Are You Prepared For The Changes To The Singapore Employment ACT?

Preview Of The Impending Changes In The Singapore Employment Act And The Implication To Business In Singapore

Overview Of The Current Singapore Employment Act

The Employment Act is Singapore’s main labour legislation. It was introduced in 1968 to standardize the employment conditions of employees across different occupations and facilitate Singapore’s raid industrailisation to create jobs. The Act serves to safeguard basic employment standards, particularly for workers who are more vulnerable and need to be protected by law and specifies the rights and responsibilities of employers and employees under a contract of service.

Key areas of protection covered by Employment Act:

  • Wages and salaries
  • Working hours and overtime
  • Paid public holidays
  • Paid annual leave and sick leave
  • Employment Termination

The Employment Act does not cover all employees. The following employees are excluded from the Act:

  • Persons employed in managerial and executive positions. (Exception: Junior managers and executives earning S$4,500 basic monthly salary and below are covered partially on the basic payment of salary. All other provisions do not apply to them.)
  • Seamen
  • Domestic Workers
  • Statutory board and government employees

Part IV of the Act, which provides for rest days, hours of work and other conditions of services, applies only to:

  • Workmen (defined as employees whose work involves manual labour) earning not more than S$4,500 basic monthly salaries and
  • Employees earning not more than S$2,000 basic monthly salaries

The Ministry of Manpower (MOM) is conducting review of the Employment Act to ensure it stays relevant and responsive to the changing labour market conditions and trends.

Proposed Key Changes To The Singapore Employment Act

  1. Increase salary threshold of non-workmen from $2,000 to S$2,500 for more to enjoy working hours-related protection, including overtime payment.
  2. To help employers manage costs with the increase in workmen’s salary threshold, the amount of overtime rate payable to non-workmen will be capped at the salary level of S$2,250.
  3. Extend the protection accorded to Professionals, Managers and Executives (PMEs) earning up to S$4,500 to beyond salary, covering also the general provisions of the Act such as sick leave benefits and protection against unfair dismissal.
  4. Cosmetic consultation and procedures not medically necessary are not qualified from the paid sick leave and medical expense benefits.
  5. Requirement on employers to provide written itemized payslips and to maintain detailed employment records of all their employees.
  6. Introduction of a 25% sub-cap for salary deductions for accommodation, amenity and services to prevent excessive salary deductions by employers. (Note: Employers can deduct salary for reasons allowed under the Act, or if ordered by the Court. The maximum deduction amount in respect of any one salary period is 50% of the total salary with certain exceptions.)
  7. Shortening the qualifying period for retrenchment benefits from 3 years to 2 years of employment.
  8. Employees who are transferred by their employer to another entity will have their employment terms protected by pre-existing collective agreement for at least 18 months after the transfer.

The review of the Employment Act is on-going and more changes could be introduced to address 2 areas:

  • Protection of employees in non-traditional work arrangements such as contract workers and self-employed persons;
  • Mechanisms to facilitate employer-employee dispute resolution.

Implementation Process And Effective Date

MOM is conducting the review of the Employment Act in 2 phases. Public consultation for Phase 1 has been completed. Phase 2 is now opened to public consultation until 31 October 2013. MOM is set to introduce the Employment Act Amendment Bill in parliament by end of 2013. When passed, the changes will come in force in first half of 2014.

What Businesses Need To Do To Get Prepared For The Amendments To Employment Act

  • Familiarize yourself with the changes to the Employment Act and update all relevant employees on the changes
  • Review your IT infrastructure and ensure the system is programmed to manage the latest changes such as the computation of overtime amount.
  • Amend your Employee Handbooks, Company Manual and Employment Contracts to be in compliance of the Employment Act
  • Review HR function to ensure adequacy of resources to cope with the changes, particularly for businesses whose majority of the workers are covered by the Employment Act