Changes to Singapore’s Employment Act for 2019

Singapore will soon expand the scope of its Employment Act: employers should prepare for the impact of the changes on the workforce…

After proposals dating back as far as 2012, in November 2018 Singapore’s parliament finally passed amendments to its Employment Act (EA). The changes, introduced by Manpower Minister, Josephine Teo, broadly affect termination procedures, the administration of employee benefits, and the dispute resolution process. More specifically, the provisions of the EA have been extended to a greater number of employees in Singapore’s workforce, or adjusted for greater employee benefit.

The Amendments

The changes set out in the amendment bill will come into force on 1 April 2019. In more detail, the bill has the following effects on existing EA legislation:

Core Provisions Extended to Managers and Executives

Under the current system, the core provisions of the EA extend to employees earning only S$4,500 or less per month. From 1 April 2019, those core provisions will be extended to employees at the managerial and executive levels, and to technicians - in other words, those earning a basic salary of over S$4,500 per month. Now effectively covering all employees (foreign and domestic), the core provisions of the Employment Act include:

  • A minimum of 7-14 days of paid annual leave
  • Protections for the timely payment of salaries
  • 14 days of paid sick leave, and paid public holiday leave
  • Childcare leave
  • Protections against wrongful dismissal

The expansion of the EA’s scope will bring an estimated 430,000 employees under the protection of its core provisions - an effort to better reflect the number of professionals, managers, executive, and technicians (PMET) working within Singapore. In fact, that employee demographic is projected to comprise around two thirds of the workforce by 2030.

Additional Protections Extended

Part IV of the EA currently provides a range of additional protections to workmen (earning up to S$45,000) and non-workmen (earning up to S$2,500). Those additional protections relate to hours of work, overtime, and rest days. From 1 April 2019, the amendment bill introduces the following changes to the provision of additional protections:

  • Salary threshold: Protections for hours of work, overtime, and rest days will be raised to a salary threshold of S$2,600 for non-workmen. Additionally, overtime rates payable to non-workmen will be raised to a cap of S$2,600 (from the current cap of S$2,250).
  • Time off for public holidays: Employers will be able to offer non-Part IV workmen and non-workmen time off for the hours they work on public holidays - as opposed to a full day off. This will, in turn, allow them to continue to offer Part IV employees a full day off, or a full day’s pay when they work public holidays.
  • Deduction flexibility: Employers will be able to make deductions to employee salaries (for the purposes of hospital insurance, for example) if the employee consents in writing. Employees can withdraw consent at any time and deductions may not be greater than 50% of the employee’s total salary.

The amendment is projected to extend additional protections to around 100,000 more employees.

Dispute Resolutions Improved

Under the current EA dispute resolution system, salary disputes are overseen by Singapore’s Employment Claims Tribunal (ECT) and wrongful dismissal disputes by the Ministry of Manpower (MOM). Similarly, managers and executives can only seek dispute resolution after one year’s service. Under the amended EA, however:

  • The ECT will become a “one-stop shop” responsible for both salary and wrongful dismissal claims.
  • The MOM will publish tripartite guidelines illustrating the criteria for wrongful dismissal.
  • Managers and executives can seek dispute resolution after only 6 months’ service.

Additional Amendments

A variety of additional changes have been introduced in the amended EA:

  • Medical certificates & hospitalisation: Under the current EA, sick leave can only be authorised by medical certificates from certain government and company-appointed doctors. From 1 April 2019, however, employers must recognise certificates from all doctors. The rules regarding hospitalisation leave have also been clarified and expanded - with post-discharge periods and special circumstances also included in the coverage.
  • Protection of employee entitlements: Adjustments will be made to the MOM’s regulatory framework in order to ensure it can quickly address undesirable employment practices - such as employers issuing vouchers in lieu of salaries.

Industry Reaction

Labour MP, Patrick Tay, has called the EA amendments a “watershed moment”, and industry representatives in Singapore have welcomed the move to curb employment malpractice. On the other hand, some have warned that the amendments may be exploited through “unmerited claims by rogue employers”.

For more information about Singapore’s employment legislation, check out activpayroll’s Global Insight Guide to Singapore...