Singapore: Changes to the Employment Act

Further to our report last year on the proposed amendments to Singapore’s Employment Act (EA) (see our Bulletin), the Singapore Parliament passed a bill to amend the EA in November 2013.

The amendments are the outcome of phase one of a two-phase review of the EA and it is expected that most of the changes will take effect on 1 April 2014.

Key amendments

• The application of Part IV of the EA will be extended through an increase in the salary threshold for employees (other than workmen) from SG$2,000 to SG$2,500 per month.
• Professionals, managers and executives (PMEs) earning up to SG$4,500 will benefit from extended coverage of the EA, including sick leave benefits and unfair dismissal provisions. PMEs will need 12 months’ service to seek redress for unfair dismissal.
• Deductions from wages for accommodation, amenities and services will be subject to a 25% sub-cap. The 50% total cap for authorised deductions continues to apply.
• The salary threshold for non-workmen claiming overtime pay will be increased from SG$2,000 to SG$2,500. However the overtime rate payable will be capped at SG$2,250.
• Employers can provide time-off in lieu for work done on public holidays by PMEs, subject to mutual agreement.
• Failure to pay salary in accordance with the EA will now attract an increased fine of between SG$3,000 and SG$15,000 and/or 6 months imprisonment for a first offence, and a fine of between SG$6,000 and SG$30,000 and/or 12 months’ imprisonment for subsequent offences.
• Arrest powers will be granted to employment inspectors where there is a reasonable belief that there has been a failure to pay salary. Inspectors will also have the right to enter workplaces and conduct checks.
• Company officials (including directors) will bear greater personal responsibility for offences committed by the company.

Other changes include:

• From 1 April 2015, the eligibility period for retrenchment benefits will reduce from three years’ service to two years’ service.
• Tripartite Guidelines will be introduced in early 2014 requiring employers to provide payslips and keep employment records for all employees. Tools to assist employers (including template documents) will be made available on the Ministry Of Manpower website by 1 April 2014.
• The potential ‘double dipping’ where parents with an older Singapore citizen child and a younger non-citizen child have been able to claim leave under both the EA and the Child Development and Co-Savings Act (CDCA) will be prevented by amendments to the CDCA.

Further reviews

The outcomes of phase two of the EA review have not yet been announced. In addition, a review of the Industrial Relations Act is underway.

Actions for employers

Employers should review employee entitlements, employment agreements and procedures to ensure compliance. In addition, employers should be aware that there may be further amendments to the EA as a result of the phase two review.

Article written by Fatim Jumabhoy, Senior Associate and Georgia Leonhardt, Associate.