Singapore: Amendments to the Singapore Employment Act

Following a public consultation on the review of the Singapore Employment Act (the “EA”), the Ministry of Manpower (“MOM”) announced on 5 March 2018 that amendments to the EA will be implemented effective 1 April 2019.

Significantly, a key amendment to the EA involves enhancing the current EA framework by extending the coverage of the EA to professionals, managers and executives (“PMEs”) earning more than S$4,500 per month. On the dispute resolution front, in seeking to create a more streamlined process for resolving employment related disputes, wrongful dismissal claims which are currently heard by the MOM will soon be heard by the Employment Claims Tribunal (“ECT”).

Amendments to the EA

The key amendments to the EA are:

Expanding the scope of coverage:

Currently, PMEs earning more than S$4,500 per month are not covered by the EA. Following the amendments, PMEs earning more than S$4,500 per month will be afforded the protection of the EA which includes statutory rights to:

  • paid public holidays, sick leave, hospitalization leave and maternity leave,
  • the preservation of existing terms of employment in an employment transfer scenario and,
  • recourse for wrongful dismissal.

Once the amendments come into force, PMEs earning more than S$4,500 per month whose employment is terminated can lodge an application to the ECT (currently MOM) within one month of the dismissal alleging that their dismissal was “without just cause or excuse”. If the ECT finds the dismissal was without just cause or excuse, the employer may be ordered to:

  • reinstate the employee and pay them the wages they would have earned had they not been dismissed; or
  • pay the employee an amount of wages as compensation.

In respect of employees covered by the Employment Act, employers are also required to make and keep employee records and provide itemised pay slips.

In addition to widening the scope of coverage of the EA to PMEs earning more than S$4,500 per month, the scope of application of Part IV of the EA will be expanded to include “non-workmen” (employees who are not involved in manual labour such as clerks, receptionists and retail sales assistants) earning up to S$2,600 per month (up from the current cap of S$2,500 per month). This will result in a larger number of non-workmen being entitled to the protection afforded by Part IV of the EA which includes rest days, overtime pay and working hours.

Currently, for non-workmen earning more than S$2,250 per month, the overtime rate payable is calculated based on a salary cap of S$2,250 per month. With the amendments, the overtime rate payable will be calculated up to a salary cap of S$2,600 per month, resulting in a higher overtime rate payable for non-workmen who are earning between S$2,250 to S$2,600 per month.

“One-stop service” for employment disputes:

Currently, wrongful dismissal claims are heard by the MOM, while statutory and contractual salary related disputes are heard by the ECT. An aggrieved employee who brings a claim for wrongful dismissal which also involves salary issues will have to bring these disputes in two different forums.

When the amendments come into force, the ECT will provide a “one-stop service”, allowing both claims for wrongful dismissal and salary related disputes to be heard in the same forum. This is intended to create a more streamlined process for the resolution of employment related disputes.

Key takeaways

Many multinationals already provide PMEs earning more than S$4,500 per month contractual entitlements to paid public holidays, sick leave, hospitalization leave and maternity. In that regard, the change will not be significant. However, a key difference is that PMEs earning more than S$4,500 per month will now have a statutory redress for wrongful dismissal. With the ECT providing a “one-stop service” for the resolution of employment related disputes, an increase in the number of disputes relating to wrongful dismissals is likely.

In light of these amendments, and to minimize the risks of employees raising wrongful dismissal claims, employers should be mindful to implement fair termination processes, ensuring that proper records of employees’ performance and conduct are kept, and that there is due inquiry prior to any decision to terminate for cause.

 

Written by Fatim Jumabhoy, Partner, Tess Lumsdaine, Senior Associate, and Rebecca Lim, Associate


Disclaimer

Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.

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Filed under Business sales/transfers, Employment-related claims- procedure and form, Jurisdiction: Asia, Termination of employment, Working hours (including holiday, sick leave, overtime, rest breaks), Workplace flexibility and family-friendly rights

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