Amendments to the Employment Act
On 12 November 2013, the Singapore Parliament passed a new Bill which will
make a number of changes to the Employment Act (Cap.91) (“EA”). Most of
these changes, unless otherwise stated, will take effect on 1 April 2014.
The classes of persons likely to be significantly affected by these changes
include but are not limited to:
organisations which have a sizable number of employees who fall
under the EA (i.e. employees who are NOT in managerial or
executive positions); and
organisations who have employees in professional, managerial and
executive (“PME”) roles which earn a basic monthly salary of up to
The key changes to highlight are the following:
increase in the protection of more workers by extending the scope
covered by the EA;
increase in flexibility for employers; and
increase in enforcement powers and also penalties for failure to
comply with employment standards.
Summary of changes
1. Increase in the protection of more workers by extending the
scope covered by the EA
The salary threshold for non-workmen (i.e. employees who come under the
EA but are not engaged in manual labour) under the Part IV of the EA will be
raised from a basic monthly salary of S$2,000 to S$2,500. This may mean
that a greater number of employees in your organisation would now be
entitled to a greater amount of protection with respect to, including but not
limited to, work on rest days, hours of work and annual leave.
PMEs earning a basic monthly salary of up to S$4,500 will now also be
covered under the general provisions of the EA, thus affording them statutory
entitlements such as, including but not limited to, sick leave benefits and
protection against unfair dismissal. Previously, PMEs were not covered under
the EA. The Ministry of Manpower has defined PMEs in its FAQs with respect
to the changes to the EA.
Managers and executives are defined as those with executive and
supervisory functions. These functions include the authority to influence or
make decision on issues such as recruitment, discipline, termination of
employment, assessment of performance and reward, or involvement in the formulation of strategies and policies of the enterprise, or the management and running of the business.
Professionals are defined as those with specialised skills and whose employment terms are comparable to those of executives and managers.
Employees who come under the EA would now be eligible to receive retrenchment benefits if they have worked for the employer for two years. This time period has been reduced from the previous three years. This will take effect on 1 April 2015.
2. Increase in flexibility for employers
Despite the increase of the salary threshold of non-workmen to S$2,500, to allow a greater number of non-workmen to be statutorily entitled to the benefits under Part IV of the EA, the overtime rate payable for non-workmen will be capped at the salary level of S$2,250 to help employers manage costs.
PMEs earning up to S$4,500 can only seek recourse against unfair dismissal (dismissal without just cause) if he has been employed by the same employer for at least 12 months.
3. Increase in enforcement powers and also penalties for failure to comply with employment standards
To ensure that individuals such as directors or partners of companies are made more accountable for EA offences committed by the company, such individuals, who are primarily responsible for the offence and have failed to exercise reasonable supervision or oversight, will be presumed to be negligent and be held liable in the event of any offence. He will be able to rebut the presumption by proving that he has exercised reasonable supervision or oversight to avoid commission of an offence under the EA.
Employment inspectors will also be granted the power to arrest any person whom they reasonably believe to be guilty of the failure to pay salary to employees. They will also be allowed to enter any workplace to conduct checks.
The penalty for a failure to pay salary in accordance with the EA will be raised. A first-time offence will attract a fine of between S$3,000 and S$15,000 and/or 6 months' jail. A subsequent offence will attract a fine of between S$6,000 and S$30,000 and/or 12 months' jail. The maximum composition fine will be increased from S$1,000 to S$5,000.
Traditionally Singapore is known to be a pro-employer jurisdiction, but we have seen recently a shift in direction by the authorities to provide greater protection to employees. As these changes to the EA will take effect in 2014, organisations should consider the impact of these changes with respect to their workforce.
In addition, it is important for organisations to review their employment policies and processes to ensure that they will be in full compliance with the changes to the EA.
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Amendments to the Employment Act
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