On 8 July 2015, the Ministry of Manpower (“MOM”) announced that, as part of the Government’s continuing efforts to enhance the Singaporean core in the workforce, it had put in place several new measures to increase its support for Singaporean Professional Managers & Executives (“PMEs”). To recap, this initiative by the Government was first announced on 23 September 2013 with the introduction of the Fair Consideration Framework (“FCF”), which imposes an obligation on all businesses to consider Singaporeans fairly for employment opportunities. The new measures seek to complement the FCF by imposing tougher hiring rules on companies seeking to bring in foreign PMEs and introducing a new method of dispute resolution for PMEs who do not enjoy the protection of Singapore’s Employment Act.
This client update provides an overview of these new measures which come into effect from 1 October 2015, as well as list out some of the key requirements under the FCF.Businesses are advised to have regard to these issues, as the failure to comply with the FCF may lead to the MOM suspending the work pass privileges of a company for a significant period of time.
What is the Fair Consideration Framework?
Overview of the FCF
Under the FCF, all companies operating in Singapore are required to comply with the Tripartite Guidelines on Fair Employment Practices (“TAFEP Guidelines”) as well as put in place employment, hiring and staff development practices that are open, merit based and non-discriminatory. In addition, prior to submitting an application for an Employment Pass (“EP”), companies must advertise the vacancy on the Jobs Bank administered by the Workforce Development Agency for a period of at least 14 days.
Separately, the MOM and other government agencies, including the Tripartite Alliance for Fair Employment Practices (“TAFEP”) will, from time to time, scrutinise companies which have a disproportionately low concentration of Singaporean PMEs. On this, companies who have been chosen will be required to provide information on their human resource practices, including confidential information relating to their employees or other sensitive internal procedures, to the MOM and / or TAFEP. While there is, strictly speaking, no statutory requirement to comply with such requests, companies who are found to be unresponsive may face a longer wait in relation to their work pass applications, or have their work pass privileges curtailed.
Why is Compliance Important?
On 29 December 2014, the MOM announced that it had curbed the work pass privileges of a Singaporean company for a period of 2 years as the company was found to have engaged in employment practices which did not comply with the requirements under the FCF. In its press release on the matter, the Director of the Fair Consideration Department, MOM, states –
‘MOM has been investigating complaints against companies for not considering Singaporeans fairly for job and development opportunities, including if they resorted to discriminatory dismissal of Singaporeans. This is a case where we found the company to have retrenched Singaporeans unfairly.’
From this case, it is evident that the MOM takes a serious view of non-compliance with the FCF, and will not hesitate to impose orders and / or directions on companies found to be in breach of the FCF. As a worst case scenario, the MOM will prohibit the infringing company from applying for work passes for a significant period of time, which can be detrimental to the companies who have operations in a number of jurisdictions.
What are the New Measures?
Increase Scrutiny on Hiring Practices
From 1 October 2015, in addition to advertising job vacancies on the Jobs Bank, companies must also disclose in such advertisements the salary range applicable to the vacancy. A failure to do so will result in a subsequent rejection of the EP application.
Further, companies are reminded to review all their job advertisements to ensure that the advertisements do not contain criteria which may potentially infringe the TAFEP Guidelines. In particular, the advertisement should not contain words or phrases that indicate preferences for candidates of a specific nationality, age, race, language, gender or religion. In essence, job advertisement should only contain selection criteria that pertain to the qualifications, skills, knowledge and / or experience required for the vacancy.
In addition, from 1 October 2015, companies who have a weaker Singaporean core of PMEs may be required to provide additional information to the MOM when applying for an EP. According to the MOM, the information is to enable the MOM to assess whether Singaporeans were considered fairly for the vacancy. By way of an overview, information required to be submitted include (i) number of Singaporeans who applied for the role, (ii) number of Singaporeans who were interviewed for the role and (iii) number of Singaporeans PMEs generally employed by the company.
Increased Scrutiny on Work Pass Applications
Under the TAFEP Guidelines, companies are encouraged to, inter alia, train and develop the potential and career of Singaporeans. To complement this, from 1 October 2015, the MOM will enhance scrutiny on EP applications, and reject applications which contain qualifications from dubious sources, an obvious one of which are degree mills. The MOM has nevertheless stated that it will accord more weight to the relevant experience of EP and S pass applicants, so as to provide flexibility for companies to employ foreign workers with skills that are not available in Singapore but have no formal qualifications
New Tribunal for PMEs
Finally, in the first quarter of 2016, the MOM will set up an Employment Claims Tribunal (“ECT”), which aims to cover PMEs who earn a monthly basic salary exceeding S$4,500. The ECT, which appears to be a formalisation of an existing process where the MOM on a case by case basis aids in resolution, seeks to facilitate cordial, swift and cost effective resolution of statutory and contractual salary-related disputes. As the ECT is available only to PMEs who are not covered by the Employment Act, it is unlikely that terms in the employment contracts of such PMEs which are less favourable than the corresponding provision in the EA will be dee to be aware of be deemed void and unenforceable by the ECT. While this is the case, companies will still need benefits contained in other pieces of legislation, including the Child Development Co-Savings Act and Retirement and Re-employment Act.
Overall, these measures reflect the Government’s position in ensuring that there is a Singaporean Core in the workforce, particularly at the PME level. While these new measures will bring about positive effects of improving the prospects of the Singapore Core and benefit all businesses in the long run, companies which typically hire more foreigners must ensure that they take cognisance of these new measures to avoid having their work pass privileges curtailed or such other directions as may be imposed by the MOM, as it is clear that the MOM will not hesitate to take actions against companies found to have infringed the principles of the FCF. As a concluding point, it is important to note that the aim of the FCF is not to prevent foreign hires, but to provide a fair environment for hire.