As of April 1, 2016, the Singapore Ministry of Manpower is enforcing amendments to its Employment Act (EA), which was originally enacted in 1968 and revised in 2009. The amendments involve enhanced requirements for pay stubs, how to present employees with key employment terms in writing, and recordkeeping.
The Employment Act: What is it, and Which Employees Get What?
Before we dive into the amendments, let’s understand the Employment Act itself. The EA is Singapore’s primary statute governing employment relationships, and (like many countries’ labor codes) contains chapters regarding notice of termination, timing of salary payments, deductions, rest days, annual leave, sick leave, and so on. Other statutes relevant to employers in Singapore include the Industrial Relations Act, the Trade Unions Act, the Work Injury Compensation Act, the Workplace Safety and Health Act, and the Central Provident Fund Act.
The greatest source of confusion within the EA itself is the question of which provisions apply to which employees. Many employees above specified income thresholds are exempt from certain benefits, such as paid vacation. Some high-level managerial or executive employees fall outside the EA altogether based on their salary levels. And finally, Singapore citizens and noncitizens are treated differently for some purposes, for example, under the Child Development Co-Savings Act, which provides an additional source of maternity and childcare leave benefits.
The chart below is an illustration of which employees qualify for which benefits under the EA (with monetary amounts represented in Singapore dollars):
Click here to view the table.
Because many employers maintain workforces mostly or wholly consisting of workers who earn above the S$4,500 income threshold, it is crucial to understand these distinctions. The 2016 amendments will apply to all EA employees (everyone except for the top row in the table above), but employers may wish to comply with the changes for their entire workforces.
Overview of the 2016 Amendments
Singapore employers should be aware of the 2016 amendments, and many will need to take proactive steps to implement changes to remain compliant. Even with the added steps, the new practices may ultimately be a positive development for employers. One Singapore employment law attorney, Chye Shu Yi, with the law firm of Bird & Bird commented that the amendments "will help build trust in the employer-employee relationship, and also contribute towards making the workplace fairer." She cited the policy reasons set out in Singapore’s Parliamentary Debates on these amendments: (1) enabling employees to better understand their salary components, employment terms, and benefits; and (2) helping employers prevent misunderstandings and minimize disputes with employees.
(1) Detailed pay stubs
Employers will now need to include more detail on employees’ pay slips, including applicable deductions. While this has long been a best practice, there was previously no specific law requiring specific timing or details. As a result, pay stubs were sporadic and inconsistent, leading to situations where employees became confused about salary components. That lack of understanding tends to increase, rather than lessen, the prospect of disputes between employees and employers, and makes it difficult for the parties and/or the Ministry of Manpower to resolve such disputes.
To increase transparency and understanding, detailed pay stubs must now be provided at least once per month to all EA employees—either with the salary payment or within three days after the salary is paid. The pay stubs can be delivered either digitally or in hard copy, which is important given the increased use of electronic payment methods and direct deposit.
Each pay slip must contain the following information:
- the full name of the employer;
- the full name of the employee;
- the payment date (or multiple dates if the employee is paid more than once per month);
- the basic salary for the pay period;
- the start and end dates of the pay period;
- fixed allowances paid during the pay period;
- any other additional payments made during the pay period (e.g., bonuses, rest day pay, public holiday pay, etc.);
- deductions made during the pay period (e.g., for Central Provident Fund contributions or absences from work);
- overtime hours worked and overtime pay earned (if applicable);
- the employee’s net salary for the pay period, including overtime pay earned (if applicable); and
- the start and end dates of the overtime pay period (if applicable and if different from the regular pay period).
Failure to comply can lead to stiff penalties (covered in detail below), so although we do not yet know how the ministry will enforce these updates, employers may want to ensure that they track distribution of the detailed pay stubs in case of an audit.
(2) Key employment terms to employees
Under the amendments, employees must now be given specifically defined key employment terms in writing within 14 days after the commencement of employment. As with the pay stubs, the major goal here is to facilitate understanding and transparency between employers and their employees. While there is currently no prescribed format or delivery method for the terms (e.g., the terms can be provided in an employment contract, employee handbook, or standalone document), the Ministry of Manpower has recently released a template, which employers can use as a guideline in drafting their documents.
The following specific information must be provided to each employee:
- the full name of the employer;
- the full name of the employee;
- the employment start date;
- the employee’s job title;
- the employee’s job duties (a sentence or two will meet this requirement, though many employers use a longer job description);
- the duration of the employment term (if a fixed-term agreement);
- the probationary period (if applicable);
- the employee’s working hours and working days (e.g., “9:00 a.m.–5:00 p.m. Monday through Friday with rest days Saturday and Sunday” (although the employment contract itself will usually specify that the employee will work additional hours or on rest days as business needs warrant);
- salary periods (e.g., paid on a monthly basis);
- the employee’s base salary (usually called a “basic salary” in Singapore);
- fixed allowances (such as a housing allowance or transportation allowance);
- other additional incentives (e.g., bonuses);
- fixed deductions (statutory deductions, such as payments to the Central Provident Fund and other regular deductions);
- medical and dental insurance and benefits;
- leave entitlements (e.g., annual leave, sick leave, maternity leave, and childcare leave); and
- overtime hours and overtime rates of pay (if applicable).
In practice, these terms will be typically included in the written employment contract, or for terms common to all employees (e.g., leave policies and medical benefits), in an employee handbook, or on the company intranet. Employers will want to ensure that the above subjects are covered in writing, and if the terms are in more than one document, that employees affirmatively acknowledge receipt of all of those documents.
(3) The requirement to retain specific employment records
Most employers make it a best practice to maintain key employment information regarding every employee in the employee’s personnel file. But now the amendments have created an affirmative duty for employers to retain specific personnel information for employment purposes. For current employees, all employment records must be kept for two years. For former employees, employers must maintain records for at least one year after the employee leaves employment for any reason. Again, the goal of this requirement is to have standard employment information available in the event of a dispute between the parties to facilitate an efficient and effective resolution.
At a minimum, the following employee records must be kept on file:
- the employee’s address;
- the employee’s National Registration Identity Card number (a national identification number akin to a U.S. Social Security number) or, for an expatriate working in Singapore, the expatriate’s employment pass number and its expiration date;
- the employee’s date of birth;
- the employee’s gender;
- the date employment began;
- the date of termination of employment;
- the employee’s working hours, including meal times and breaks;
- dates of public holidays taken (so if an EA employee works on a public holiday, this will need to be documented and placed in the employee’s file); and
- dates of leave (annual leave, sick leave, maternity leave, etc.).
In addition, the same information included in the itemized paystubs must be maintained for the periods above (two years for current employees, and at least one year after the employee leaves employment for any reason) as salary records. Employers can satisfy this requirement through a spreadsheet or by retaining copies of the pay slips themselves.
Potential Penalties for Noncompliance
Failure to comply with the new regulations governing pay stubs, key employment terms, and employment records will be deemed a “civil breach” punishable with an administrative penalty. The civil penalties will range from S$100 to S$200 per occurrence or per employee, depending on the factual situation. However, once the ministry enforces a civil penalty, any continued failure to comply may be deemed a criminal offense punishable by fines up to S$5,000 and/or up to 6 months’ imprisonment.
Action Items for Employers
As we remain vigilant to see how the ministry will enforce these new items, employers employing individuals in Singapore may decide to take the following steps:
- develop a master document with the key employment terms or, in the alternative, ensure that the key employment terms are specifically covered in the employment contracts and/or employee handbook;
- review existing pay stubs and begin working with their payroll departments or payroll providers to make the required changes to include all required data going forward;
- evaluate current employee recordkeeping practices and ensure that at least the minimum employee information is kept for the requisite time periods; and
- review their global data privacy policies and any consents or acknowledgements used in Singapore in light of the new recordkeeping requirements. Most employers already utilize a consent form to ensure compliance with Singapore’s Personal Data Protection Act, but if an employer’s practices will change as a result of the 2016 amendments, the employer may need to update its consent forms accordingly.