In this bulletin, we summarise the key changes that employers will need to be aware as they start 2016 including increased administrative requirements, changes to the Central Provident Fund (CPF) regime, additional paternity leave entitlements and new workplace harassment guidelines.
Additional administrative requirements from 1 April 2016: payslips, written employment terms and record-keeping
From 1 April 2016, the Employment (Amendment) Act 2015 will require employers to:
(i) issue itemised payslips to all employees;
(ii) provide employees with written Key Employment Terms; and
(iii) keep detailed employment records for each employee.
These requirements apply to all employees who fall within the scope of the Employment Act, which generally encompasses non-managerial and non-executive employees, and any employees in managerial or executive positions who earn SGD 4,500 per month or less.
Employers will be required to issue itemised payslips to employees at least once a month at the time of payment of salaries to employees, or within three days of the employees' salaries being paid. While there is no set format for the payslip, it must include details of the salary period and date of payment, and the basic salary for that period along with any allowances or additional payments made and any deductions taken. Overtime payments must also be itemised.
Payslips can be provided in hardcopy or by electronic means. Employers are required to retain records of all payslips issued for at least two years. In relation to employees who leave the company, payslip records for the last two years of employment will need to be kept for one year after the employment ends.
Written Key Employment Terms (KETs)
Any employee hired after 1 April 2016 who will be employed for at least 14 continuous days must receive written KETs within 14 days of beginning their employment. As with payslips, there is no prescribed form for the KETs, and they may be provided in hard or soft copy. However, specific information must be provided, including:
- the full names of the employer and employee;
- the employee's full job title and an outline of their main duties and responsibilities;
- start date of employment and the duration of any probation period;
- details of working hours, salary, allowances, benefits and incentives, overtime and annual leave entitlements; and
- notice requirements for termination of employment by either party.
Employers may choose to provide information applicable to all employees in an employee handbook or company intranet rather than creating individual written KETs for each employee.
Employers will be required to keep detailed and up to date employment records for current employees and those who leave the company's employment after 1 April 2016. Current employment registers will need to be expanded to include details similar to KETs. Employers are required to keep records for at least two years, and in relation to employees who leave the company, records for the last two years of employment will need to be kept for one year after the employee leaves the company.
Consequences of breach
A failure to fulfil the new requirements is likely to be treated as a "civil breach" resulting in an order from the MOM to rectify the breach and potential liability of up to SGD 1,000 for a first contravention and SGD 2,000 for a second or subsequent contravention. More severe consequences will be imposed for failure to comply with a MOM order, which is a criminal offence resulting in a fine of up to SGD 5,000, imprisonment for up to 6 months, or both.
The MOM is expected to take a more stringent approach to enforcement from 2017 onwards, so it is advisable for employers to implement procedures for payslips, key employment terms and record keeping as soon as possible. To assist companies in complying with the new requirements, the MOM, together with the other tripartite partners (the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF), has issued guidelines on KETs and itemised payslips. An assistance package, with guidance and sample KETs and payslips, is also available from the MOM.
CPF changes come into force
From 1 January 2016 the majority of the changes to the CPF regime announced in the 2015 Budget have come into effect. These mandatory changes aim to enhance the CPF for employees, particularly older workers, and as a result may place a greater financial burden on employers.
In summary, changes that have taken effect include:
- an increased CPF Salary Ceiling of SGD6,000;
- increased employer and employee contribution rates for workers aged between 50 and 65;
- an enhanced Temporary Employment Credit regime; and
- new Special Employment Credit incentives.
The key change to take note of is the increase in the CPF Salary Ceiling by SGD1,000 to SGD6,000. The result is that the first SGD6,000 of every employee's salary each month gives rise to CPF contribution payments by both the employer and the employee, with the result that contributions will increase for a significant number of employees and their employers. The CPF Annual Limit has also been revised to SGD37,740.
In contrast, the contribution rates increase only applies to older workers. For those aged 50 to 60, employers must contribute an additional 1% on top of existing rates. For employees aged 60 to 65, the increase is 0.5%. These increases are allocated to the Special Account. Employees aged between 50 and 55 must also top up their own contributions by an additional 1%.
The result is that employer CPF contributions for employees aged 50 and under remain at 17%, while for those aged above 50 to 55 and for those aged above 55 to 60 the rates are now 17% and 13% respectively. For employees aged 60 to 65, employers must contribute 9%, while contributions for over 65s remain at 7.5%.
New fathers granted additional week's paid paternity leave
In August 2015, Prime Minister Lee Hsien Loong announced that the Singapore government will fund an additional week of paternity leave for eligible working fathers, creating the potential for new fathers to take up to two weeks of government-paid paternity leave. This aims to encourage shared parental responsibility and to create a more supportive financial and workplace environment to enable them to do so. The additional week of leave has already been introduced in the civil service. In the private sector, while the measure is currently implemented on a voluntary basis, employers are encouraged to follow suit.
Employers should also note that the new policy applies to eligible fathers of children born from 1 January 2015. Those who have already taken their week of paid leave may request and take a second week within 12 months of their child's birth if the employer agrees. In addition, employees may combine the additional paternity leave with a request for shared parental leave, which entitles them to a further week's paid leave out of the mother's maternity leave entitlement, to be taken within 12 months of the child's birth. Working fathers may therefore now be able to take up to three weeks' paid parental leave for the birth of a child.
Workplace harassment guidelines
Another notable development is the issuance of the Tripartite Advisory on Managing Workplace Harassment on by the tripartite partners (the MOM, NTUC and SNEF) in December 2015. Singapore has seen an increased focus on harassment in the workplace recently; as both employers and employees will no doubt be aware, the Protection from Harassment Act (PHA) came into effect in 2014, criminalising acts of harassment and providing civil remedies to victims of harassment. While the PHA does not specifically cover workplace harassment, the Tripartite Advisory encourages employers to proactively identify, evaluate and control the risk of harassment at the workplace, and introduces guidelines on how employers can do so.