In 2017 several key pro-employee developments were introduced in Singapore, including mandatory retrenchment notifications and increased oversight and scrutiny of retrenchment exercises by the Ministry of Manpower, and the increase of the reemployment age from 65 to 67. The Employment Claims Tribunal was also set up to resolve low-value employment disputes, and a High Court ruling showed employers that they must take care in drafting references for former employees.
In this wave of new developments in Singapore employment, stronger emphasis is being placed on observing the various standards and advisories issued and revised by the Tripartite Alliance for Fair & Progressive Employment Practices (TAFEP), with practical consequences for violations being introduced, such as companies being delisted and no longer being eligible to receive government funding (e.g., media funding from the Info-communications Media Development Authority of Singapore (IMDA)). Companies should take note of the following changes to the employment landscape in Singapore.
2017 saw several large-scale reduction-in-force (RIF) exercises in Singapore that demonstrated companies will be held accountable for the manner in which they retrench their employees. These RIF exercises are drawing increased scrutiny by the Ministry of Manpower (MOM), as borne out by the introduction of the mandatory retrenchment notifications noted below.
The following are key takeaways from these exercises:
- The MOM is placing increasing emphasis on fair and responsible retrenchment behavior. The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment was updated in March 2017 (Tripartite Advisory), and while the Tripartite Advisory does not have force of law, violating the guidelines therein could lead to soft penalties being imposed including the MOM withholding work pass privileges from companies that commit transgressions.
- Employers cannot conduct retrenchment exercises under the guise of dismissing employees for being “poor performers” without evidence of the same. Employers must be able to substantiate claims of poor performance using relevant and objective criteria of which the employees must be aware. Employers must also keep records of employee performance.
- Termination will be considered unlawful if an employer isn’t able to produce documentary evidence of “poor performance.” In such a situation, the employer may be ordered to reinstate or compensate the employee.
Given this heightened focus on responsible retrenchment, companies should consider putting in place stronger employee protection measures and more stringent exit procedures for outgoing employees.
Mandatory Retrenchment Notifications
Effective January 1, 2017, employers who employ at least 10 employees and retrench five or more employees within a six-month period are obliged to notify the MOM of the retrenchments. A retrenchment is defined as “dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work.”
The notification must be submitted to the MOM within five working days after the fifth employee is notified of retrenchment. For subsequent employees who are retrenched, the notification must be submitted within five working days after each such employee is notified.
Notifications apply to the retrenchment of permanent employees as well as to contract workers with full-term contracts of a minimum of six months.
Failure to notify the MOM within the mandated timelines is an offense and employers may face penalties including a fine of up to S$5,000 if convicted.
The introduction of these mandatory retrenchment notifications ties in with the trend of increasing scrutiny and oversight by the MOM into RIF exercises to ensure that companies are conducting retrenchments in a fair and responsible manner.
Launch of the Employment Claims Tribunal
The Employment Claims Tribunal (ECT) was set up in April 2017 to facilitate the affordable and expeditious resolution of low-value employment disputes. The tribunal’s jurisdiction is limited to hearing claims of up to S$20,000, or up to S$30,000 if the dispute has undergone mediation assisted by trade unions or under the auspices of the Tripartite Alliance for Dispute Management.
The ECT’s jurisdiction covers
- statutory salary-related disputes for employees covered under the Employment Act, Retirement and Re-employment Act, and Child Development Co-Savings Act. These include claims for unpaid salary, overtime pay, salary in lieu of notice, and maternity pay;
- contractual salary-related claims involving professionals, managers, and executives (PMEs) who earn a monthly salary of more than $4,500. These include claims for payment of allowances, bonuses, commissions, salary in lieu of notice, and retrenchment benefits, provided that these are expressed in monetary terms in a contract; and
- claims by employers for salary in lieu of notice.
Parties to ECT proceedings must act in person and cannot be represented by legal counsel or agents. To facilitate this, ECT proceedings are judge-led and will have simplified procedures.
The ECT is a welcome addition to the employment landscape in Singapore, with the hope being that it will encourage responsible employment and retrenchment practices. That said, having separate dispute resolution options for salary-related disputes and unfair dismissal claims is cumbersome and impractical, and the MOM is considering the option of streamlining these options as part of its ongoing public consultation on the Employment Act. We will explore this in more detail in an upcoming LawFlash on key trends in Singapore employment in 2018.
Amendments to the Retirement and Re-employment Act
Amendments to the Retirement and Re-employment Act included revising the reemployment age from 65 to 67 to assist older workers who are willing and able to continue working. The new reemployment age applies to eligible employees who turn 65 on or after July 1, 2017.
A revised edition of the Tripartite Guidelines on Re-employment of Older Employees (July 2017) was issued in tandem with the revision of the reemployment age, with two major revisions relating to employment assistance payment payouts and the recommendation that employers use MediShield Life to provide medical benefits to reemployed employees, including by providing additional MediSave contributions in place of in-patient medical benefits.
Tripartite Standard for Media Freelancers
The Tripartite Standard on the Procurement of Services from Media Freelancers (Tripartite Standard) was launched in November 2017 and is intended to take effect April 1, 2018. This is Singapore’s first industry-specific tripartite standard that addresses concerns of media freelancers.
A key upshot of the Tripartite Standard is that from April 2018, companies must adopt the Tripartite Standard on the procurement of services from media freelancers in order to qualify for IMDA grants of funding for public service broadcast content.
The Tripartite Standard sets out industry best practices in four major areas:
- Written contracts clearly stating key terms such as agreed deliverables, intellectual property rights, and payment milestones
- Timely payment
- Dispute resolution with mediation as the first port of call
- Insurance with respect to production equipment (where applicable), commercial general liability, and work-related accidents
Complaints or feedback about companies that do not adhere to the Tripartite Standard will be considered by the TAFEP. If companies fall short of the Tripartite Standard, they may be delisted and would no longer be eligible for IMDA media funding.
Increased Income Threshold for Pass Holders to Sponsor Dependents
Effective January 1, 2018, the minimum fixed monthly salary for Employment Pass or S Pass holders qualifying them to sponsor their dependents (i.e., legally married spouse and/or unmarried children under 21, including legally adopted children) has been increased from S$5,000 to S$6,000.
Effective January 1, 2018, the minimum fixed monthly salary for Employment Pass or S Pass holders qualifying them to bring in their parents to Singapore on Long Term Visit Passes has been increased from S$10,000 to S$12,000.
This increase in the threshold salary to qualify for Dependents Passes or Long Term Visit Passes is in line with the MOM’s overall direction to moderate growth of the nonresident population, including foreign workforce inflow into Singapore. It remains to be seen if this will pose a challenge to companies that wish to employ foreigners with dependents.
Duty of Care in Writing References for Former Employees
The seminal case of Ramesh s/o Krishnan v. AXA Life Insurance Singapore Pte. Ltd. made it clear that in drafting references and communications relating to a former employee, employers are required to take reasonable care to ensure that the requirements of truth, accuracy, and fairness are met.
The High Court awarded $4.026 million to Ramesh Krishnan, a former insurance agent, on the back of a scathing letter of reference issued by his previous employer, AXA Life Insurance Singapore, which cost him the reasonable chance of gaining employment with Prudential.
This was on the back of the Court of Appeal’s finding that AXA had breached its duty of care to Mr. Krishnan by, among other things, not providing information in an objective manner in the Industry Reference Check Form and communications it had sent to Prudential and the Monetary Authority of Singapore. Companies should take note that although the case involved a specific form of reference, the duty of care applies to references in general.