Significant Changes to Employment Act, Effective April 1, 2019

New Legislation Enacted

Authors: Benjamin Gaw, Director and Elizabeth Tong, Director - Drew & Napier LLC

Significant changes to the Employment Act (Cap. 91)(the EA) came into force on April 1, 2019. The EA now applies to managers and executives earning more than S$4,500 per month, thus extending coverage by around 430,000. Additionally, the current salary cap for non-workmen who are covered under Part IV of the EA, which contains provisions for more vulnerable employees, has been increased from S$2,500 to S$2,600 per month. The overtime salary cap for non-workmen has been increased from S$2,250 to S$2,600, and is anticipated to benefit an additional 100,000 non-workmen. Further, Employment Claims Tribunals now hears both salary-related disputes and wrongful dismissal claims, instead of the latter being heard by the Ministry of Manpower. Employers should review their employment contracts and frameworks to ensure that they comply with the new employment laws.

Company Fined S$210,000 and Supervisor Jailed for Workplace Accident

Precedential Decision by Judiciary or Regulatory Agency

Authors: Benjamin Gaw, Director and Elizabeth Tong, Director - Drew & Napier LLC

An employer was fined $210,000 for violating the Workplace Safety and Health Act (WSHA) that resulted in a workplace accident on September 14, 2016, where one of its workers was left permanently disabled. For that same accident, the employer’s construction foreman was sentenced to nine weeks’ imprisonment for his negligent act under the WSHA. Investigations revealed that the construction foreman did not obtain a permit-to-work before carrying out the installation process that left the worker disabled. This sentencing is the second custodial sentence imposed on a supervisor for a negligent act in a workplace. Supervisors have a duty to ensure a safe working environment for workers under their care and forbid unsafe work practices that may put them at risk. The company, as an employer, also had the duty to take reasonably practicable measures to ensure the safety and health of all employees.

High Court Finds No Liability Based on Independent Contractor Status

Precedential Decision by Judiciary or Regulatory Agency

Authors: Benjamin Gaw, Director and Elizabeth Tong, Director - Drew & Napier LLC

The High Court recently rejected a bid by the Central Provident Fund (CPF) Board to recover more than $400,000 in alleged arrears of CPF contributions over seven years for a gym instructor who had worked at a country club. The High Court also cleared the country club of four criminal charges of non-payment of CPF obligations, overturning a district court decision last year to convict the employer. This decision hinged on the High Court’s conclusion that the gym instructor was an independent contractor, and not an employee, finding that the three key factors (control, personal service and mutuality of obligations) did not point towards an employment relationship. This case highlights that contracts must clearly state the nature of the relationship. Parties should also act consistently with this classification.

Employer Awarded Only Nominal Damages Despite Employee’s Contractual Breach

Precedential Decision by Judiciary or Regulatory Agency

Authors: Benjamin Gaw, Director and Elizabeth Tong, Director - Drew & Napier LLC

The Singapore High Court recently held that an ex-employee had breached his employment agreement and implied duty of good faith and fidelity by engaging in the business of a competitor. However, the Court only awarded the company nominal damages, because the company failed to prove that it had suffered specific pecuniary loss, and that this loss had been caused by the ex-employee. The High Court further held that the non-compete clause in the employment contract did not protect a legitimate proprietary interest and was therefore void as an illegal restraint on trade. The Court also held that the terms of the restraint of trade (in the employment contract) were unreasonably wide. This decision is a useful reminder that covenants in restraint of trade are prima facie void and unenforceable, and should be carefully tailored to each employee. Parties who are considering claims against their former employees should also consider and seek legal advice on whether the losses they have suffered can be causally linked to the former employee’s wrongdoing.

Tripartite Guidelines on Wrongful Dismissal

New Regulation or Official Guidance

Authors: Benjamin Gaw, Director and Elizabeth Tong, Director - Drew & Napier LLC

On April 1, 2019, the Ministry of Manpower, Singapore National Employers Federation and National Trade Union Congress published the Tripartite Guidelines on Wrongful Dismissal. On the same day, wrongful dismissal claims were transferred from the Ministry of Manpower to the Employment Claims Tribunal. The Guidelines provide guidance on what constitutes wrongful dismissal under the Employment Act (Cap. 91). Importantly, the Guidelines clarify that where poor performance is cited as a reason for dismissal, an employer cannot simply dismiss the employee without notice and would need to substantiate it. Further, a dismissal with notice may nonetheless be wrongful if it is made for a wrongful or false reason. Given the ease and low cost of making a claim for wrongful dismissal with the Employment Claims Tribunal, every employer considering terminating an employment relationship should ensure that the separation process and documentation complies with the Guidelines.