Q&A: Labour & Employment Law in Singapore

Legislation and Agencies

What are the main statutes and regulations relating to employment?

Following significant amendments that entered into force on 1 April 2019, the Employment Act (the EA) will govern all employees apart from Singapore government (or statutory board) employees, seamen and domestic workers. This is a major change from the previous position, where professionals, managers and executives (PMEs) earning over S$4,500 in basic monthly salary were not covered by the EA. The EA’s core provisions provide for matters such as recourse for wrongful dismissal, and also cover employees’ rights to timely payment of salary, notice periods, public holidays and annual and sick leave entitlements, among other things.

Part IV of the EA, which provides additional protection (such as mandatory rest days, overtime pay and maximum hours of work) will, however, continue to only apply to:

• workers (manual labour employees) earning up to S$4,500 in basic monthly salary; and
• other employees (other than workers and PMEs) earning a maximum of S$2,600 in basic monthly salary (up from the previous limit of S$2,500 prior to 1 April 2019).

Apart from the EA, other statutes govern specific aspects of employment. These include:

• the Personal Data Protection Act 2012 (the PDPA);
• the Protection from Harassment Act (the PHA);
• the Retirement and Re-Employment Act (the RRA);
• the Child Development Co-Savings Act (the CDCA, concerning maternity and childcare leave);
• the Employment of Foreign Manpower Act (the EFMA);
• the Workplace Health and Safety Act; and
• the Industrial Relations Act.

Singapore’s Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) also issues guidelines and advisories (Tripartite Guidelines and Advisories). These range from non-binding best-practice guides, to guidelines (notably, the Wrongful Dismissal Guidelines), which the Employment Claims Tribunals (ECT) and courts are statutorily required to have regard to.

Is there any law prohibiting discrimination or harassment in employment? If so, what categories are regulated under the law?

The PHA defines harassment essentially as the causing of harassment, alarm or distress, whether intentionally or unintentionally (provided the harasser should have reasonably known that the act would likely have caused harassment, alarm or distress). The PHA is meant to cover acts of harassment within and outside the workplace, stalking and cyberbullying, and abolishes the common law tort of harassment, establishing a statutory tort under Singapore law. Acts of harassment may constitute criminal offences under the PHA, and may also form the basis of a civil action.

Apart from commencing civil claims for redress against acts of harassment, it is also possible for an individual to apply for various protection orders and expedited protection orders against such acts of harassment, as well as a court order compelling offending third parties to make corrections to any false statements of fact that have been made against that particular individual. In this respect, the Court of Appeal held in Attorney-General v Ting Choon Meng and another appeal [2017] 1 SLR 373 that only individuals (and not organisations or entities) will be able to seek such corrections of false statements, and, likely, any other form of redress under the PHA.

The High Court decision in Benber Dayao Yu v Jacter Singh [2017] 5 SLR 316 saw the application of the PHA in the employment context. An ex-employee successfully obtained a protection order against an ex-employer who had published on its website various allegations in connection with the ex-employee’s termination. The Court found that the ex-employer’s conduct in the circumstances amounted to harassment and was not reasonable even if there was some truth in certain assertions made by the ex-employer, and accordingly, the ex-employer was ordered to remove all publications relating to the ex-employee on its website, and desist from publishing further insulting or abusive communications about the ex-employee.

The Singapore courts have also recognised over the past few years (see the Court of Appeal decision in Wee Kim San Lawrence Bernard v Robinson & Co (Singapore) Pte Ltd [2014] 4 SLR 357 and the High Court decision in Brader Daniel John and others v Commerzbank AG [2014] 2 SLR 81) that employers generally owe employees an implied duty not to undermine or destroy the mutual trust and confidence in the employer-employee relationship. This is discussed in greater detail in questions 36 and 39. One aspect of this duty in the United Kingdom is that an employer may have a duty to investigate an employee’s complaint of sexual harassment in the workplace. It will be interesting to see if this aspect of duty will come to be adopted by the Singapore courts and if a duty to investigate other forms of harassment will be introduced.

Article 12(2) of the Constitution of Singapore protects individuals from discrimination on grounds of religion, race, descent or place of birth (among other things). Aside from this, Singapore has no specific laws protecting employees from discrimination based on gender, race or disability. There are, however, Tripartite Guidelines on Fair Employment Practices as well as a Grievance Handling Handbook, both issued by TAFEP, but these are not statutorily binding at present. That said, the Ministry of Manpower (MOM) may refer to these when addressing complaints of unfair employment practices. Also relevant in this respect is the MOM’s Fair Consideration Framework and Human Capital Partnership Programme (see question 9).

Some statutes do specifically prohibit certain forms of discrimination. For example, employers cannot dismiss female employees under the CDCA or the EA (see question 25) during maternity leave. As for older employees, the RRA makes it mandatory for companies to offer eligible employees re-employment opportunities (for at least one year, unless otherwise stated) beyond the current statutory retirement age of 62, up to the age of 67. The RRA also makes it an offence for employers to dismiss or terminate the contracts of employees below 62 for the sole reason of their age (although this does not affect the employer’s right to terminate the employment for poor performance, ill health or misconduct). The RRA itself does not address prospective discrimination against older employees in relation to either recruitment, selection, promotion or training opportunities per se. However, some of these issues are addressed in TAFEP’s Tripartite Guidelines for Re-employment of Older Workers, and the RRA statutorily requires employers to take these particular guidelines into account. More generally, the Tripartite Guidelines on Wrongful Dismissal (which the ECT and courts are statutorily required to have regard to), which were released on 1 April 2019, expressly provide that dismissing an employee because of discrimination (eg, against the employee’s age, race, gender, religion, marital status, family responsibilities or disability) is wrongful, and employees would have a claim for wrongful dismissal if they have been dismissed on such grounds, even if they have received full contractual notice (see question 36 for further detail on wrongful dismissal).

What are the primary government agencies or other entities responsible for the enforcement of employment statutes and regulations?

The primary government agency responsible for the enforcement of employment statutes and regulations is the MOM. The MOM also adjudicates on employment issues through proceedings before the Commissioner for Labour (colloquially termed ‘Labour Court’ proceedings, although the High Court, in MST Ruma Khatun v T & Zee Engineering Pte Ltd [2017] 4 SLR 1045, noted that these may not be ‘court’ proceedings in the true sense). Parties are not allowed legal representation in such proceedings, but decisions by the Commissioner for Labour are generally appealable to the Singapore High Court within 14 days of the decision. The MOM also regulates other employment-related areas, such as workplace safety and employment of foreign manpower.

Moving forward, however, the ECT will be the main dispute resolution forum for most individual employment claims. Set up in 2017 to provide employees and employers with a more economical and expeditious avenue to resolve salary-related disputes, the ECT is a division of the state courts that hears wrongful dismissal and salary-related (whether statutory or contractual) claims of up to S$20,000 (or S$30,000, if the employee has gone through tripartite mediation or union-assisted mediation). Similar to the Labour Court, no external legal representation is allowed at the ECT. In this regard, it is possible for an employee to come before the ECT with a wrongful dismissal claim for up to S$20,000 (or S$30,000), and a separate contractual or statutory claim under the EA for another S$20,000 (or S$30,000).

Before a claim can be made before the ECT, a request must be made for mediation before the Tripartite Alliance for Dispute Management (TADM). The TADM was set up in April 2017 (together with the ECT) as an alternative means of dispute resolution between employees and their employers. In addition to employees, the TADM has since extended its mediation services to self-employed workers (freelancers and gig workers) for the resolution of payment disputes with businesses.

In addition to the Labour Court, ECT and TADM, an employee is also at liberty to commence court proceedings in the state courts or the High Court, especially where the employee’s claim exceeds the ECT’s jurisdictional claim limit of S$20,000 (or S$30,000).

The primary agency responsible for enforcing the PDPA is the Personal Data Protection Commission (PDPC) (see question 34), while the PHA is enforced through the courts.

Worker representation

Is there any legislation mandating or allowing the establishment of employees’ representatives in the workplace?

The Trade Unions Act allows employees to form or join trade unions to regulate their relations with their employers through collective agreements. While certain PMEs may also be collectively represented by trade unions, this is only the case in respect of certain less senior PMEs and those not dealing with finance, labour or human resource issues, and where the majority of a trade union’s membership is made up of non-PMEs. A trade union will not be able to collectively represent PMEs where there is a real or potential conflict of interest between the PMEs and the non-PMEs, or where management effectiveness may be undermined.

Once formed and registered with the Registrar of Trade Unions, the trade union may approach an employer for statutory recognition under the Industrial Relations (Recognition of a Trade Union of Employees) Regulations. It is ultimately difficult for an employer to refuse to recognise a trade union by law in the long run. Where the employer continually refuses, the MOM Commissioner for Labour (see question 3) may then call for a secret ballot among the employees entitled to vote, and if a majority of those employees are members of that trade union, the employer must give it recognition. If the majority is not met, the union is precluded from seeking recognition again for six months. Because secret ballots are logistically challenging and can create hostility, trade unions typically prefer to use memoranda of understanding (MOUs) with employers as an interim step. MOUs are contracts where, for example, the union agrees not to seek recognition for a certain number of years, and the employer in return agrees to sponsor or subsidise its employees’ union fees and dues, therefore often effectively securing the success of any future secret ballot.

What are their powers?

Negotiating collective agreements and representing employees in trade disputes

Once recognised, a trade union can invite the employer to negotiate a collective agreement for its relevant employees pursuant to the Industrial Relations Act. These collective agreements would then govern the employment relationship between the employer and the unionised employees. The unions may also assist individual unionised employees in negotiating better bonuses, salary increments and other benefits. If the employer refuses to negotiate, a statutory ‘trade dispute’ will exist, which will have to be determined by the Industrial Arbitration Court (IAC) where, as with the Labour Court, the ECT and mediation before the TADM, legal representation is not allowed. Prior to that, the Commissioner may intervene to facilitate reconciliation between the parties.

The IAC is statutorily empowered to resolve trade disputes on the basis of fairness and equity rather than strict contractual principles. Employers are therefore obliged to negotiate with trade unions in good faith, and statutory recognition by the company of the trade union is a key milestone in the engagement process.

Strikes and other industrial actions

Technically, a registered trade union is also able to commence, promote, organise and finance a strike or industrial action, but it may only do so in limited circumstances. Strict restrictions in this respect are imposed upon both the trade union and its members by the Trade Unions Act and the Trade Disputes Act. For example, under the Trade Unions Act, a registered trade union is prohibited from commencing, promoting, organising or financing any strike or any form of industrial action affecting the whole or any section of its members without obtaining the consent, by secret ballot, of the majority of the members so affected. Further, under the Trade Disputes Act, strikes and industrial actions are illegal if:

• they have any object other than the furtherance of a trade dispute; they are in furtherance of a trade dispute of which the IAC has cognisance; or
• they are designed or calculated to coerce the Singapore government either directly or by inflicting hardship on the community.

It is an offence for any person to knowingly expend or apply any money in direct furtherance or support of, or to instigate or incite others to take part in, or otherwise act in furtherance of, an illegal strike or industrial action. Union-led strikes are very rare in Singapore. The last strike in 2012 did not involve a union (it involved non-unionised foreign bus drivers taking unilateral action), and the previous strike was in 1986 (which lasted a day).

Background information on applicants

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

There are currently no restrictions on an employer (or third party) conducting a background check on a job applicant. Although the general rule under the PDPA is that an individual’s consent must be sought before his or her personal data may be collected, used or disclosed, the PDPA also provides certain exceptions. These include where the personal data is publicly available, where the personal data is collected by a credit bureau and where collection is necessary for evaluative or investigative purposes. The collection of data from other sources or for other purposes will be subject to the provisions of the PDPA (see question 34). Further in this respect, an applicant whose application was rejected on the basis of information obtained from such background checks could potentially make a complaint to the MOM on the grounds that the prospective employer did not abide by the Tripartite Guidelines on Fair Employment Practices (for instance, in situations where in taking into account such information, the prospective employer was being discriminatory or failed to apply relevant and objective selection criteria).

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

There are no such restrictions or prohibitions. An employer may refuse to hire an applicant who refuses to submit to such an examination or test, although the employer should bear in mind the Tripartite Guidelines on Fair Employment Practices. To this end, TAFEP has stated that in situations where a candidate’s medical condition would not affect his or her ability to perform the job, this should not be included within the employer’s selection criteria.

Under Singapore’s Workplace Safety and Health (Medical Examinations) Regulations 2011, employers have a statutory duty to ensure that any prospective employee who is to be employed in a hazardous occupation (eg, occupations involving the use or handling of or exposure to certain chemicals or any of their compounds) undergoes a pre-placement medical examination by a designated workplace doctor, to be certified fit to work in such an occupation.

Administratively, the MOM also requires employers of prospective foreign workers on work permits to send such workers for a medical examination within two weeks of their arrival in Singapore. Work permits for these workers will only be issued if they pass the medical examination, otherwise the foreign worker would have to be sent home.

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

No, although as a matter of best practice, employers should be clear and transparent with their drug and alcohol testing policies, whether in their employment contracts or company handbooks. See question 7.

Hiring of employees

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

See question 2. Aside from the Constitution, the Tripartite Guidelines on Fair Employment Practices caution against choosing job candidates based on race, religion, age or gender, marital status or disabilities, and encourage employers to apply only relevant and objective selection criteria, and recruit on the basis of merit. It has also been clarified in Parliament that employers should not discriminate on the basis of pre-existing medical conditions, if the prospective employee would otherwise be able to perform the job. Employers may also make reference to TAFEP’s Fair Recruitment and Selection Handbook for further guidelines on implementing fair recruitment and selection processes. Tripartite Standards, released in 2017, also encourage employers to address only objective and relevant selection criteria in their job advertisements, application forms and during interviews. An employer complying with such non-mandatory standards will earn public recognition as a progressive employer. Such criteria also appear to mirror what is set out in the Tripartite Guidelines on Fair Employment Practices (which the MOM has stated it will enforce against non-compliant recalcitrants through administrative actions, such as the curtailment of work pass privileges).

Under the MOM’s Fair Consideration Framework, employers who wish to hire a foreign employee on an employment pass must (unless they fall within certain exceptions) advertise the particular job vacancy online on the national Jobs Bank administered by the Singapore Workforce Development Agency for at least 14 days before an application for an employment pass may be made. Some exceptions to this requirement include where the company concerned has fewer than 10 employees, where the job position is paying a fixed monthly salary of S$15,000 and above (this salary cap was increased from S$12,000 on 1 July 2018) or where the job is to be filled by an intra-corporate transferee who holds a senior position or has an advanced level of expertise (see question 17). This is aimed at preventing discrimination against Singaporeans by employers who prefer to hire foreigners. The Human Capital Partnership Programme launched by the MOM also recognises employers with a good track record in their employment practices, and leads to certain benefits, such as endorsements recognising them as employers of choice, better access to government support and resources, and faster responses and higher service standards with the MOM.

At the other end of the spectrum, as at August 2018, the MOM has placed 350 companies on its watch-list pursuant to its Fair Consideration Framework for unfairly favouring foreigners in their hiring practices. These companies who employ a high proportion of foreigners, have no plans to recruit and train more Singaporeans and do not significantly contribute to the economy and society, can expect to have their work pass privileges curtailed by the MOM and their employment pass applications subject to closer scrutiny, meaning they may potentially have no new employment pass applications approved and no renewals of their existing employment passes. The MOM also took action against 521 companies between 2013 and 2017, having received an average of 450 complaints a year from 2013 to 2017, primarily regarding issues of discrimination relating to race and age.

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

Employers are required to set out certain terms of employment known as key employment terms (KETs) in writing, and to issue a copy of these written KETs to all employees covered by the EA who are hired on or after 1 April 2016 and who are employed for a continuous period of 14 days or more. This is intended to assure employees of their basic rights to payment and other benefits, as well as to minimise disputes between employers and employees. The written KETs should include, among other things, provisions relating to the payment of salary, allowances and other salary-related components, such as bonuses and incentives, leave entitlements and the notice period for the termination of employment (whether initiated by the employer or employee). There is no actual prescribed format or template for KETs, and these may be provided in the employment contract or offer letter.

Additionally, employers should pay close attention to ensure that any onerous financial terms are set out expressly and unambiguously in employment contracts, as the Singapore courts interpret and may construe onerous financial terms of employment agreements in favour of employees. Employers should also take into consideration the implied duty of mutual trust and confidence in employment relationships. In the 2015 Singapore High Court decision in Corinna Chin Shi Hwa v Hewlett-Packard Singapore (Sales) Pte Ltd [2015] SGHC 204, the Court observed that, where an employer had used a standard form contract containing provisions that were obviously unfair (eg, ambiguous terms relating to the payment of various incentive compensations due to the employee, which could lead to unreasonable results), the employer may risk finding itself unable to enforce those terms as regards the employee. (While this case went on appeal and the Court of Appeal eventually found in favour of the employer, this was on the basis that the provisions were not in fact ambiguous, and the High Court’s stated principle above should be regarded as remaining unaffected.)

Further, employers are required to issue itemised payslips to employees covered by the EA. Itemised payslips must be given at least once a month at or around the time payment is made to the employee. In the case of termination or dismissal, employers must provide the payslip together with any outstanding salary. The itemised payslip should include information such as the date of payment, the basic salary, any additional payments (such as bonuses and pay for working on a rest day) and any deductions made for each salary period.

To what extent are fixed-term employment contracts permissible?

Fixed-term employment contracts are not uncommon and are enforceable. There is no statutorily prescribed maximum duration for fixed-term contracts, although Tripartite Guidelines and Standards address common concerns of fixed-term employees (see question 26). Where possible, employers should also take care to provide for termination options prior to the expiry of the fixed term (see question 36 on constructive dismissal and its relevance to fixed-term contracts). In the absence of agreement, TAFEP and Tripartite Advisories suggest that the notice period for the early termination of, or non-renewal of, a fixed-term contract should be not less than the minimum notice periods prescribed by the EA, although this is not clear from the EA itself.

What is the maximum probationary period permitted by law?

There is no maximum duration for probationary periods prescribed by law. Probation periods are generally around one to three months, but may extend beyond this. The contractual notice period for termination (see question 36) is normally shorter during probation periods (eg, one week, as opposed to one month, post-probation). Employers should, however, comply with the minimum notice periods specified in the EA (see question 37).

What are the primary factors that distinguish an independent contractor from an employee?

Independent contractors (including freelancers and gig workers) are engaged through contracts for services and are presently not entitled to any particular statutory rights or protection under Singapore law. On the other hand, employees are hired through contracts of services and are entitled to statutory rights and protections. However, as the High Court in National University Hospital (Singapore) Pte Ltd v Cicada Cube Pte Ltd [2017] SGHC 53 stated, there is no single, bright-line test that determines whether an individual is an employee or an independent contractor. Instead, a list of non-exhaustive factors would be considered, including whether:

• the alleged employee’s work is done as an integral part of the business of the alleged employer;
• the alleged employee is paid a regular salary or commission;
• there are stipulations as to working hours;
• there is an entitlement to overtime pay;
• the alleged employer contributed to the Central Provident Fund (CPF) account of the alleged employee;
• the alleged employee is entitled to leave and holidays;
• the alleged employee is entitled to medical leave; and
• the alleged employer has the power to dismiss the alleged employee from service.

If some or all of the above are answered in the positive, the individual is more likely to be considered an employee.

The distinction is an important one, as an entity may ultimately be liable or in breach of statutory requirements for failure to provide mandatory employee benefits to individuals misclassified as independent contractors. For example, in Public Prosecutor v Jurong Country Club [2018] SGDC 314 (PP v JCC), a district court found that a club was liable for CPF contributions to a gym instructor because it misclassified the instructor as an independent contractor (CPF is a mandatory social security scheme for Singaporeans funded by contributions from employers and employees). In coming to its conclusion, the court looked at factors, such as:

• the degree or extent of control exercised by the club over the individual;
• whether the individual was given any employment benefits; and
• whether the contractual terms allowed the club to terminate the relationship without notice.

The court observed that, although the club did not control the manner in which the individual carried out his work, the club tracked his attendance, dictated his hours, required him to seek approval before taking leave and did not authorise him to publicise his training programmes without its approval. The court also noted that, having worked at the club for approximately 25 years, there was ‘a certain degree of permanency in [the individual’s] relationship with the club’, and ‘some expectation on the part of both parties for this relationship to continue indefinitely’.

Employers should make a conscious and deliberate effort to properly classify the individuals they engage (whether they are independent contractors or employees, and if the latter, which benefits they are entitled to). The MOM recently warned that it would take a stern view towards employers who misclassify their employees as independent contractors to avoid their statutory obligations, and has taken action to help around 100 employees recover their statutory entitlements over the past three years. In PP v JCC, the prosecution had sought an order that the club pay S$416,924 in CPF contributions that should have been paid to the gym instructor over a period of around 18 years, and employers who wrongly classify their employees may face similar consequences. While the district court in that case did not exercise its discretion to grant such an order, the prosecution has appealed and it remains to be seen whether such an order may be granted by the High Court.

There is also increasing attention on the growing number of freelancers and gig economy workers. Such individuals are technically independent contractors even though they share many of the characteristics of (and indeed may often be de facto) employees, and as such do not receive statutory or contractual employee benefits. While no changes to the legislative framework have been specifically announced as yet, a Tripartite Standard on Contracting with Self-Employed Persons has recently been launched, aimed at entrenching best practices and shaping contractual norms over time, and at better protecting freelancers by encouraging businesses to discuss and agree with the freelancer the terms of engagement and payment schedules. Similarly, a Tripartite Standard on the Procurement of Services from Media Freelancers was released in late 2017, encouraging companies, among other things, to enter into a written contract with the freelancer containing basic contractual terms, in exchange for public recognition as being a progressive company that complies with such non-mandatory standards. The TADM also extended mediation services to all self-employed workers for the resolution of payment disputes with businesses. In the 2018 parliamentary debates in relation to the recent amendments to the EA, the Minister for Manpower indicated that the government had accepted MOM’s recommendations and implementation plan to address the common challenges of self-employed workers.

Is there any legislation governing temporary staffing through recruitment agencies?

Organisations and individuals who place jobseekers with employers are governed by the Employment Agencies Act (the EAA). Under the EAA, certain licences are required to be obtained before organisations and individuals may place jobseekers with employers. Among other things, this requires all the relevant officers of the recruitment or placement agencies to obtain a certificate of employment intermediaries, to ensure that the relevant officers understand their legal obligations and are capable of advising their clients on their rights and responsibilities.

Foreign workers

Are there any numerical limitations on short-term visas? Are visas available for employees transferring from one corporate entity in one jurisdiction to a related entity in another jurisdiction?

Work passes, in principle, are available for employees transferring from one corporate entity to a related entity in another jurisdiction. A foreign national who seeks or is offered employment in Singapore will fall under the provisions of the EFMA (see question 1). The EFMA requires that such a foreign employee must obtain a valid work pass (an employment pass, an S pass or a work permit). The issuing of a work pass to the foreign employee is at the discretion of the Controller of Work Passes (under the MOM (see question 3)).

A miscellaneous work pass may be granted for foreigners who are:

• directly involved in organising or conducting seminars, conferences, workshops or gatherings that relate to religion, race, a cause or politics;
• giving talks related to any religion; or
• journalists, reporters or accompanying crew members not supported or sponsored by any Singapore government agency to cover an event or write a story in Singapore.

This miscellaneous work pass lets foreigners take on assignments of up to 60 days in Singapore. There are no published numerical limitations on such passes.

Are spouses of authorised workers entitled to work?

No foreign national can work in Singapore without a valid work pass or permission from the MOM. Spouses of certain pass holders can work in Singapore provided they obtain their own valid work pass. Alternatively, spouses on a dependant’s pass may also work in Singapore if a letter of consent from the MOM is obtained.

What are the rules for employing foreign workers and what are the sanctions for employing a foreign worker that does not have a right to work in the jurisdiction?

No employer can employ a foreign worker without a valid work pass. The work pass is valid only for the employer, type of employment and period expressly specified. The issuance of a work pass comes with mandatory conditions that both the employer and foreign employee must comply with. All employers are required by the EA and the EFMA to keep a register of foreign employees to whom work passes have been issued. It is an offence to employ an unauthorised foreign worker and the penalty on conviction is a fine of between S$5,000 and S$30,000 or imprisonment of company officers in egregious cases for up to 12 months, or both, for the first offence. Subsequent offences attract a fine of between S$20,000 and S$60,000 for corporate entities, and a fine of between S$10,000 and S$30,000 with an imprisonment term of between one and 12 months for individuals. Additionally, an employer who employs a foreign worker who does not have the right to enter or remain in Singapore may also be guilty of an offence under the Immigration Act. It is also an offence to work without a valid work pass. On conviction, the sanctions for the worker include a fine not exceeding S$20,000 or imprisonment for a term not exceeding 24 months, or both.

Different eligibility criteria and restrictions are also applicable depending on the specific work pass and the foreign employee concerned. Generally, there is no minimum qualifying salary required to obtain a work permit, but a work permit typically lasts two years, and foreign employees holding work permits are also limited by maximum employment periods ranging from 14 to 26 years, depending on their skill level and the industry in which they work. The minimum qualifying salary for a foreign employee to be issued an S pass (which does not impose a maximum employment period) is currently S$2,300, and will be raised to S$2,400 from 1 January 2020. Employers should note that there has been increased scrutiny by the MOM in assessing work pass applications, and the MOM has prosecuted employers who have made false salary declarations in their work pass applications in order to obtain work passes.

Foreign professionals, managers and executives earning at least S$3,600 a month would have to obtain an employment pass or other similar passes. There is no maximum employment period applicable for a foreign employee holding an employment pass, although the employment pass (as with work permits and S passes) will still need to be renewed.

From 1 July 2018, firms with at least 10 workers must also advertise jobs paying under S$15,000 a month on the national Jobs Bank for 14 days before hiring a foreigner for the role (up from S$12,000; see question 9).

Is a labour market test required as a precursor to a short or long-term visa?

No. There is, however, a limit on the number of foreign employees a firm may employ under a work permit (suitable for semi-skilled workers in the construction, manufacturing, marine shipyard, process or services sector) or S pass (suitable for mid-level skilled staff). The industry sector a firm falls under is based on the declaration of its business activity, and each industry is assigned a quota (a foreign employee entitlement), which is used to compute the number of foreign employees each firm can recruit. The entitlement is based on:

• the size of the total workforce in the firm;
• the firm’s ratio of local to foreign employees; and
• other unique eligibility criteria specific to the firm’s industry.

Despite the last reduction made to such quotas in 2013, there has been a steady increase in the number of work permit holders in certain sectors. With a view to counterbalancing this, the proportion of work pass holders a firm can employ will be decreased from 40 per cent to 38 per cent on 1 January 2020, and to 35 per cent on 1 January 2021.

Terms of employment

Are there any restrictions or limitations on working hours and may an employee opt out of such restrictions or limitations?

Part IV of the EA stipulates mandatory rest days, hours of work and other conditions of service. Generally, employees covered under Part IV (see question 1) cannot be required to work for more than eight hours a day or 44 hours a week. By agreement, however, and provided that such employees either work five days a week or less, or less than eight hours on one or more days of the week, such employees may work more than eight hours on some days. Even in such situations, Part IV employees still cannot be required to work more than nine hours a day or 44 hours a week. Again, under certain exceptional circumstances (eg, urgent work, or work essential for defence or security), Part IV employees may be permitted to exceed the eight or nine-hour limit, provided they still do not work more than 12 hours a day. Part IV employees are also prohibited from working more than six consecutive hours without a leisure period. The employee is allowed one whole day (or, for shift work employees, any continuous period of 30 hours) as a rest day each week without pay. The employer can determine which day of the week the rest day shall fall on (this is often, although not necessarily, Sunday). An employee may elect to work overtime at higher rates of pay (see question 20) for more than those numbers of hours (ie, eight or nine hours a day or 44 hours a week) or on a rest day, provided that no employee works for more than 72 hours in a month or more than 12 hours a day (including such voluntary overtime). In the 2013 High Court decision in Monteverde Darvin Cynthia v VGO Corp Ltd [2014] 2 SLR 1, it was held that any contractual term requiring an EA employee covered by Part IV of the EA to work for more than 44 hours without overtime payment was illegal (and therefore null and void), and the employee would be entitled to overtime payment for the extra hours worked.

Employees covered under Part IV should not, in any event, be forced to work beyond the above statutory hours of work, on their rest days or on public holidays (even if the employers would be fully prepared to make the relevant overtime payments). If an employer dismisses an employee on the ground that the employee refused to work beyond the statutory hours (or days) of work, the employee could potentially commence a claim for wrongful dismissal, as the employer may in fact be punishing the employee for exercising his or her statutory rights (see question 36).

No statutory restrictions as to working hours, days or periods currently apply to employees not covered by Part IV of the EA, and any such restrictions would be a matter of contract between such employees and their employers. In late 2017, however, Tripartite Standards on Flexible Work Arrangements were released, encouraging employers to implement variations from usual work arrangements in exchange for public recognition as a progressive employer.

What categories of workers are entitled to overtime pay and how is it calculated?

An employee covered by Part IV of the EA must be paid for overtime (see questions 1 and 19) at the rate of not less than one and a half times the employee’s basic hourly rate of pay (or two times, where the employee is requested to work on a rest day). Overtime payment must be made to the employee within 14 days of the last day of the employee’s salary period.

In addition, an employee covered by Part IV of the EA who is required by his or her employer to work on any public holiday is also entitled to an extra day’s salary or a full day off in substitution for that holiday. If the employee is not covered by Part IV of the EA, he or she may additionally be given part of a day off depending on the number of hours spent working on that public holiday as an alternative mode of compensation.

Of particular relevance in relation to overtime pay (and Part IV of the EA) is the High Court’s recent decision on ‘disguised’ PMEs in Hasan Shofiqul v China Civil (Singapore) Pte Ltd [2018] SGHC 128 (Hasan Shofiqul). This concerned a foreign construction worker who was paid a basic salary of S$2,200 a month. The employee held the title of site supervisor, and oversaw six to seven workers. The employee was required to work long hours (sometimes through the night, and on his rest days) without receiving any overtime pay. After his termination, the employee lodged a claim for, among other things, overtime pay.

The High Court found that, despite the employer’s argument that the employee was not entitled to overtime pay under Part IV of the Employment Act because he was a site supervisor (and therefore, allegedly a PME), the employee was not in fact employed in a managerial or executive position by law and was therefore entitled to statutory overtime pay. As a result, the employer was ordered to pay the employee all overtime accrued until his termination.

In coming to its decision, the High Court reasoned that ‘[s]upervisory responsibility does not mean the person cannot be a workman’ for the purposes of Part IV of the EA. It also observed that ‘the fact that [the employee] is employed as a site supervisor is not sufficient by itself to lead to the conclusion that he is an executive’. Instead, ‘[m]uch must depend on the nature and level of supervisory powers that he has been given and all other circumstances’. In this regard, the Court noted that the employee did not have a diploma, did not possess any specialised skills or training and was largely involved in ‘hands-on’ supervision. The employee’s supervisory functions were also not executive functions but in fact ‘regular on-site routine administrative work’. The employee also did not have authority to hire, dismiss or promote any of the workers that he was ‘in charge’ of.

Hasan Shofiqul therefore emphasises that job titles are not determinative, and an employer cannot simply rely on its own subjective (and often self-serving) classification of its employees to determine whether statutory rights (in particular, those under Part IV of the EA, including as to overtime pay) would accrue, a practice of which has led to ‘disguised PMEs’ (employees conveniently labelled as PMEs when, in truth, they actually are not). The MOM has also now warned that it ‘takes a serious view of attempts to misclassify employees in order to avoid employer obligations’.

Can employees contractually waive the right to overtime pay?

An employee under Part IV of the EA will be statutorily entitled to overtime pay in the manner prescribed by the EA. Non-payment of overtime pay would result in the commission of an offence under the EA and any clause in that employee’s contract purporting to waive the right to overtime pay would be void and unenforceable (see question 19).

As for employees not covered by Part IV of the EA, whether or not an employee has a right to overtime pay will at present be governed by the provisions of the employment contract. It is possible for the employer to expressly stipulate in the employment contract that it is contemplated that the employee will have to work outside the employer’s ordinary working hours in order to complete all the tasks asked of that employee and in consideration for that employee’s regular remuneration. However, all employees covered by the EA are statutorily entitled to payment for work done on a public holiday.

Is there any legislation establishing the right to annual vacation and holidays?

An employee who has worked for an employer for a period of not less than three months and who is covered by the EA will be entitled to statutory annual leave of seven days for the first 12 months of service, and an additional day’s annual leave for every subsequent 12 months of continuous service with the same employer, up to a maximum of 14 days (which can and often is exceeded by mutual agreement to provide for more leave). This is in addition to the rest days, holidays and sick leave (see questions 1 and 23) to which the employee is entitled.

Under Part X of the EA, every EA employee is entitled to a paid holiday at his or her gross rate of pay on a public holiday that falls during the time that he or she is employed, although this may be varied by mutual agreement between the employer and employee (also see question 20 on the employee’s right to additional pay for work done on a public holiday).

Is there any legislation establishing the right to sick leave or sick pay?

Under Part X of the EA, an EA employee who has served an employer for a period of not less than three months is entitled to paid sick leave certified by a medical practitioner. The statutory entitlement to sick leave is capped at 14 days each year where no hospitalisation is necessary, and 60 days each year (including the aforesaid 14 days) where hospitalisation is necessary. These statutory rights are increased prorata (starting from five days of sick leave or 15 days of hospitalisation leave) until an employee has served an employer for a period of not less than six months (at which time the employee will then be entitled to the aforementioned 14 and 60 days). Employers should not dismiss employees who fully consume their statutory entitlement to sick or hospitalisation leave, as this is likely to be seen as penalising employees who exercise their statutory rights and will constitute wrongful dismissal (see question 36).

Where an EA employee has served an employer for a period of three months, the employer is also liable to bear or to reimburse the fees of an examination of the employee by a medical practitioner if the medical practitioner is appointed by the employer or is a medical officer, and after the examination the employee is certified to be entitled to paid sick leave. Employers are, however, not required to grant paid sick leave or bear the medical examination expenses of employees for cosmetic consultations and procedures that are not medically necessary, although they are free to contract on terms that are more (but not less) favourable to its employees.

In what circumstances may an employee take a leave of absence? What is the maximum duration of such leave and does an employee receive pay during the leave?

Apart from parental (maternity, paternity, shared parental, adoption, childcare, extended childcare and infant care) leave (see question 25), leave of absence is not currently covered under the EA (or Singapore’s other employment legislation). The prospective grant and duration of such leave, and payment thereunder, is a matter to be contractually determined and agreed between the employer and employee.

What employee benefits are prescribed by law?

The Central Provident Fund Act provides for the periodic contributions of monies into the Central Provident Fund (CPF, a mutually funded mandatory social security scheme for Singaporeans); CPF does not apply to foreign workers in Singapore. The employee will receive monthly pay-outs upon reaching the age of 65, although the employee may also choose to make limited withdrawals from the age of 55. Meanwhile, the employee may apply the funds for certain purposes, such as the purchase of property and certain securities, and towards certain insurance and medical protection schemes.

An eligible female employee under the CDCA (see question 1), namely one whose child is a Singaporean citizen and who has worked for her employer for at least three continuous months before the birth of her child, is entitled to 16 weeks of government-paid maternity leave. The female employee may absent herself from work four weeks immediately before and 12 weeks immediately after delivery (ie, totalling 16 weeks). Where there is a mutual agreement with her employer, an employee can take the last eight weeks (ninth to 16th week) of her maternity leave flexibly over a 12-month period from the child’s birth. A female employee who is covered under the EA but not under the CDCA (ie, essentially foreign workers in Singapore), will be entitled to 12 weeks of maternity leave (instead of 16 weeks), eight of which would be paid for by the employer.

Under the EA and the CDCA, it is not lawful for an employer to give a female employee notice of dismissal (termination) while the female employee is on maternity leave or such that the notice period will expire while she is on maternity leave. Garden leave does not make a difference to this provision. While it is not entirely clear from the relevant statutes, this prohibition is likely to apply where the dismissal is done by payment in lieu of notice instead of allowing the employee to serve out the notice period (ie, if the notice period, if fully served, would otherwise have expired while the employee is on maternity leave). Additionally, if an employer gives a female employee notice of dismissal (or termination) without sufficient cause (or on grounds of redundancy or reorganisation) while the female employee is pregnant but prior to her maternity leave, the employee may commence a claim for wrongful dismissal against the employer. Also, such a notice of dismissal cannot deprive the employee of any payments or entitlements that she would otherwise have received had she not been dismissed (provided the female employee has served the employer for at least three months at the point of notice). This is the case even if the notice period would expire prior to the maternity leave. In other words, the employer would still have to pay the employee for her 16 (or eight) weeks of paid maternity leave. A contract that purports to deprive a female employee of her statutory maternity benefits or reduce an employer’s obligations in this respect will be null and void.

Eligible female employees under the CDCA who adopt (rather than deliver) a child are entitled to 12 weeks of government-paid adoption leave. As the EA does not currently provide for maternity leave for mothers who adopt children, it would appear that female employees who are under the EA but not the CDCA (ie, essentially foreign workers) will not be entitled to any adoption leave. Eligible male employees under the CDCA (unlike maternity leave, paternity leave is not provided for under the EA) are also now entitled to two weeks of government-paid paternity leave (whereas they were previously only entitled to one week). Under the CDCA, there is also a Shared Parental Leave scheme, where a working father is entitled to share up to four out of the 16 weeks of the working mother’s maternity leave if he meets certain eligibility criteria. The female employee’s maternity leave will then be reduced accordingly.

For eligible employees who have served an employer for at least three months, the CDCA affords up to six days of childcare leave per year (for qualifying children below the age of seven years) and up to two days of extended childcare leave per year (for children above the age of seven years, but below the age of 13 years). However, employees are not entitled to more than an aggregate of six days of childcare and extended childcare leave per year. Employees who are not eligible under the CDCA but are covered by the EA will be entitled to two days of childcare leave, provided that they have served an employer for at least three months. Under the CDCA, eligible employees who have served an employer for at least three months and have a qualifying child below the age of two years are also entitled to six days of unpaid infant care leave per year.

Benefits are also afforded to older employees who have reached the statutory retirement age (see question 44).

In general, an employer who terminates an employee in a bid to deprive the employee of his or her statutory benefits may be faced with a claim for wrongful dismissal by the employee (see question 36).

Where an insolvent corporate employer is placed in liquidation, the Singapore Companies Act expressly accords preferential status to claims by employees in respect of unpaid wages and salary, including wages or salary in lieu of notice, with priority over the employer’s ordinary unsecured creditors. There is, however, a statutorily imposed limit on the sum that is payable as a preferred debt, equivalent to five months’ salary or S$12,500, whichever is lower. Any balance claims by the employee do not enjoy preferential status and rank as ordinary unsecured debts in the employer’s insolvency. The labour movement has pushed for a review of the statutory cap of S$12,500 in response to an increased number of PMEs with correspondingly higher salaries, but the limits mentioned above remain in place at present.

Are there any special rules relating to part-time or fixed-term employees?

Under the EA, a part-time employee currently means an employee covered by the EA who is required to work for less than 35 hours a week. Part-time employees are covered by the Employment (Part-Time Employees) Regulations. Every part-time employment contract must specify the employee’s hourly basic rate of pay as well as the number of working hours in a day, week and month. Where a part-time employee works beyond his or her normal hours, but does not exceed the hours a full-time employee doing the same work would have worked, the part-time employee will be entitled to the normal hourly rate of pay for each hour worked up to what the full-time employee would have worked. However, every hour worked over what the full-time employee would have worked will then be considered overtime, and paid for at a rate of one and a half times the employee’s basic hourly rate. Payments for work on public holidays, annual leave and the number of sick days allowed are prorated according to statutory formulae.

Aside from that discussed above (see question 11 in particular), there are no statutory rules specifically directed at fixed-term employees, and their employment relationship will generally be governed by their employment contracts and the EA (and other relevant employment legislation), if applicable. However, Tripartite Guidelines on the employment of fixed-term employees released in 2016 encourage employers to treat contracts renewed within one month of the previous contract as continuous, and grant or accrue leave benefits based on the cumulative term of the contracts (as to leave benefits, see question 25). Employers are also encouraged to notify fixed-term employees in advance as to whether they wish to renew the contract, so as to allow sufficient time for the employee to make alternative arrangements. In the absence of agreement, the notice period for termination of (or non-renewal of) a fixed-term contract should be not less than the minimum notice periods prescribed by the EA (see question 37). These particular guidelines are not legally binding, although the Tripartite Standards on the Employment of Term Contract Employees released in late 2017 now encourage employers to adopt standards similar to those set out in the earlier Tripartite Guidelines in exchange for public recognition as a progressive employer.

Must employers publish information on pay or other details about employees or the general workforce?

No. However, the Department of Statistics is empowered to conduct labour market surveys under the Statistics Act. It is compulsory for chosen organisations (randomly selected) to respond to such surveys, and refusing to answer or providing false information is an offence punishable by a fine of up to S$1,000.

Post-employment restrictive covenants

To what extent are post-termination covenants not to compete, solicit or deal valid and enforceable?

Under Singapore law, restraints of trade are generally frowned upon on grounds of public policy. However, in the employment context, the Singapore Court of Appeal has held that (i) a restrictive covenant in restraint of trade may potentially be enforceable if it seeks to protect a legitimate proprietary interest of the employer, provided that (ii) the interest that is to be protected by the restrictive covenant in question is not already covered by another restrictive covenant. Recent decisions by the Singapore High Court have suggested, however, that the judicial sentiments towards point (ii) may be changing, and indeed, may already have changed (see ‘Non-compete clauses’).

To date, the legitimate proprietary interests the courts have recognised are trade secrets (and confidential information), trade or business connections, and the maintenance of a stable, trained workforce. The courts will generally uphold such restraints provided they are reasonable in the interests of parties and the public, and go no further than necessary. The courts tend to construe restrictive covenants more strictly in the employment contract context than in other areas (eg, sale of businesses, settlement agreements).

Trade secrets and confidential information

Protection is granted by common law over an employer’s trade secrets or equivalent confidential information even without an express confidentiality provision (ie, as an implied term), provided the trade secrets can be particularised. However, an express confidentiality clause can potentially help to identify the trade secrets or equivalent information that the employees are precluded from using or disclosing during and after employment, and can also aid in enforcement. Care must also be taken to distinguish between trade secrets and confidential information on the one hand, and the skill and knowledge belonging to the ex-employee on the other. A restrictive covenant seeking to protect the former may be enforced, whereas a restrictive covenant preventing an ex-employee from competing through the latter may be considered unreasonable and unenforceable (see ‘Trade and business connections’ and ‘Non-compete clauses’).

Trade and business connections

Where an employee has personal knowledge and influence over an employer’s customers or clients, the employee can be restrained from taking advantage of this after employment. This is usually done through a non-solicitation of customers or clients clause, which must be reasonable, taking into account factors such as duration and the geographical area of restraint. Non-solicitation provisions can potentially extend to non-solicitation of suppliers as well. Periods of restraint of up to a year may potentially be enforced. Although there is no clear prohibition against longer periods, these are less likely to be enforced and may affect the overall enforceability of the clause. Restraints of up to two years may be allowed in more specialised industries, however (see Tan Kok Yong Steve v Itochu Singapore Pte Ltd [2018] SGHC 85 (Steve v Itochu) below), although the longer the restraint, the higher the chance that the court will find it to have been ‘arbitrarily selected’ (see Powerdrive Pte Ltd v Loh Kin Yong Philip and others [2018] SGHC 224 (Powerdrive)). In the absence of an express clause, the courts may possibly be willing to imply a term to protect this proprietary interest, although unlike trade secrets, this has only been suggested (and not confirmed) by the courts. It is likely to be more difficult to enforce non-dealing (as opposed to non-solicitation) clauses, as these may be construed as unreasonable insofar as they do not just enjoin solicitation, but all forms of dealing.

Maintenance of a stable, trained workforce

An employer can protect its workforce by a non-solicitation of employees (also known as non-poaching) clause. Such clauses are again subject to the requirement of reasonableness, taking into account duration and the types of employees covered. The restraint should not be a blanket prohibition on the prospective solicitation of all employees of the ex-employer, but should be referable to the position, training or knowledge of the target employee, and should also be restricted to employees over whom the ex-employee had influence. Again, periods of restraint of up to a year may potentially be enforced (with longer periods again less likely to be enforced, and potentially affecting enforceability of the clause, although, as mentioned, restraints of up to two years may be allowed in more specialised industries). There has been no indication that the Singapore courts will be willing to protect this interest without an express term.

Although the protection of an employer’s workforce is usually enforced by way of a non-poaching clause, the High Court decision in PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd [2012] 4 SLR 36 (PH Hydraulics) suggests that it might be possible to enforce this through non-compete clauses as well (see ‘Non-compete clauses’).

Non-compete clauses

Having regard to the Court of Appeal decisions in Man Financial (S) Pte Ltd v Wong Bark Chuan David [2008] 1 SLR(R) 663 (Man Financial) and Stratech Systems Ltd v Nyam Chiu Shin (alias Yan Qiuxin) and others [2005] 2 SLR(R) 579 (Stratech), non-compete clauses would appear difficult to uphold and enforce under Singapore law if the three recognised legitimate proprietary interests identified above are already protected by other clauses (unless a yet further legitimate proprietary interest can be shown). In this respect, the Court of Appeal in Man Financial described the decision in Stratech as reaffirming ‘the proposition that where the protection of confidential information or trade secrets is already covered by another clause in the contract, the covenantee will have to demonstrate that the restraint of trade clause in question covers a legitimate proprietary interest over and above the protection of confidential information or trade secrets’. The Court then went further and held that ‘this proposition is, in our view, a general one and would apply equally in the context of other legitimate proprietary interests’ (and not just confidential information or trade secrets).

A growing line of more recent High Court decisions on non-compete clauses, however, appear to indicate an increased willingness to uphold non-compete clauses even where all of the three recognised legitimate proprietary interests were already protected by other clauses.

For example, in the above-mentioned case of PH Hydraulics, the High Court characterised the maintenance of a stable, trained workforce as a legitimate proprietary interest that could be protected by a non-compete clause (as opposed to a non-poaching clause).

Subsequently, in the High Court decision in Centre for Creative Leadership (CCL) Pte Ltd v Byrne Roger Peter and others [2013] 2 SLR 193 (CCL), the High Court, in considering whether a non-compete covenant was enforceable to protect confidential information and trade secrets (even though there was a separate clause in that case protecting such information), appositely commented that it did not seem logical that an employer that had both a non-compete covenant and a confidentiality clause had a lower chance of using the non-compete covenant to protect its confidential information than an employer that only had a non-compete covenant. However, the High Court noted that it was bound by the prior Court of Appeal decisions in Man Financial and Stratech. The CCL decision was appealed to the Court of Appeal, but was ultimately settled before the Court of Appeal could hear and rule on the matter.

Thereafter, in the High Court decision in Lek Gwee Noi v Humming Flowers & Gifts Pte Ltd [2014] 3 SLR 27 (Humming Flowers), the High Court opined that the legitimate proprietary interest of trade connections could suffice to support both a non-compete and a non-solicitation clause (which would appear to be contrary to what the Court held in Man Financial, and the judge there expressed similar reservations on the position in Man Financial and Stratech). The Court ultimately did not grant the non-compete injunctions sought, however. The Humming Flowers decision was also appealed to the Court of Appeal, but likewise settled before it could be heard.

The High Court’s June 2018 decision in Solomon Alliance Management Pte Ltd v Pang Chee Kuan [2018] SGHC 139 (Solomon Alliance) did not refer to Stratech. In upholding a non-compete clause against an independent contractor operating both during the contract term and for a year thereafter, the Court found a legitimate proprietary interest ‘in ensuring that an independent contractor… [the plaintiff] had hired to market products sold by the plaintiff did not market those same products on behalf of other companies while the contract was still in operation between the parties’ in addition to the plaintiff’s ‘in safeguarding and maintaining [the company’s] trade connections with its product suppliers and in preventing the use of its confidential information’. This decision is a clear recognition by the Singapore courts of a legitimate proprietary interest in the exclusive marketing by an independent contractor of a range or type of products. It could have been the Court’s way of avoiding the application of Stratech for non-compete, but it may also be authority for a new legitimate proprietary interest of exclusive marketing of a product type or range. However, the Solomon Alliance decision concerned an independent contractor rather than an employee, and the courts have previously held that restrictive covenants may be scrutinised less strictly in non-employment contexts.

The High Court’s subsequent decision in Powerdrive essentially bypassed the issue of whether there was a legitimate interest that justified the restraint by holding only that the non-compete restrictive covenant in question was unreasonable and therefore unenforceable (the Court did, however, recognise that Stratech still remained binding).

Finally, in the High Court’s March 2019 decision in World Fuel Services (Singapore) Pte Ltd v Xie Sheng Guo [2019] SGHC 54, a six-month non-compete restrictive covenant was upheld despite the presence of a ‘full suite’ of the other restraints (namely, a covenant not to solicit customers or poach employers, and a clause imposing duties of confidentiality). In doing so, the Court did not make reference to either Stratech or Man Financial. Instead, the Court appeared to find that the balance of convenience leaned in favour of upholding the non-compete restrictive covenant, and took the view that on the facts, ‘[i]t would be impossible to separate confidentiality from a detached discharge of [the employee’s] duties with [the employee’s] new employer’ (which would seem to be at odds with the proposition in Stratech, which required the ex-employee to compete with a new employer as long as he observed the previous employer’s confidentiality).

It is therefore an open question whether the proposition in Stratech should be considered as still representing the Singapore courts’ position on non-compete. It technically remains good law insofar as it is a Court of Appeal decision, and only the Court of Appeal can overrule it, which has not happened as yet. This may only be because no suitable case has gone before the Court of Appeal for determination since then, and it has not therefore had the opportunity to overrule Stratech.

Meanwhile, of importance are the factors that the Court in Powerdrive had looked at in coming to its conclusion. The Court noted that the employer used the non-compete clause against ‘all its employees regardless of their seniority, nature of work or level of access to information’. Following past decisions, the Court further noted that ‘such an indiscriminate application would suggest that the true purpose of the provision was to restrain competition rather than to protect a legitimate interest of an employer’, which would make the non-compete unenforceable. In this regard, the Court also suggested that even if an employer only actually intended to enforce the non-compete against select groups of employees, by making the non-compete applicable to all employees it made the clause unreasonable and therefore unenforceable.

Employers should therefore be careful when drafting non-compete restraints. In addition to stipulating an appropriate scope of work and geographical area, the employer would also need to carefully consider the types of employees to be restrained and, as Powerdrive suggests, would need to be able to provide some explanation and basis as to why the stipulated period of restraint is appropriate (although, generally speaking, shorter periods of restraint would be relatively easier to justify).

That is not to say that long periods of restraint would always be unreasonable and unenforceable, however. In the earlier April 2018 decision of Steve v Itochu, the High Court upheld a non-compete restraint that lasted for two years. This case concerned an employee who was in charge of his employer’s cement products business (which the Court noted was a specialised industry) in various Asian countries, and who had taken approximately four years to build up customer connections on behalf of his employer. As such, it was reasonable that the employer could seek two years to rebuild the same contacts without any interference from the ex-employee.

Springboard injunctions

Injunctive relief may also be granted to prevent a person who has obtained confidential information from using it as a ‘springboard’ for activities detrimental to the person to whom the confidential communication belongs, or to gain an unfair advantage or head start over that person. Although similar in effect to a non-compete injunction based on restrictive covenants, such springboard injunctions originate from cases involving a breach of the duty of confidence, and do not exclusively arise in employer-employee situations. Accordingly, a springboard injunction may even be granted in the absence of any restrictive covenants at all, although the presence of restrictive covenants would at least be relevant.

In the Singapore High Court decision in Jardine Lloyd Thompson Pte Ltd v Howden Insurance Brokers (S) Pte Ltd & Ors [2015] 5 SLR 258, the ex-employer sought an injunction against its ex-employees to prevent the ex-employees from joining their new employer, and similarly sought an injunction against the new employer to prevent the new employer from hiring its ex-employees. This was done notwithstanding the absence of any non-compete clauses in the relevant employment agreements of the ex-employees. The basis of the ex-employer’s claim for the injunction rested (among other things) on the argument that its former employees had misused its confidential information and, accordingly, should be prevented (by way of an injunction) from taking unfair advantage of the springboard that would otherwise be created from such misuse. While the Singapore High Court declined to grant the injunction sought on the grounds that there was no evidence of misuse of the confidential information (or risk thereof), the High Court appeared to suggest that in the appropriate case, a springboard injunction could possibly be granted to prevent an employee from disclosing his or her employer’s confidential information (even in the absence of a valid non-compete clause).

Thereafter, in the High Court decision in Goh Seng Heng v RSP Investments and others and another matter [2017] 3 SLR 657 (Goh Seng Heng), the High Court granted an interim springboard injunction as it was found that:

• there was misuse of confidential information, or the risk of such misuse;
• such misuse of confidential information had given rise to an unfair competitive advantage to the party sought to be restrained;
• the unfair advantage was still being enjoyed by the party sought to be restrained at the time the injunction was sought; and
• damages would be inadequate.

While there were non-solicitation and non-compete clauses in the relevant employment contracts in Goh Seng Heng and they were considered by the Court, this was ultimately not the Court’s basis for the grant of the springboard injunction. Instead, the High Court found that the four requirements above were satisfied as the ex-employees had (among other things) taken and misused confidential information and trade secrets, in addition to poaching the former company’s doctors, entering into contracts unfavourable to the former company, and inflating the salary of its ex-chief executive officer. The Court found that these actions were intended to, and did, bleed the former company financially, and the breaches of confidentiality gave an unfair competitive advantage towards the ex-employees’ new company. There was a strong likelihood that without a springboard injunction, the former company would be ruined before the matter reached trial, and damages in lieu of an injunction would therefore be insufficient. As such, the springboard injunction was found to be necessary. The ex-employees appealed against the High Court’s decision in this regard, and the appeal was allowed by the Court of Appeal. However, no written grounds of decision were rendered, so it is unclear what view the Court of Appeal took of the High Court’s reasoning on the springboard injunction.

A clause prohibiting the misuse of confidential information for a stipulated period of time may be a relevant consideration for the court in deciding how long the springboard injunction should be in place (if granted at all). In PH Hydraulics, the High Court stated that the springboard doctrine did not apply as the two-year period in the relevant confidentiality clause had expired, and the information was no longer confidential. On the other hand, where a period of time was not expressly stipulated in a confidentiality clause (and the relevant clause did not indicate how long this obligation would last), the Court of Appeal in Tang Siew Choy and others v Certact Pte Ltd [1993] 1 SLR(R) 835 took the view that the period of time to restrain the ex-employees from using confidential information would have to be gathered mainly from the complexity of the information protected, with the injunction to continue for the period for which the unfair advantage may reasonably be expected to continue.

Deferred bonuses

Aside from springboard injunctions, another potential way to achieve a similar result to a non-compete clause may be to expressly incentivise employees not to compete (or disincentivise employees from competing) for a specific period of time after employment.

That said, care should be taken by the employer in doing so. In the Court of Appeal’s decision in Mano Vikrant Singh v Cargill TSF Asia Pte Ltd [2012] 4 SLR 371 (overturning the High Court decision in that case), the Court held that to financially disincentivise an employee from competing through a contractual clause that deprived the employee of a vested right (in that case, a declared and vested deferred bonus payment) effectively amounted to a restraint of trade, which would therefore have to pass the test of reasonableness in order to be enforceable (the restriction was found to be unreasonable as, among other things, it had no geographical limit). This was notwithstanding the fact that the clause in question did not actually prohibit competition by the ex-employee, as his competition with the company was not in breach of his employment contract per se (and the company accordingly had no recourse to damages or an injunction). In light of this decision, while a financial disincentive to compete may still be a viable alternative means to effectively achieve non-compete, employers should be careful to ensure that the benefits sought to be withheld cannot be construed as having been vested, or otherwise encourage expectations that employees are entitled to such benefits.

General

The courts may be more willing to uphold restrictive covenants agreed on in sale-of-business agreements, and also settlement (or possibly termination) agreements. This is particularly so where the agreement provides for new and substantial post-employment benefits, which have been freely negotiated between the employer and employee at that point.

As to severance of terms, the Court of Appeal in Smile Inc Dental Surgeons Pte Ltd v Lui Andrew Stewart [2012] 1 SLR 847 (Smile Inc) significantly indicated that it was not in favour of the ‘notional’ severance approach in the construction of restrictive covenants (ie, the flexible ‘reading down’ of a clause by modifying, deleting or adding to the clause as appropriate, rather than applying the strict ‘blue pencil’ test, which only allows for severance by actual deletion). This means a restrictive covenant with an unreasonably long period of restraint (eg, three years) may now be struck out in its entirety as unreasonable (because the period in question cannot be reduced by a ‘blue pencil’ deletion to make it apply for a more reasonable period (eg, one year)). The court stated that employers should draft reasonable (and therefore enforceable) restrictive covenants from the outset, instead of drafting unreasonably long periods of restraint in trying to obtain maximum protection, then subsequently relying on the courts to ‘read down’ the provision to make it enforceable. While the Court of Appeal in Smile Inc raised without apparent disapproval the use in other jurisdictions (eg, Australia) of ‘cascading clauses’ (which consist of multiple overlapping periods and areas of restraint, to specifically allow the offending ones to be ‘blue pencilled’ out), the High Court in Humming Flowers has since opined that cascading clauses offend against public policy, among other things, as they increase rather than reduce uncertainty, and should accordingly not be upheld; this may now be taken as the correct view unless and until the Court of Appeal holds otherwise.

Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Barring express contractual requirements, an employer does not have an obligation by law to pay former employees while they are subject to post-employment restrictive covenants. That said, the fact that such payment has been made may potentially result in the court finding the clause in question more reasonable on first principles, although this has not been judicially determined in Singapore to date.

Liability for acts of employees

In which circumstances may an employer be held liable for the acts or conduct of its employees?

An employer may be vicariously liable for a criminal act or tort committed by its employee if committed in the course of his or her employment. However, for there to be potential vicarious liability, the employee must have incurred legal fault through the commission of some tort or offence, and not merely acts of abetment or assistance. The question is whether the tortious conduct of the employee was so closely related to his or her employment that it would be fair and just to hold the employer vicariously liable for such conduct. The court will examine all the relevant circumstances, including policy considerations, in determining this. In this respect, the High Court, in Rohini d/o Balasubramaniam v Yeow Khim Whye Kelvin and another [2017] SGHC 149, found that a real estate agency was not vicariously liable for its agent’s acts of embezzling funds from the bank account of one of its clients.

On appeal, however (see Rohini d/o Balasubramaniam v HSR International Realtors Pte Ltd [2018] SGCA 37), the Court of Appeal found that the real estate agency was in fact negligent in not putting in place a system of checks and monitoring to mitigate the risk of fraud (the Court thus found that it was unnecessary to consider whether vicarious liability had arisen). Employers would therefore do well to both have a system of checks and balances, and further sufficiently supervise their employees and take steps to mitigate any risk of the employees performing any wrongful acts in the course of their employment.

Where personal data is concerned, however, vicarious liability is more easily established. The PDPA provides that any act done or conduct engaged in by a person in the course of his or her employment shall be treated as done or engaged in by his or her employer as well as by him or her, regardless of whether the employer knew or approved of such conduct.

It remains to be seen if employers may be found vicariously liable for harassment that occurs in the course of employment under the PHA, though the Singapore courts could find the United Kingdom House of Lords’ (now Supreme Court) decision in Majrowski v Guy’s and St Thomas’s NHS Trust [2006] UKHL 34 (where the House of Lords took the view that an employer could indeed be vicariously liable for harassment) persuasive.

An employer may also be liable under a transaction or bound by the acts of an employee under the principles of agency law. Where an employer confers on its employee the requisite authority to enter into the relevant transaction, the employer will be bound by the acts of the employee so authorised; this is the principle of actual authority. However, an employer may also be bound by the acts of an employee even if no such actual authority has been conferred in the event of the employee’s ostensible or apparent authority to bind the employer.

Taxation of employees

What employment-related taxes are prescribed by law?

An employee’s annual income is subject to income tax under the Income Tax Act.

A non-resident (a foreign national who is in Singapore for fewer than 183 days in a year, or less than a continuous period of 183 days over two years) is still liable to pay income tax on Singapore-sourced income, unless the non-resident is employed for 60 days or fewer (save for certain exceptions). Before an employer makes final payment to a non-resident who has ceased employment, it has to withhold a percentage of that payment and pay the amount to the Inland Revenue Authority of Singapore (IRAS) as withholding tax (see also question 40).

The Skills Development Levy Act also provides that a skills development levy will be imposed on the employer for all employees, up to the first S$4,500 of the employee’s gross monthly pay. The levy is imposed at the rate of 0.25 per cent of the employee’s monthly remuneration or S$2, whichever is greater.

Employee-created IP

Is there any legislation addressing the parties’ rights with respect to employee inventions?

Under the Copyright Act, the person who creates a work is the owner of the copyright in the work. However, the employer owns the copyright if the work was created in the course of an individual’s employment unless there is an agreement to the contrary.

Under the Registered Designs Act, designs created by an employee in the course of employment likewise belong to the employer, unless there is an agreement to the contrary.

Under the Patents Act, the patent for an invention is normally granted to the actual deviser (inventor) unless, by virtue of any treaty, international convention or enforceable term of any agreement entered into with the inventor before the making of the invention, it is to be granted to any other person (such as the inventor’s employer).

Is there any legislation protecting trade secrets and other confidential business information?

No, in contrast to personal data, there is no legislation that expressly governs the protection of trade secrets and other confidential business information. Rather, protection in this respect is afforded through contract, common law and equitable principles (see question 28).

Data protection

Is there any legislation protecting employee privacy or personnel data? If so, what are an employer’s obligations under the legislation?

The PDPA, which governs data protection, applies to all organisations except for those in the public sector. It generally protects ‘personal data’, which is broadly defined as data about an individual who can be identified from that data (or in conjunction with other likely accessible information).

The PDPA generally requires that an individual’s consent be obtained before the organisation can collect, use or disclose personal data. However, the PDPA dispenses with the requirement for the individual’s consent in certain situations, four of which are pertinent in the employment context. First, personal data produced for the purposes of an individual’s employment, and personal data for the purposes of managing or terminating an employment relationship, may be collected, used and disclosed for those purposes (as long as notification of such purposes is given to the employee). This would potentially cover personal information such as biographical data, financial affairs, medical conditions, race, gender and religion (eg, employees’ bank account details for payment of salaries). Such personal information collected should ideally (but not mandatorily) be relevant to the unique requirements of the position, and should not be obtained to exclude certain types of candidates.

Second, an employee’s personal data can also be collected, used and disclosed without the need for the employee’s consent and without the need to notify the employee, for ‘evaluative purposes’. This includes determining suitability for employment, promotion or removal from employment (eg, references from a former employer and employees’ performance records).

Third, an employee’s personal data can be used by the employer or disclosed to a party or prospective party (a third party) in a business asset transaction provided the personal data relates to the part of the employer’s organisation or business assets with which the transaction is concerned (if the personal data is necessary for the third party to determine whether to proceed with the transaction), and the employer and the third party have entered into an agreement that requires the third party to use or disclose the personal data only for the purposes related to the transaction. In such a case, the employer must notify the employees that the transaction has taken place and that their personal data has been disclosed to the third party. If the business asset transaction fails to proceed or complete, the third party to the transaction must return or destroy the personal data obtained.

Fourth, an employee’s personal data may be collected, used or disclosed without notification or consent if it is ‘necessary for any investigation or proceedings’. Such collection may only be done if it is reasonable to expect that seeking the consent of the individual would compromise the availability or the accuracy of the personal data. While the term ‘proceedings’ relates to civil, criminal or administrative proceedings by or before a court, tribunal or regulatory authority, it is likely that the term ‘investigations’ as distinguished from ‘proceedings’ would also encompass investigations within an organisation, prior to the commencement of proceedings (or regardless of whether such proceedings are eventually commenced).

Organisations must designate at least one individual (the data protection officer (DPO)) to be responsible for ensuring compliance with the PDPA. Organisations must also safeguard the personal data in their custody or control by making reasonable security arrangements to prevent unauthorised access, use, disclosure, copying, modification, disposal or other similar risks. Further, they must destroy or anonymise personal data once the purpose for its collection has expired. The PDPC is in charge of administering and enforcing the PDPA (the PDPA does not prescribe any registration requirements for DPOs with a central agency as yet). The PDPC has also released substantive Advisory Guidelines (including guidelines for selected topics, such as employment, and sector-specific guidelines (eg, for telecommunications, healthcare or real estate)).

The PDPC Advisory Guidelines address matters such as the use of closed-circuit television cameras (CCTV) for workplace surveillance - the PDPC has advised that, where CCTVs are used, there should be a notice indicating that CCTVs are operating and stating the purpose of such monitoring (although the placement of these notices need not reveal the exact location of the CCTV). Additionally, the PDPC had recently issued Advisory Guidelines on the National Registration Identification Card and Other Identification Numbers (including passport and work pass numbers). Because such personal identifiers can be sensitive and allow for access to large amounts of information pertaining to the individual concerned, employers should take care when collecting, using or disclosing such data, and should provide a greater level of security to guard against the risks and impact of any unauthorised use or disclosure.

Employers must also ensure that their employees understand and are adequately trained to uphold the PDPA obligations regarding data privacy, especially when consumer personal data is concerned (as there has been an increasing number of high-profile cases relating to unauthorised disclosure of consumer personal data). Under the PDPA, any acts done or conduct engaged in by an employee in the course of his or her employment are treated as also done or engaged in by his or her employer, whether or not it was done or engaged in with the employer’s knowledge or approval. To date, there have been prosecutions for breaches of the Do Not Call Registry under the PDPA (with fines ranging from S$500 to S$39,000). The PDPC has also issued warnings and financial penalties of up to S$750,000 against companies in breach of their obligations in respect of personal data under the PDPA. Most of these decisions, however, relate to breaches in respect of customers’ personal data as opposed to employees’ personal data.

Apart from the statutory obligations under the PDPA and contractual provisions, the employer also continues to be under a common law duty not to breach the confidence of the employee.

Business transfers

Is there any legislation to protect employees in the event of a business transfer?

Under section 18A of the EA, when an undertaking (defined as including any trade or business) is transferred from one entity to another, the employment contracts of the employees of the transferred business are not terminated, but instead are automatically transferred. While the EA defines the term ‘transfer’ as including the disposition of a business as a going concern, and a transfer effected by sale, amalgamation, merger, reconstruction or operation of law, the MOM has, in March 2019, further clarified that the following do not constitute a transfer:

• transfer of assets only;
• transfer of shares;
• transfer of operations outside Singapore;
• outsourcing of supporting functions; or
• in the context of competitive tendering, where an incoming service provider takes over an outgoing service provider.

This additional clarity is welcome given the 1 April 2019 amendments to the EA, which extend the application of this section to essentially all private sector employees (see question 1). It is likely that a new set of Tripartite Guidelines or frequently answered questions will be issued to further clarify the scope and applicability of section 18A.

Where there is such a transfer, transferred employees covered under the EA would have their employment contracts post-transfer regarded as if they had originally been made between the new owner of the business and the employee, and all the terms and conditions of service would be preserved. That said, the EA provides that the new employer, the employee and the trade union (if any) are not prevented from negotiating and entering into new contracts of service on different terms from those contained in the original employment contract. The employment terms of transferred employees under pre-existing collective agreements will be protected for at least 18 months (even if the collective agreement would have expired prior to the end of the 18 months).

The employer is currently required to notify its EA employees and any relevant trade union of the fact that the transfer will take place, and of the approximate date, the reasons for and the implications of the transfer, and the measures that will be put in place by both the transferring employer and the new employer in relation to the affected employees. The new employer is, however, only required to enter into consultations with the employees or the trade union concerning the transfer of the business when it is reasonable to do so before the anticipated transfer takes place.

Trade unions that had been recognised by the former employer will be deemed recognised by the new employer if the majority of the new employer’s employees, after the transfer of the business, are members of that trade union. This will have repercussions for the new employer (see questions 4 and 5).

If the employer and employee, or new employer and employee are unable to agree to the new terms of employment, either party may terminate employment with notice. If a dispute in this regard is referred to the Commissioner for Labour, the Commissioner has the power to delay or prohibit the transfer of employment from the transferring employer to the new employer, or order the transfer of the employee’s (or employees’) employment on certain conditions that are considered just. Dismissals (ie, terminations) arising from the reorganisation or restructuring of businesses (or redundancies) are not considered wrongful dismissals (as per the Tripartite Guidelines on Wrongful Dismissals (see question 36)). As such, dismissal in a situation where an employee is offered equivalent terms with the new employer but declines to accept, does not resign and is terminated as a result, is unlikely to be considered wrongful.

Under the PDPA, employees’ personal data can be disclosed to the new employer for the purposes of the transfer, but the new employer may only use or disclose that personal data for the same purposes for which the previous employer would have been permitted to use or disclose it. In addition, the relevant employees must be notified of the transfer and disclosure (see question 34).

Termination of employment

May an employer dismiss an employee for any reason or must there be ‘cause’? How is cause defined under the applicable statute or regulation?

With the 1 April 2019 EA amendments, most employees covered by the EA (which from 1 April 2019 onwards includes essentially all private sector employees (including PMEs regardless of salary level); see question 1) may now only be dismissed with ‘just cause or excuse’. In this regard, any PME employed for at least six months at the point of dismissal, and any non-PME who considers that he or she has been dismissed without just cause or excuse, may lodge a claim before the ECT for reinstatement or compensation. This is notwithstanding that the employee may have received full contractual notice or payment in lieu of notice. However, PMEs will not be statutorily entitled to bring a wrongful dismissal claim within the first six months of their employment if they were dismissed with notice, or with payment of salary in lieu of notice; the same is not true for non-PMEs, who can bring a claim for wrongful dismissal at any time, regardless of whether they receive notice or payment in lieu of notice. It is anticipated that this provision for PMEs may create a greater incentive on the part of unscrupulous employers to misclassify more of their employees as PMEs, so as to argue that they can dismiss such disguised-PME employees (see also question 20) in the first six months of employment without fear of a wrongful dismissal claim (as long as they give or pay notice). If the employee’s claim falls outside the ECT’s jurisdictional limit (see below), the employee may also bring a claim in court for such compensation (or, potentially, reinstatement).

The Tripartite Guidelines on Wrongful Dismissal, released on 1 April 2019 alongside the EA amendments, do recognise the employer and employee’s right to contractually terminate employment with notice (or payment in lieu of notice), and provide that dismissals with notice (or payment in lieu) are presumed not to be wrongful, even if no other reasons are provided for the termination or dismissal.

Further to this, however, the presumption that the dismissal is not wrongful may be displaced where the employee is able to substantiate a wrongful reason for the dismissal, such as discrimination (including on the basis of age, race, gender, religion, marital status and family responsibilities or disability), the deprivation of an employment benefit or owing to an employee exercising his or her statutory rights. The Tripartite Guidelines also provide that where an employer has provided a reason for dismissal with notice, but the reason given is later proven to be false, the dismissal may then be wrongful.

According to the Tripartite Guidelines on Wrongful Dismissal, other legitimate reasons that may be given for dismissing an employee with notice include poor performance or redundancy. As noted above, this is, of course, provided that the reasons given are true. In the case of poor performance, the employer would have to substantiate the employee’s poor performance with documented proof.

Redundancy occurs when the employer has excess manpower, the company is undergoing restructuring, the old job no longer exists or the employee’s job scope has changed. In such cases, employers should have regard to the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (see questions 39 and 42). Again, an employee may potentially be wrongfully dismissed if the employer’s reason for dismissal is, in fact, false; for example, if the employer stated that the dismissed employee’s old job no longer exists, but later employs a new employee to replace the dismissed employee in the same position.

The Tripartite Guidelines on Wrongful Dismissal further provide that misconduct is the only legitimate reason for dismissal without notice. Even then, dismissal should only occur after ‘due inquiry’ (this is further discussed in question 38).

Employers should also bear in mind that, from 1 April 2019 onwards, dismissal under the EA includes ‘the resignation of an employee if the employee can show, on a balance of probabilities, that the employee did not resign voluntarily but was forced to do so because of any conduct or omission, or course of conduct or omissions, engaged in by the employer’. This is a statutory recognition of the concept of ‘constructive dismissal’, and employees may accordingly be regarded as having dismissed or terminated even if it is the employee who had actually resigned.

The jurisdictional limit for claims brought before the ECT (and TADM) is S$20,000 per claim (or S$30,000 per claim if the employee has gone through tripartite mediation or union-assisted mediation), and the ECT may order the employer to reinstate the employee to his or her former employment or compensate the employee with his or her lost wages or both. It should be noted that an employee may potentially bring both a salary-related claim and a wrongful dismissal claim before the ECT (effectively claiming S$40,000, or S$60,000 in cases of tripartite or union-assisted mediation, in aggregate).

The above marks a further shift for Singapore away from pure ‘at-will’ employment. While the right to contractual terminations (both for the employer and employee) is preserved, employers should now exercise a larger degree of responsibility and caution when terminating employees to ensure that their conduct does not attract claims of wrongful dismissal. It will also require a change to Singapore’s common law and jurisprudence on the subject. Prior to the 1 April 2019 changes, the Singapore courts had taken the position that employees who have been wrongfully dismissed are only entitled to salary in lieu of notice, as this would be what an employee would be contractually entitled to had the employee been terminated in accordance with the contract instead of being wrongfully dismissed (since such employees would have had no further recourse for wrongful dismissal. This is unless the wrongful dismissal also resulted in a loss of other benefits, such as deferred bonuses or vested share options, in which case the claim could include such other benefits as well.) It is now clear, however, that the ECT and the courts may award compensation for wrongful dismissal per se over and above salary in lieu of notice in appropriate cases.

In this respect, amendments to the Employment Claims Regulations 2017 (also effective from 1 April 2019) provide that, where wrongful dismissal is made out, the amount of compensation to be awarded by the ECT is to consist of compensation for:

• the employee’s loss of income, subject to a maximum of three months of the employee’s gross rate of pay; and
• the harm caused to the employee by the ex-employer from the wrongful dismissal.

With regard to the latter, the amount of compensation for harm caused to the employee is to be computed using a base amount not exceeding two months of the employee’s gross rate of pay, which may increase or decrease by 50 per cent of the base amount, depending on the aggravating or mitigating factors at play. Examples of such aggravating factors include the ex-employer’s conduct of the wrongful dismissal in a humiliating manner or in a manner that caused physical harm to the employee, any false accusation or allegation used by the ex-employer as a ground for wrongful dismissal or any deliberate act of the ex-employer to adversely affect the employee’s prospect of subsequent employment. Conversely, mitigating factors may include any misconduct or poor performance of the employee or insubordination by the employee, which, while not providing just cause or excuse, or sufficient cause for the dismissal, was taken into account by the ex-employer in dismissing the claimant.

The total amount an employee may claim for wrongful dismissal at the ECT (not including any other claims that the employee may have) would effectively range from zero to six months of basic salary, subject to the overall jurisdictional claim limits under the ECT (see above). This compensatory framework therefore remains suitable for employees who are lower fee earners, rather than high-earning PMEs (whose recourse would then be with the courts, who should apply the same statutory principles, as well as the principles in the Tripartite Guidelines on Wrongful Dismissal). Moving forward, PMEs may also be further incentivised to become unionised employees in the interest of having a higher jurisdictional claim limit applicable to them under the ECT. Employers and employees alike may expect further guidance from published ECT or court decisions. For the moment, however, given the far-reaching changes to Singapore’s wrongful dismissal regime, the precise implications (both legal and cultural) on Singapore’s employment landscape remains to be seen.

Must notice of termination be given prior to dismissal? May an employer provide pay in lieu of notice?

The EA allows employers or employees to provide notice to terminate the contract of employment or to provide payment in lieu of notice (employers should, however, have just cause or excuse when dismissing an employee; see question 36). Where the employment contract is silent as to the relevant notice period, the EA prescribes minimum notice periods according to the employee’s length of service:

• one day’s notice for employees employed for less than 26 weeks;
• one week’s notice for employees employed between 26 weeks and two years;
• two weeks’ notice for employees employed between two and five years; and
• four weeks’ notice for employees employed for five years or more.

In which circumstances may an employer dismiss an employee without notice or payment in lieu of notice?

The EA allows for termination of the employment contract without notice in the event of any wilful breach by the other party of a condition of the employment contract. An employer may also dismiss an EA employee after due inquiry without notice on the grounds of misconduct inconsistent with the employee’s obligations and conditions of service (ie, for cause). While the term ‘due inquiry’ is not defined under the EA, the High Court, in Long Kim Wing v LTX-Credence Singapore Pte Ltd [2017] SGHC 151, held that due inquiry comprises more than merely making inquiries and conducting an investigation, and involves informing employees concerned of the allegations and evidence against them. While this case concerned a then non-EA employee whose contract expressly gave the employer the right to summarily terminate his employment after due inquiry, it should be noted that the MOM website also provides general guidelines for holding an inquiry (to which the High Court in this case referred). Recourse is available where an employee feels as though he or she has been wrongfully dismissed (see question 36).

The EA also allows for termination of the employment contract without notice in the event of any wilful breach by the other party of a condition of the employment contract. While the EA does not expressly require the employer to hold a due inquiry before summarily dismissing the employee on such grounds, given the introduction of the Tripartite Guidelines on Wrongful Dismissal, which now provide that an employee may only be dismissed without notice (or payment in lieu of notice) on the grounds of misconduct and after a due inquiry has taken place (see question 36), employers should, as a matter of prudence, treat wilful breaches of the employment contract as instances of misconduct if they intend to dismiss the employee without notice as a result, and conduct a due inquiry first.

Is there any legislation establishing the right to severance pay upon termination of employment? How is severance pay calculated?

The right to severance pay is not statutorily provided for in Singapore, save for employment assistance payments (payable under the RRA to employees 62 years of age or older whose employment is terminated on the grounds of age and who are not re-employed (see question 44)). Any right to (and calculation of) severance pay will have to be expressly provided for in the employment contract (or a collective agreement, in the case of unionised employees; see questions 4 and 5).

Part IV of the EA currently provides that an employee covered under this part is not entitled to retrenchment benefits unless the employee has been in continuous service with an employer for two years or more. However, this is a minimum requirement, and does not automatically entitle such an employee to any retrenchment benefit or severance payment in the absence of an express contractual provision granting this in his or her employment contract or collective agreement.

Notwithstanding the above, employers may certainly still choose to pay severance even in the absence of contractual obligations for reasons of morale, reputation, industry norms or consistency with group offices in other jurisdictions. The Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (which is not statutorily binding as yet) suggests that:

• employees with two years’ service or more are eligible for retrenchment benefits, and those with less than two years’ service could be granted an ex-gratia payment;
• an employer should pay a retrenchment benefit of between two weeks’ and one month’s salary per year of service, depending on the financial position of the employer and taking into consideration industry norms; and
• in unionised companies where the quantum of retrenchment benefit is stipulated in the collective agreement, the norm is one month’s salary for each year of service.

Unionised employees are accordingly in a stronger position to demand severance through their unions, even if this is not contractually provided for (see questions 4 and 5). It is also possible that the payment of severance may assist an employer’s position that the relevant employee has been terminated on account of redundancy, while a lack of severance pay may prejudice such an employer’s position. Again, further guidance may potentially be had from published ECT or court decisions on the matter moving forward.

Often, a dispute will arise in respect of the effect of termination on bonus payments. In this regard, the High Court in Leong Hin Chuee v Citra Group Pte Ltd & Anor [2015] 2 SLR 603 commented that, even where such bonus payments are contractually stipulated to be payable at the employer’s discretion, the implied duty of mutual trust and confidence may oblige an employer to exercise its discretion towards an employee in a bona fide and rational manner. That said, the court noted that much will depend on the intention of the employer and employee, as reflected in the terms of the employment contract and the circumstances of the case. In this respect, making such payments subject to the ‘sole and absolute discretion’ of the employer helps to preserve the employer’s full discretion on whether or not to make such payments.

Are there any procedural requirements for dismissing an employee?

From 1 April 2019 onwards, employers are obliged to conduct due inquiry prior to dismissing any employee covered by the EA without notice on grounds of misconduct. In any event, employers should only dismiss employees with just cause or excuse, unless this is being done purely contractually, and not for reasons of discrimination, deprivation of statutory benefits or retaliation, which would amount to wrongful dismissal (see question 36 for more detail on wrongful dismissal).

Section 22 of the EA provides that the total sum due to an employee who has been dismissed shall be paid on the day of dismissal or, if this is not possible, within three working days thereafter. However, section 24 provides that no payment of salary or any other sum due to a foreign employee on termination of service shall be made to the employee by the employer without the permission of the Comptroller of Income Tax. An employer shall immediately give notice of a termination of service to the Comptroller of Income Tax, and the payment of the salary or other sum due to the employee shall then be paid within 30 days of such notice being given to and received by the Comptroller of Income Tax (after the employer deducts the necessary taxes payable to IRAS and pays these direct to IRAS).

Beyond termination, employers should also be mindful of exercising reasonable care when writing references or recommendations for former employees. In Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2016] 4 SLR 1124 (Ramesh Krishnan), an employer was found liable to pay damages to an employee arising out of a misleading letter of reference (with damages eventually assessed at over S$4 million). The Court of Appeal, in Ramesh Krishnan, stated that a standard of care was expected of employers when writing a reference for both current and former employees. Employers must ensure that the facts stated in a reference are true, and that any opinions expressed in the reference are based on and supported by facts that are true. Further, employers must also ensure that the reference as a whole does not give an unfair or misleading overall impression of the employee, even if the discrete pieces of information within the reference are factually correct. Misleading references can also potentially result in an aggravated level of compensation for wrongful dismissal (see question 36).

In what circumstances are employees protected from dismissal?

See question 2 in relation to female and elderly employees, and questions 36 to 40 on protection from wrongful or unfair dismissal. There is no absolute statutory prohibition against dismissal otherwise.

Are there special rules for mass terminations or collective dismissals?

Employers who employ at least 10 employees are required to notify the MOM if five or more employees are retrenched within any rolling six-month period. Retrenchments are defined as dismissal on the grounds of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work. This applies to permanent employees, as well as contract workers with full contract terms of at least six months. Failure to notify the MOM within the required time frame may cause an employer to be liable upon conviction to penalties, including a fine not exceeding S$5,000. Additionally, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment sets out progressive workplace practices regarding the management of such mass terminations. Given that the amendments to the Employment Act in April 2019 have strengthened the Commissioner for Labour’s powers to inquire into retrenchment practices (including requesting that employers furnish information on the retrenchment of any employees), it is likely that this area will be subject to heavier scrutiny. Employers, therefore, ought to reassess their retrenchment policies and practices, and ensure that they act in accordance with the relevant Tripartite Advisories and Guidelines.

Additionally, in the event of a corporate restructuring and consequent transfer of employees to a new corporate entity, the provisions set out in section 18A of the EA should be followed (see question 35).

Are class or collective actions allowed or may employees only assert labour and employment claims on an individual basis?

Class action suits are not provided for under the Rules of Court per se, and every employee who wishes to assert a claim has to do so on an individual basis (ie, as an individual plaintiff to the suit). Employees may, however, bring a representative action, provided that the various parties have the same interests in the proceedings (in which case, one or more of them may potentially represent the group in the proceedings).

Does the law in your jurisdiction allow employers to impose a mandatory retirement age? If so, at what age and under what limitations?

Under the RRA, the current statutory retirement age is 62. It is an offence to dismiss an employee below 62 on grounds of age alone (although this does not prevent an employer terminating an employee’s contract for poor performance or misconduct, and there have been no known prosecutions for a breach of this provision in any event - although it is now likely to constitute wrongful dismissal owing to age discrimination under the Tripartite Guidelines on Wrongful Dismissal (see question 36)). Further, under the RRA, it is mandatory for companies to offer re-employment opportunities to workers beyond the statutory retirement age of 62, up to the age of 67. The employer is only obliged to offer re-employment where the employee is medically fit and, upon the assessment of the employer, can deliver satisfactory job performance. In cases of re-employment, a new contract of service is to be entered into between the employer and the employee where the job scope and the terms and conditions may vary from the previous contract of service, as long as the variation from the original contract is based on reasonable factors, such as the employer’s requirements and the employee’s productivity, performance, duties and responsibilities. The new employment contract cannot be for less than one year, unless otherwise agreed. If the employer is unable to re-employ an eligible employee because the employer is unable to find, after having made reasonable attempts to do so, a vacancy in the company that is suitable for the eligible employee, the employer is required to transfer its re-employment obligations to another employer with agreement from the employee or offer the employee an employment assistance payment (EAP).

The Tripartite Guidelines on the Re-Employment of Older Workers (which employers are statutorily obliged to take into account, and the ECT and appellate courts may have regard to) suggest that a lump sum EAP could be three and a half months of salary and in any event range between S$5,500 and S$13,000 (ie, assuming three and a half months of salary exceeds S$5,500, the EAP should then be three and a half months or S$13,000 - whichever is less). This is aimed at helping older employees tide over a period of time while they look for another job, while on the other hand also helping to ensure that employees are not encouraged to stop working. These Tripartite Guidelines also encourage employers to offer re-employment to eligible employees (or otherwise inform the relevant employees that they do not qualify for re-employment) at least three months before retirement. To account for the employer’s obligation to re-employ eligible employees up to the present statutory re-employment age of 67, the quantum of the EAP may diminish over time as the employee approaches that age. For example, if an employer has re-employed an employee since the age of 62 for at least 30 months, the Tripartite Guidelines provide that the lump sum EAP may be reduced from three and a half months to two months (this is subject to a minimum EAP amount of S$3,500). The Minister for Manpower has now stated that both the retirement age of 62 and the re-employment period of up to age 67 are slated to rise. At the time of writing, there has been no news as to when this will occur, or what the relevant ages will be raised to.

Dispute resolution

May the parties agree to private arbitration of employment disputes?

Yes, although this is not common in Singapore.

May an employee agree to waive statutory and contractual rights to potential employment claims?

An employee may agree to waive statutory or contractual rights to potential employment claims as a matter of contract or estoppel, although certain statutory rights to employment claims may not be waived (eg, claims in respect of statutory maternity leave), and any contractual provisions to the contrary of such rights are potentially void and unenforceable. The waiver should be express or possibly implied from conduct. For estoppel, the waiver must amount to a clear and unambiguous representation; further, the employer must act in reliance of the concession such that it would be inequitable to allow the employee to resile from his or her representation.

What are the limitation periods for bringing employment claims?

Although claims brought under the ECT or for mediation before the TADM must generally be filed within one year of the date of the dispute if the employee is still employed, or within six months of the last day of employment if the employment relationship has ended, there are claim-specific limitation periods that apply. For example, from 1 April 2019 onwards, wrongful dismissal disputes should first be submitted for mediation at the TADM not later than one month after the date of the employee’s dismissal or, in the case of a female employee who is dismissed at any time of her pregnancy, not later than two months after the date of her confinement.

However, where an action is brought under contract or tort in the civil courts (eg, by an employee outside the time period stated above or who has a claim above the ECT’s jurisdictional claim limits of S$20,000 or S$30,000 (see question 3)), the claimant employee has six years under the Limitation Act from the date on which the cause of action accrues to bring the action.

Update and trends

Are there any emerging trends or hot topics in labour and employment regulation in your jurisdiction? Are there current proposals to change the legislation?

The far-reaching amendments to the EA and related statutes in 2019 will cause a seismic shift to Singapore’s employment landscape insofar as it will effectively introduce strong concepts of wrongful dismissal into Singapore law, making it, at best, a qualified at-will jurisdiction for all levels of employees (a position Singapore has not been in since independence in 1965). While parties may still exercise their contractual rights of termination, the Tripartite Guidelines on Wrongful Dismissal and compensation framework for wrongful dismissals demonstrate an increased sensitivity to wrongful dismissal issues, and a greater willingness to provide recourse to employees where such cases are made out. This major change is consistent with the general trend seen for some years now of according employees’ greater rights and protection under Singapore law, and the trend is expected to continue into 2019 and beyond. As the jurisdiction of the ECT expands to allow employees to make various types of wrongful dismissal and other employment-related claims relatively easily, it now behoves employers to thoroughly familiarise themselves with the statutory rights afforded to employees and to implement these accordingly. More attention should also be paid to published ECT decisions once these are available (as well as equivalent court cases), which should provide further clarity and elucidation on the law on wrongful dismissal. With the new EA, changes on wrongful dismissal, issues of retirement and re-employment (or lack thereof) are expected to take on heightened importance, and the pending raising of the retirement and re-employment ages is significant indeed in this respect. It is also expected that fixed-term employment contracts will become more common in Singapore, as these will now allow for more certainty of termination (at least at the conclusion of the fixed term). The concept of disguised PMEs (see questions 20 and 36) will likely also assume greater importance, as unscrupulous employers may try to disguise more of their non-PME employees as PMEs, so as to allow them to dismiss such employees with notice or with salary in lieu of notice within their first six months of employment without fear of a wrongful dismissal claim being made.

Another area of interest is the new section 139(2)(aa) of the EA, which expressly empowers the Minister of Manpower to make regulations aimed at regulating the conduct of employers to protect employees against employment practices that may adversely affect their well-being. Parliamentary debates on the recent EA amendments suggest that this potentially marks a shift in policy towards protecting not only employees’ physical safety and welfare, but also the psychological and social needs of employees, especially with the greater current emphasis on mental health. This is well-illustrated in the compensation framework for wrongful dismissal claims, which provide that conduct of the wrongful dismissal in a humiliating or degrading manner may constitute an aggravating factor for the purposes of calculating the harm caused to an employee by their previous employer. It will be interesting to observe how this will influence future policy making, and whether related legislation, regulations or guidelines will eventually be introduced in this regard.

Additionally, measures specifically directed at concerns over protection and rights for gig economy workers and freelancers could also be on the horizon. It is possible that Singapore might follow the lead of other countries in establishing a class of ‘workers’ who are not employees, but yet enjoy some of the rights and protections of employees. This bears watching, as do continuing developments to the law on non-compete and restrictive covenants.

In terms of data protection, we can expect to see revisions to the PDPA that impose stricter breach reporting rules. Proposed revisions that may come into effect in 2019 include requiring organisations to notify individuals that have been affected by a breach as soon as practicable. Organisations would have 30 days to determine the veracity of suspected breaches, after which they would have 72 hours to notify the PDPC of such breaches. Additionally, the PDPC has approved a proposal for organisations to share blacklists to detect fraud and prevent abuse of data, provided that the organisation ensures that the consumer is not harmed in any way and the data is not abused.