As we begin the New Year, we examine changes in legislation that will likely take place in 2019 in Singapore, with a special focus on required actions for businesses.
Changes to the Employment Act (Cap 91) (2009 Rev Ed) and Employment Claims Act 2016 will take effect on 1 April 2019. Broadly, the changes offer more protection to employees in Singapore’s workforce. We highlight the key changes that you should take note of:
- The groups of people protected under the Employment Act will be expanded. The Employment Act will extend to managers and executives earning above $4,500 per month. They will enjoy benefits such as a minimum of seven days of annual leave and statutory protection against wrongful dismissal by requiring due inquiry to be taken by the employer or a minimum notice period (depending on the length of service).
- Wrongful dismissal claims will now be heard by the Employment Claims Tribunal. Managers and executives may now bring a claim for wrongful dismissal to the Employment Claims Tribunal after working for 12 months with the employer, instead of the previous requirement of six months.
Currently, the Employment Claims Tribunal only hears salary-related claims. From 1 April 2019, the Employment Claims Tribunal would also be able to hear wrongful dismissal claims. Accordingly, this change is likely to streamline and simplify the claims process for employees, who will now have a one-stop shop to bring claims against their employers.
Helpfully, the Ministry of Manpower will be publishing guidelines to illustrate what constitutes wrongful dismissal. This will be useful to both the employees and employers in formulating proper procedures when dismissing an employee.
- The Employment Act will also be amended to make the deduction of salaries from employees more flexible.
Currently, employers may deduct salaries for accommodation, amenities and services supplied.
After the amendments are implemented, employees will be able to consent to other forms of deductions, such as obtaining group insurance plans. The employee’s consent to the deduction must be in writing. The employee must be allowed to withdraw consent at any time without penalty. Employers should take special note of this as salary deductions may now lead to disputes with the employee. A clear, agreed-upon procedure to deduct salary should be implemented to avoid contravening the amended Employment Act.
Insolvency, Restructuring and Dissolution Act 2018
On 1 October 2018, Parliament passed the Insolvency, Restructuring and Dissolution Act, unifying the legislation in relation to insolvency and bankruptcy. This will come into operation on a date that the Minister appoints by notification in the Gazette.
The key reforms in the Insolvency, Restructuring and Dissolution Act 2018 are as follows:
- Liquidators will now have to seek permission from the Court or a committee of inspection before bringing or defending against legal proceedings. Liquidators will now also be able to assign causes of action such as proceedings to set aside undervalued transactions or unfair trading. Such changes will give liquidators more certainty in performing their duties. Liquidators will also be able to share the risk of bringing litigation and enable them to recover sums owed to a company where there are no funds to bring litigation proceedings. Overall, this will facilitate the collection and distribution of the property of an insolvent company.
- There is a new provision of wrongful trading. This allows directors/officers to be personally liable for a company’s debts before criminal liability is established. Previously, personal liability may only be imposed on a director after criminal liability is found against the director under sections 339(3) and 340 of the Companies Act (Cap 50). The benefit of this new provision empowers the Court to impose personal liability without having to find criminal liability. This will provide more protection to creditors who are faced with errant directors as the requirements for imposing personal liability are likely to be lower under the Insolvency, Restructuring and Dissolution Act 2018.
- Secured creditors of companies will now have to realise their interest within 12 months after the commencement of the winding up. As for bankruptcy, a notice of intention to claim interest on a secured debt must be made within 30 days of the bankruptcy order to the trustee in bankruptcy or to the Official Assignee. The secured creditor will then have 12 months after the date of the bankruptcy order to claim their interest.
This would create more certainty for other creditors in the winding up and bankruptcy regime and speed up the administrative process of the winding up or bankruptcy. More importantly, this means that secured creditors must either be vigilant or lose their entitlement to the security.
- Contractual clauses that terminate or amend, or claim an accelerated payment or forfeiture of a term under, any agreement with a company solely due to the company being insolvent or undergoing restructuring (scheme of arrangement or judicial management) will no longer be enforceable in the Singapore courts. This will facilitate the rescue of a company and/or provide a better chance of recovery of the debts of all creditors.
- If a majority of a company’s creditors, both in number and value of debt, approve a company’s entry into judicial management, the company may enter judicial management without the costs and time required for an application to the Court.
Reforms to the Civil Justice System
At the close of 2017, the Civil Justice Commission drafted and proposed new Rules of Court for the purpose of modernising the litigation process and in doing so, enhancing the efficiency and speed of adjudication. In his speech at opening of legal year 2019, the Chief Justice indicated that the changes may be implemented by the end of 2019. The possible key changes that you should take note of based on the Public Consultation Paper on Civil Justice, the Report of the Civil Justice Review Committee, and the Civil Justice Commission Report are:
- There may now be a duty on all litigants to consider amicable resolution of the dispute before and during the commencement of the action or appeal. This means that the litigant will have to make an offer to settle or an offer for alternative dispute resolution (for example, mediation). If the Court is not satisfied that this duty has been discharged properly, the Court has the discretion to order the parties to attempt to resolve the dispute other than by litigation.
- Commencing a suit on a party outside Singapore may now be simplified. Under the current Rules of Court, there are specified grounds to obtain the leave of Court to serve originating process out of Singapore. Under the proposed new Rules of Court, the litigant only has to show that the Singapore Court has the jurisdiction to hear the case, or is the appropriate court to hear the case.
- The Court may also be able to order that affidavits of evidence-in-chiefs be exchanged before the disclosure of documents. This would effectively prevent witnesses from tailoring their evidence to the disclosed documents.
- There may be a reduction in the scope of discovery. There may no longer be an obligation for a party to disclose all documents relevant to the suit, whether it adversely affects them or not. Instead, parties will only be obligated to disclose documents which they rely on. An application for specific discovery will now have to be taken out
- The use of expert evidence will also be simplified. The default position under the new Rules of Court sets out that a common expert should be used. Individual experts may only be used in special cases.
Developments to International Settlements Resulting from Mediation
In Singapore, in order to enforce a settlement agreement in Singapore, a claimant must bring his claim as a contractual claim in the Court.
The Singapore Convention on Mediation was introduced by the United Nations Commission on International Trade Law to facilitate the enforcement of international settlement agreements entered into after mediation of disputes. With this new treaty, there will be a common international understanding of how enforcement of international settlement agreements can take place across jurisdictions.
The Singapore Convention on Mediation is scheduled to be signed in Singapore on 1 August 2019.
In the coming year, we are likely to see changes in the legislation to give effect to the Singapore Convention on Mediation, which would simplify the requirements that a party seeking to enforce an international settlement agreement currently.