21 March, 2018
Background
On 5 March 2018, the Ministry of Manpower ("MOM") announced sweeping changes to the Employment Act (Cap. 91) (the "EA"). Manpower Minister Lim Swee Say stated that "as professionals, managers and executives (PMEs) make up 56% of the workforce – going up to 65% by around 2030 – it is timely to make a fundamental change to the coverage of the Employment Act".
In addition, in an effort to raise the quality and productivity of foreign workers in Singapore (whilst ensuring local Singaporeans receive access to highly-skilled jobs), the MOM has introduced stricter rules on employing foreigners. The MOM believes these rules will send a clear message: "We are pro-business, but only to those who are pro-worker".
This briefing summarises the key issues arising from the MOM's announcement.
Summary of EA Amendments
The amendments to the EA are due to be tabled in Parliament in September 2018, to come into force on 1 April 2019 (the "EA Amendment"). This follows a month-long consultation period in January 2018, in which public feedback was sought. The MOM stated that the EA is regularly reviewed to "keep pace with the changing labour force profile and employment landscape", announcing the following amendments:
The S$4,500 salary cap (currently taken as a benchmark, above which employees are not covered by the EA) will be removed, meaning 430,000 more professionals, managers and executives ("PMEs") will be covered by the EA. Currently, salary and responsibilities are both important in determining whether an employee is covered by the EA; following the EA Amendment, the position will change such that all employees (regardless of whether they are managerial or not) will be covered by the EA. The EA will then provide protection to all employees with respect to certain general benefits such as 11 days paid public holiday, 14 days paid sick leave, 60 days paid hospitalisation leave, as well as maternity leave. They will also benefit from redress for wrongful dismissal, timely payment of salary and allowable deductions. However, the EA will still draw a distinction between PMEs and non-PMEs with lower salary levels (as noted below), who will receive additional benefits.
The salary cap for 'non-workmen' (i.e. those who are not involved in manual labour, such as clerks and receptionists) will be raised from S$2,500 to S$2,600. This will allow them to enjoy additional protections in areas such as hours of work, overtime pay and rest days. Currently, overtime pay for non-workmen is capped at a minimum rate of 1.5 times the salary level of S$2,250 (provided the employee earns less than S$2,600). This will be raised to S$2,600.
The Employment Claims Tribunal will become a "one-stop service", being able to hear claims related to wrongful dismissal, previously heard by the MOM. This will be on top of salary-related disputes currently heard by the tribunal if unresolved by mediation by the Tripartite Alliance for Dispute Management.
Public servants, domestic workers and seafarers will continue to be covered under separate legislation.
Tightening of rules on employing foreigners
Smaller companies (with at least 10 employees) will now find it more difficult to hire foreign talent in Singapore. Currently, the rule that requires companies to advertise jobs on the national Jobs Bank for at least 14 days before a foreigner can be employed only applies to companies with at least 26 employees and for jobs paying under $12,000 a month.
However, from 1 July 2018, this will be extended to cover companies with at least 10 employees and for jobs paying under S$15,000 a month. Additionally, companies will need to pay foreign semi-skilled workers more under the 'S Pass scheme', with an increase from S$2,200 to S$2,400 taking place over two tranches.
As foreigners make up around one-third of Singapore's workforce, and as Singapore's net job growth slows to under 10,000 a year on average, the MOM has historically sought to tackle these issues early. For example, the government introduced tighter rules for Employment Passes ("EPs") in 2014, which resulted in a significant decrease from a peak of 32,000 new EP holders in 2011, down to an average of 3,000 new EP holders per year over the past three years.
The "Blacklist"
To underline the importance of these reforms, on 6 March 2018 the Manpower Minister Lim Swee Say noted that 500 companies had been marked for bias towards hiring foreigners in the past two years.
The companies have been included on a government watchlist, and such "triple weak" companies (so called as they have a high proportion of foreigners, have no plans to recruit more Singaporeans and contribute little to the economy and society) will have their EP applications scrutinised more closely. Whilst 150 companies have introduced significant changes to justify their removal from the blacklist, 60 companies have shown no signs of cooperation; for these companies, Mr Lim confirmed "We have curtailed their work pass privileges".
