On 14 March 2013, the Ministry of Manpower (MOM) announced the proposed changes to the Employment Act (EA) following the conclusion of its first phase of review of the EA (Phase 1 Review). The Phase 1 Review encompassed the extension of the EA, improvement of employment standards and benefits for employees, and reduction of rigidity and augmentation of flexibility for employers. (For further information on the Phase 1 Review, please refer to our December 2012 issue available here).
On 22 July 2013, MOM announced that it is conducting the second phase of reviews of the EA (Phase 2 Review). The Phase 2 Review aims at ensuring that Singapore’s employment legislation keeps up to date with the latest employment trends and focuses on the following key areas:
- protection for workers under non-traditional work arrangements such as term contract workers, outsourced workers and freelancers, while maintaining business flexibilities; and
- additional protection for vulnerable low-wage workers.
We outline below the issues which MOM has identified and is seeking to address in the Phase 2 Review.
PROTECTION FOR WORKERS UNDER NON-TRADITIONAL ARRANGEMENTS
- Term Contract Workers
Term contract workers refer to employees who are on fixed-term contracts of employment that will automatically expire unless renewed.
Presently, such employees must fulfil a minimum service period of three months in order to qualify for paid sick leave, annual leave, maternity leave, and childcare leave under the EA. The MOM noted that whilst this qualifying period was intended to provide employers some flexibility, some employers have sought to circumvent the EA provisions by structuring their short-term contracts to be renewed with a break every three or fewer months.
Some employers also opt to offer recurrent term contracts to employees whose jobs are of a permanent nature. Presently, under the EA, an employer is neither required to renew such contracts nor to give notice of non-renewal. Therefore, disputes and issues relating to unfairness arise when such employees whose contracts have previously been routinely renewed by the employer, are not offered renewal or are not given notice of the non-renewal of their contracts.
The MOM intends to explore how better protection can be accorded to such term contract workers while ensuring that employers continue to have the flexibility to employ workers on short-term contracts when there is a genuine business need for them.
- Outsourced Workers
These are employees who are employed and supplied by third-party contractors (Contractors) to work in a client company (Principal) under an outsourcing contract. Whilst MOM acknowledged that outsourcing allows companies to optimise their manpower costs and focus on their core business functions, it highlighted that such employees could be more vulnerable to salary defaults as Contractors sometimes lower their contract bids unrealistically and as a result may eventually be unable to sustain their businesses.
Currently, such employees are entitled to certain protections under the EA. Pursuant to Section 65 of the EA, Principals who are in the same trade as the Contractors are required to compensate such employees up to one month’s salary, should the Contractors fail to do so. Further, Section 116 of the EA allows the Commissioner to summon a Principal to pay to the Commissioner any money owed to the Contractor, if the Contractor is liable to pay any sum owing to its outsourced workers. The monies collected by the Commissioner will then be paid to the employees.
The MOM intends to provide additional protection for such employees by imposing additional responsibilities on the Principals within reasonable boundaries.
- Freelance Workers
Freelancers are persons who operate their own business or trade without employing any worker and who usually provide services to their clients on freely negotiated terms and benefits. They are generally not covered by the EA due to the lack of an employer-employee relationship. Current mechanisms available to protect the interests of freelancers include mandatory contributions to their Central Provident Fund Medisave Accounts, family-related leave benefits that may be claimed from the government, and redress for contractual disputes through the Small Claims Tribunal or the Subordinate Courts
The MOM observed that there are freelancers who exhibit many employee-like characteristics including working for only one contractor, having fixed working arrangements such as fixed working hours, or being required to wear the uniform of the contractor. Currently, despite having such characteristics, such freelancers are not protected under the EA. As a result, the MOM intends to review how this vulnerable group of freelancers may be better protected and be accorded the relevant protection and benefits under the employment laws.
LOW WAGE WORKERS
The MOM also intends to review additional protection that may be accorded to low-wage workers. One of the issues identified is whether written employment terms and electronic payment of salaries should be made mandatory, so as to avoid disputes with employers about such terms and to ensure timely salary payments.
The Phase 2 Review reflects the MOM’s effort to ensure that the Singapore employment legislation remains relevant and responsive to the changing work force profile of Singapore. Employers are recommended to take into account the proposed changes promulgated by the MOM in their human resources strategies, in anticipation of the implementation of the proposed changes to the Singapore employment legislation.