Knowledge Highlights 18 January 2023
Covid-19: MOM issues updated advisory on salary and leave arrangements
Knowledge Highlights 15 June 2020
On 9 June 2020, the Ministry of Manpower (“MOM”) issued an updated “Advisory on salary and leave arrangements” (“Advisory”). The Advisory provides guidance to employers and employees on salary and leave arrangements post-circuit breaker. It supersedes the earlier advisory issued on 25 April 2020 on salary and leave arrangements during the circuit breaker.
Singapore exited the circuit breaker on 2 June 2020. In Phase One of the post-circuit breaker period, businesses that operate in settings with lower risks of Covid-19 transmission may start to re-open with Safe Management Measures in place. More activities will gradually resume in Phase Two when the Covid-19 situation further improves.
1. Jobs Support Scheme
The Jobs Support Scheme (“JSS”) announced by the Government is meant to support and encourage employers to retain and continue to pay their local employees (Singaporeans and Permanent Residents), even during periods of reduced business activity.
The JSS has been extended to cover August 2020 wages and the level of support has also been enhanced for more severely affected sectors. For employers that cannot resume business operations, the Government will continue to provide wage support at 75% of local employees’ gross monthly wages until August 2020, or when they are allowed to re-open, whichever is earlier.
2. Continuation of cost-saving measures for employers severely affected by Covid-19
Employers that have been severely affected by Covid-19 would have worked out cost-saving measures with their unions and employees to save jobs, taking into consideration the JSS. For example, employers may have sought the employees’ consent to take a few days of no-pay leave each month. Such cost-saving measures that have been agreed to should continue as necessary.
3. Employers whose businesses are operating
Local employees who continue to work fully must be paid their prevailing salaries including the employers’ contributions to CPF.
Businesses which may take time to resume operations fully, or need to scale down their operations resulting in excess manpower, are strongly encouraged to take a long-term view of their manpower needs and responsibly implement the cost-saving measures outlined in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment (“TAMEM”).
4. Employers that cannot resume business operations
Payment of baseline salary
Employers that cannot resume operations in Phase One continue to receive enhanced JSS support of 75% of local employees’ gross monthly wages. They should pay local employees a baseline monthly salary, including the employers’ contributions to CPF, in accordance with the following recommendations:
Gross monthly salary of local employee
Up to S$4,600
More than S$4,600
Employer assigns work to employee to complete
Continue to pay their prevailing salaries, including employer’s CPF contributions.
Use the enhanced JSS payout to provide for a baseline monthly salary 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 abovementioned baseline monthly salary*, subject to a cap of his prevailing salary.
*The baseline monthly salary may vary across employers due to different financial positions and business prospects. For example, an employer who continues to be financially healthy may give a non-working employee salary + CPF contribution equivalent to the enhanced JSS payout for May 2020 (i.e. 75% of one month’s of wages).
In determining the appropriate baseline monthly salary, employers should discuss with unions and employees and come to a mutually agreeable arrangement, with special consideration to be given for lower-wage employees.
Employer does not assign work to employee
Use the enhanced JSS payout to provide for a baseline monthly salary to employees, including the employer’s share of the CPF contributions.
(Source: MOM website www.mom.gov.sg)
Making up for shortfalls in employee’s salary
If, after implementing the salary arrangements in the table above, the local employee’s salary is still below his prevailing monthly salary, the employer should, as far as possible, consider the following measures to top up the shortfall:
- Send the employee for relevant or suitable training courses approved for Absentee Payroll Funding so that the overall salary paid to the employee during the training period 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;
- Allow the employee to consume his existing leave entitlements; or
- Grant additional paid leave to the employee.
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 are operating to make up for the employees’ loss of income. Employers can refer to the “Guide on second job arrangements for employees with reduced work hours in response to Covid-19”. Employers may also wish to encourage affected employees to consider suitable job opportunities under the SGUnited Jobs Initiative.
Employers unable to adhere to recommendations
MOM recognises that some employers may themselves be facing financial difficulties with poor business prospects. They may therefore not be able to adhere to the above recommendations, and may instead need to use the enhanced JSS payouts to cover some fixed overheads to keep their businesses going. The Advisory states that notwithstanding this, employers should not act unilaterally and put their local employees on prolonged no-pay leave without any baseline salary. Employers should discuss with their unions and employees and come to an agreement on how the JSS payouts are to be used to ensure their business survival as well as provide some salary support to their employees. If there is no mutual agreement, either party may contractually terminate the employment with notice as required under the employment contract or the Employment Act.
In working out such arrangements, employers should give special consideration to their lower-wage employees (e.g. employees who qualify for Workfare Income Supplement) and provide more support to them to alleviate any hardship.
5. Foreign employees
Employers should ensure that they continue to take care of the well-being of all their foreign employees in Singapore. For work permit holders, there is a legal obligation on employers to provide upkeep and maintenance while they are in Singapore.
Payment of prevailing salaries
Foreign employees who work full-time must be paid their prevailing salaries. Where the foreign employee is not able to resume full-time work in Singapore because their employers are only allowed to resume operations partially or face poor business prospects, MOM encourages these employers to continue to pay the foreign employees their prevailing salaries by considering the following:
- Allow the foreign employee to consume his existing leave entitlements;
- Redeploy the affected foreign employee to another role within the company;
- Provide the foreign employee with relevant training and upskilling to get ready for the full resumption of business activities; or
- Apply for FWS, which allows “time-banking” of salary payments for unworked hours to offset overtime payments in the future.
Employers unable to pay prevailing salaries
Employers who are unable to pay prevailing salaries because of the need to reduce wage costs after considering non-wage cost reductions should engage and mutually agree with their unions and foreign employees on the appropriate salary and leave arrangements during this period. If a foreign employee were to be placed on no-pay leave for an extended duration, the employer must obtain his consent in writing. If there is no mutual agreement, either party may contractually terminate the employment with notice as required under the employment contract or the Employment Act.
Extension of Foreign Worker Levy rebate
For those not on the Ministry of Trade and Industry’s list of businesses permitted to resume full operations on-site, and for all businesses in the construction, marine shipyard, and process sectors, the Government is extending the Foreign Worker Levy (“FWL”) waiver and rebate for up to two months (i.e. June and July 2020). This will help these businesses manage their costs and improve their cashflow until they are able to resume business activities. The FWL waiver and rebate that eligible employers will receive per qualifying work permit or S Pass holder are:
- June 2020: 100% waiver of May levies due in June and a S$750 FWL rebate; and
- July 2020: 50% waiver of June levies due in July and a S$375 FWL rebate.
6. Notification requirements for cost-saving measures with salary reductions post-circuit breaker
Employers that implement cost-saving measures post-circuit breaker must continue to notify MOM if the cost-saving measures result in more than 25% reduction in the monthly salaries of their employees and the employer has at least 10 employees.
7. Reminder to all employers and employees
The Advisory reminds all employers to treat employees, both local and foreign, fairly and responsibly, taking into consideration the significant support provided by the Government to manage business costs and protect jobs.
The Advisory states that employers should follow the guidelines on salary and leave arrangements as set out in the Advisory and take reference from TAMEM, where applicable.
Employees are also asked to take due recognition of the employer’s challenges during this crisis and be reasonable when discussing salary and leave arrangements with their employers, especially for those who are unable to resume business during Phase One.
The Advisory is available from the MOM website www.mom.gov.sg by clicking here.
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 firstname.lastname@example.org.
Knowledge Highlights 25 January 2023