Knowledge Highlights 9 April 2020

On 6 April 2020, the Ministry of Manpower (“MOM”) issued an “Advisory on salary and leave arrangements during circuit breaker” (“Advisory”) to provide guidance to employers and employees on salary and leave arrangements amid the heightened safe distancing measures suspending activities at most workplace premises in place from 7 April 2020 to 4 May 2020 (“circuit breaker”).

The circuit breaker had been announced by the Multi-Ministry Taskforce on 3 April 2020 to pre-empt the trend of increasing local transmission of Covid-19. The measures are intended to further reduce the movements and interactions of people.

Essential Services and their related supply chains and service providers are exempt from the circuit breaker. Nonetheless, these employers must ensure that all activities that can take place through telecommuting are done from home and must implement safe distancing measures to reduce physical interactions for the activities carried out at the workplace premises.

All other business, social, or other activities that cannot be carried out from home must be suspended.

Employers that can continue operating their businesses (in limited or full capacity) with their employees working from home should continue to do so.

Wage support under Jobs Support Scheme

The Jobs Support Scheme (“JSS”) announced by the Government is meant to support employers to retain and continue to pay their local employees, even during periods of reduction in business activity. Depending on the sector, the JSS provides wage support of between 25% and 75% on the first S$4,600 of gross monthly wages, for each Singapore Citizen or Permanent Resident in employment during the qualifying months.

The Advisory sets out the following JSS payout details:

  • Employers will receive three JSS payouts in April, July, and October 2020, based on the qualifying months of wages paid as set out below: 

Payout Number

Employers will receive payout in

Payout will cover wages paid in

1st payout

April 2020

October to December 2019

2nd payout

July 2020

February to April 2020

3rd payout

October 2020

May to July 2020

  • In addition, JSS support for wages paid in April 2020 will be topped up to 75% for all employers to support them during the circuit breaker period. Employers will receive this together with the 1st payout. To allow the top-up to be received together with the 1st payout, it will be calculated based on October 2019 wages first. The 2nd and 3rd JSS payouts will subsequently be adjusted to account for the difference between the April 2020 and October 2019 wages.
  • The 2nd and 3rd JSS payouts are calculated based on February to July 2020 wages. As such, employers who reduce their employees’ wages or put their employees on no-pay leave during this period will have their subsequent JSS payouts reduced correspondingly. Employers should take this into consideration in their planning.

Guidelines for employers that have implemented cost-saving measures

Some employers which have been severely affected by Covid-19 prior to the current suspension of activities at workplace premises would have worked out cost-saving measures with their unions and employees, taking into consideration the JSS. Such cost-saving measures should continue.

However, in view of the enhanced JSS payout for April 2020, the Advisory states that employers should review whether the additional support could be extended to the employees during this exceptional period to minimise hardship to them. This should be done in consultation with the union if the company is unionised and communicated to the employees.

Where employers have agreed to salary arrangements that are more generous than those recommended in the Advisory, such arrangements should continue during the circuit breaker period.

Guidelines for other employers on salary and leave arrangements

Tapping on enhanced JSS payout instead of resorting to retrenchments or prolonged no-pay leave

The Advisory states that other employers are strongly urged not to resort to retrenchments or prolonged no-pay leave to manage business costs during the circuit breaker period. Employers should tap on the enhanced JSS payout for April 2020 (75% of one month of wages) to pay for the salaries of local employees and the employer’s share of Central Provident Fund (“CPF”) contributions during the circuit breaker period. This will ensure that Government subsidies go directly to the local employees and that they are ensured of a baseline wage, including the corresponding CPF contributions.

Payment of salaries of local employees who continue to work full-time during circuit breaker period

In respect of local employees who continue to work full-time during the circuit breaker period, those working in essential services, or those in non-essential services who are telecommuting from home, must be paid their prevailing salaries including the employer’s CPF contributions. Companies that have done well and are still doing well could also consider recognising the efforts and contributions of employees during the circuit breaker period, e.g. through additional incentives such as food vouchers.

Payment of salaries of local employees who do not work full-time during circuit breaker period

In respect of local employees who do not work full-time during the circuit breaker period, employers should minimally adopt the following recommended salary arrangements (from 7 April 2020 to 4 May 2020):

 

Gross monthly salary of local employee

Up to S$4,600

More than S$4,600

Employer assigns work to employee to complete at home

 

 

 

 

Continue to pay their prevailing salaries, including employer’s CPF contributions.

 

 

 

Use all the enhanced JSS payout for April 2020 to provide for a baseline pay to employees including the employer’s share of the CPF contributions; and

Provide for work done on a pro rata basis. For example, if the employee works half-load (i.e. at 50%), the employer should pay the employee 50% of his monthly salary in addition to the JSS payout for April 2020, subject to a cap of his prevailing salary.

Employer does not assign work to employee

Use all the enhanced JSS payout for April 2020 to provide for a baseline pay to the employee including employer’s CPF contributions.


Making up for shortfalls in employee’s salary

If, after implementing the salary arrangements in the table above, the employee’s salary still falls below his monthly salary before the circuit breaker period, the Advisory provides that the employer should, as far as possible, consider the following measures to make up for the shortfall:

  • Send the employee for training courses approved for Absentee Payroll Funding so that salary paid to the employee during training would be mostly supported by the Government;
  •  Apply for Flexible Work Schedule (“FWS”), which allows “time banking” of additional salary payments to offset overtime payments in the future;
  • Grant additional paid leave to the employee; or
  • Allow the employee to consume his existing leave entitlements.

Encouraging employees to take on a second job

The Advisory states that where possible, employers should also allow and support their local employees to take on a second job (e.g. part-time or temporary job with another employer) in companies or public agencies that could continue to operate during the circuit breaker period to make up for the employees’ loss of income and mitigate the negative impact on their livelihoods.

Employers can refer to the “Guide on second job arrangements for employees with reduced work hours in response to Covid-19”. Employers may wish to encourage affected employees to consider suitable job opportunities under the SGUnited Jobs Initiative.

Foreign employees

Foreign Worker Levy waiver and rebate

On 6 April 2020, the Government announced a waiver of the Foreign Worker Levy (“FWL”) due in April 2020 to help firms cut costs and improve their cashflow. Employers will also receive a one-off FWL rebate of S$750 for each work permit or S Pass holder, based on previous levies paid in 2020. This will enable employers to preserve their manpower in order to quickly resume operations after the circuit breaker period.

Provision of salary support to foreign employees by employers

In light of the support given to employers, employers should provide salary support, including payment for upkeep and well-being of their more vulnerable foreign employees during this period.

In this regard, foreign employees who continue to work full-time during the circuit breaker period must be paid their prevailing salaries.

For foreign employees who could not work during the circuit breaker period, employers must continue to be responsible for their maintenance and upkeep and work out mutually agreed salary and leave arrangements with the unions and employees, especially for low-wage work permit holders who may need more support. The Advisory provides that:

  • Employers can ask their foreign employees to consume their leave entitlements, for example. Where leave entitlements are exhausted, employers should provide salary support for their foreign employees and may apply for FWS to time-bank part of the salaries to cover overtime work after the circuit breaker period.
  • Employers must treat their foreign employees fairly and responsibly taking into consideration the levy waiver and rebate provided by the Government. For example, for a low-wage work permit holder who is staying at a purpose-built dormitory and drawing a basic pay of S$600 per month, a responsible employer can pay the foreign employee S$450 as salary and also for his food and accommodation during the circuit breaker period. However, the foreign employee would forego his work-related allowances, such as his transport and shift allowances of S$400 per month.

Notification requirements for cost-saving measures with salary reductions during circuit breaker period

Employers that implement cost-saving measures during the circuit breaker period between 7 April 2020 and 4 May 2020 (inclusive) must notify MOM if the cost-saving measures result in more than 25% reduction in the salaries of their employees and the employer has at least 10 employees.

Reference materials

The Advisory is available on the MOM website www.mom.gov.sg or by clicking here.

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains knowhow and materials on legal and regulatory aspects of the Covid-19 crisis.

In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at covid19taskforce@allenandgledhill.com.

 

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