Proposed changes to the Singapore Employment Act

Employment protections under the Employment Act, Chapter 91 of Singapore (EA) are expected to be extended to a broader category of employees and additional protections have been proposed following a Ministry of Manpower (MOM) public consultation process which will be conducted in two phases. Phase One of the process commenced at the end of 2012 and was concluded in March 2013. Phase Two of the process recently commenced in July 2013 and the MOM has requested for the public's views by 30 October 2013.

Background

The EA applies to all employees in Singapore and prescribes minimum terms and conditions of employment. However, various exclusions apply, the most significant being that the EA generally does not apply to employees in a managerial or executive position (save for limited sections relating primarily to salary payment and only for managers whose monthly earnings do not exceed SGD4,500).

For EA-covered employees, application of the EA varies according to earnings. In particular, Part IV, which is concerned with annual leave, working hours, rest periods and overtime, only applies to those employees who earn less than SGD2,000 per month (or SGD4,500 in respect of manual ‘workmen’).

The EA review is mainly concerned with addressing the increase in the proportion of managers and executives, rising salary levels, as well as evolving employment norms and practices.

Proposed EA Amendments – Phase One

The MOM has proposed to extend the application of Part IV of the EA through an increase in the salary threshold for employees (other than workmen) to SGD2,500 per month.

It is also proposed to extend certain existing EA minimum entitlements and protections (for example, sick leave entitlements and protection against unfair dismissal) to junior managers/executives earning up to SGD4,500 per month. In doing so, MOM has indicated that it will amend the EA to:

• introduce a service qualification period of one year before which junior managers/executives can seek redress in the case of dismissal with notice; and
• increase flexibility to provide time-off in lieu for work done on public holidays by junior managers/executives.

Other new rights under the EA which have been proposed include:

• extending employees’ protection from unauthorized salary deductions, by introducing sub-caps within the existing total cap on salary deductions; and
• requiring employers to maintain detailed employment records and providing written itemized payslips.

Proposed EA Amendments – Phase Two

The MOM has released a statement on 22 July 2013 seeking public feedback for Phase Two of the EA review, which will focus on:

• enhancing protection for workers in non-traditional work arrangements such as contract work, outsourced work and freelancers; and
• introducing additional protection for vulnerable low-wage workers (for example, whether written employment terms and electronic payment of workers' salaries should be made mandatory).

Implications for employers

The changes proposed to the EA are potentially significant and, if passed, will alter the employment landscape in Singapore, particularly in relation to how employers deal with managers and executives earning up to SGD4,500 per month.

This article was written by Celia Yuen, Executive Counsel, and Georgia Leonhardt, Associate, with the assistance of Kwok Hon Yee, Of Counsel and Cui Xian Yap, Associate.