29 April 2019

On 1 April 2019, substantive amendments to the Employment Act and other employment-related legislation to expand and enhance employee protection and improve the framework for the resolution of employment disputes came into force.

This article highlights some of the important changes introduced by the Employment (Amendment) Act 2018 that employers should note.

Extension of core benefits under the Employment Act to all employees

One of the key amendments is the extension of core employee benefits prescribed under the Employment Act to all employees, except seafarers, domestic workers and public servants who will continue to be covered separately. Core employee benefits include annual leave, paid public holidays, sick leave and hospitalisation leave, as well as other protection (such as timely payment of salary, maternity protection and childcare leave, and statutory protection against wrongful dismissal). One notable change is that annual leave is now a statutory right of all employees; previously, only workmen earning up to S$4,500 a month and non-managerial/non-executive employees (other than workmen) earning up to S$2,500 a month had such a right.

Previously, persons employed in managerial or executive positions whose monthly salaries exceeded S$4,500 were excluded from the definition of “employee”. Such persons will now also be regarded as employees for the purposes of the Employment Act. Employers should ensure that the terms of their employment contracts meet the basic requirements stipulated in the Employment Act. These include the minimum notice period for termination, timely payment on dismissal, and authorised deductions from the salary of employees.

In addition, all employees will now be automatically transferred pursuant to a sale of business and their existing terms and conditions of employment would be preserved on transfer. Although this eases the transfer of employees in the context of a business sale as the consent of managerial and executive employees who earn in excess of S$4,500 a month no longer needs to be obtained, this may not necessarily be attractive to every acquiror of a business as it would not have the flexibility of deciding which of such managerial or executive employees it wishes to hire.

Revised salary thresholds for protection under Part IV of the Employment Act

Part IV of the Employment Act (“Part IV”) prescribes minimum conditions of service relating to rest days, hours of work, overtime pay, retrenchment and retirement benefits. Previously, Part IV applied to workmen whose monthly salaries did not exceed S$4,500 and employees (other than workmen) whose monthly salaries did not exceed S$2,500.

With the amendments, the salary cap for non-workmen to whom protection under Part IV applies will now be S$2,600 per month. There is no change to the Part IV coverage of workmen earning a monthly basic salary of up to S$4,500. Also, persons employed in managerial or executive positions will continue to be excluded from Part IV.

Improvements to the resolution of wrongful dismissal disputes

Another set of amendments concerns enhancements to the employment dispute resolution framework. Previously, unresolved statutory and contractual salary-related disputes were heard by the Employment Claims Tribunals (“ECT”), while wrongful dismissal claims were heard by the Ministry of Manpower (“MOM”). With the amendments in force, both salary-related disputes and wrongful dismissal claims will now be heard by the ECT, as both types of disputes are often related.

The definition of “dismiss” under the Employment Act has also been amended to restate what constitutes a dismissal of an employee. A dismissal will not be restricted to the termination of a contract of service at the initiative of an employer, with or without notice and for cause or otherwise, but will also include 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.

In addition, employers should take note of the following:

  • Managers and executives will now be eligible to claim for wrongful dismissal if they have served their employer for at least six months, instead of 12 months as was previously the case.
  • In a successful wrongful dismissal claim, an ECT can direct an employer to reinstate an employee in the employee’s former employment. This is not a remedy which is ordinarily or readily granted by the courts. 
  • When an ECT is deciding a claim involving a wrongful dismissal dispute, it must take into account the tripartite guidelines on wrongful dismissal.

Employers should therefore exercise more care in handling terminations and dismissals. In particular, it would be good practice to have in place appropriate procedures for conducting inquiries into alleged acts of misconduct.

Other amendments

Other amendments which have come into force include the following:

  • Deductions: Adopting a less prescriptive approach for authorised deductions. Essentially, the new amendments will now allow a deduction if it fulfils two conditions, namely, the employee must consent to the deduction and the employee must have the ability to withdraw his consent at any time without penalty.
  • Sick leave and hospitalisation: Recognising medical certificates from all doctors for paid sick leave (and not just government doctors and company-appointed doctors) and clarifying what hospitalisation entails under the Employment Act (for example, an employee will be deemed to be hospitalised despite not being an in-patient of a hospital or despite being discharged after being warded so long as the employee is certified to be ill enough to need rest in order to recover). 
  • Retrenchment: Providing that the Commissioner for Labour may require an employer to furnish information on the retrenchment of any employee.

Background

From 18 January 2018 to 15 February 2018, MOM held a public consultation seeking feedback on three broad areas: the extension of core provisions in the Employment Act to all employees (including managers and executives, regardless of level of salary), the appropriate salary thresholds for workers who qualify for protection under Part IV, and enhancements to the dispute resolution process for employment-related disputes. On 6 March 2018, the then Minister for Manpower, Mr Lim Swee Say, announced at the Committee of Supply 2018 that MOM would proceed with its plans to enhance the Employment Act to provide better protection for workers, and was aiming to have the changes implemented by 1 April 2019. The resulting Employment (Amendment) Bill was introduced in Parliament on 2 October 2018 and passed on 20 November 2018.

Reference materials

The following materials can be accessed from the Singapore Statutes Online website sso.agc.gov.sg:

  • Employment (Amendment) Act 2018
  • Employment (Amendment) Act 2018 (Commencement) Notification 2019

The State Courts media release “New Dispute Resolution Platform for Wrongful Dismissal Claims” dated 1 April 2019 can be accessed from the State Courts website www.statecourts.gov.sg by clicking here.

 

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