The Singapore Employment Act (EA), which was enacted in 1968, sets out the fundamental rights and obligations of employers and employees, shapes the responsibilities and harmonises the interests of both parties. It provides for basic employment benefits such as salary protection, minimum employment terms and dispute resolutions for certain categories of eligible employees.

Since the last major review of the EA conducted in 2008, the workforce profile has evolved significantly and the Ministry of Manpower (MOM) sees a need to review the EA to ensure that the statute remains pertinent and responsive to the changing workforce profile.

On 19 November 2012, MOM launched an eight-week public consultation exercise with the view of gathering suggestions and views on the review of the EA from members of the public.

MOM is conducting the EA review in two phases. Phase one of the review, which is being carried out from November 2012 until the first quarter of 2013, will encompass the extension of coverage of the EA, improvement of employment standards and benefits for employees, and reduction of rigidity and augmentation of flexibility for employers (Phase 1 Review). Phase two of the review, which is slated to start in the fourth quarter of 2013, will cover more complicated issues that require further study, including but not limited to enhancing protection for employees engaged in non-traditional work arrangements such as contract workers, self-employment and outsourcing, and improving mechanisms to facilitate employment dispute resolutions between employers and employees.

A summary of the key proposed changes under the Phase 1 Review is set forth:

Extending coverage of the EA

At present, workmen (which include manual labourers, drivers of commercial vehicles and certain other categories of workers) earning up to S$4,500 and non-workmen earning up to S$2,000 are covered under Part IV of the EA, which essentially governs time-based conditions such as hours of work and rest days. MOM notes that median gross monthly salaries have increased by about 25% since the EA was last reviewed. Further, with a better-educated workforce, the proportion of professionals, managers and executives (PMEs) in the resident workforce has been increasing from 15% in 1991 to 27% in 2001 and 32% in 2011. MOM notes that some entry-level PMEs do not have strong bargaining positions. Under the Phase 1 Review, MOM has thus proposed that (i) the salary threshold of non-workmen be adjusted in line with salary increases and the evolving employment norms and practices; and (ii) the salary threshold for workmen also be reviewed.

Improving employment standards and benefits for employees

The EA currently provides a list of authorised deductions that employers may make from a worker’s salary, with such deductions capped at 50% of an employee’s salary. MOM has proposed that in order to safeguard the interests of vulnerable workers against unauthorised deductions, additional limits be put in place against salary deductions and employers be required to show proof of loans and advances made on behalf of employees before any deductions are allowed. It is also further proposed that employers be required to maintain detailed employment records of their employees and that employees be accorded the right to a written salary pay slip.

Reducing rigidity and augmenting flexibility for employers

In proposing to extend the protection under the EA to PMEs, MOM is aware that work arrangements for PMEs are many and varied and it is important not to impose labour rigidities that would affect overall business competitiveness. Currently, under the EA, employees are entitled to be compensated with an extra day’s pay in addition to the paid holiday for working on a public holiday. It is impracticable to apply this requirement stringently to PMEs due to their nature of work. In this regard, it is proposed that a qualifying period for dismissal with notice provision be introduced for PMEs and employers be given flexibility to provide time-off-in-lieu for work done on public holidays by PMEs.

The consultation exercise will last for 8 weeks from 19 November 2012 to 11 January 2013. It is anticipated that the proposed changes will, if implemented, bring about greater protection to low-wage workers and allow the labour movement to represent more workers, especially the swelling ranks of PMEs.