19 April, 2018
Significant changes to the Employment Act ("EA") were announced in Parliament in March 2018. Details of the amendments are likely to be made public later this year, and these amendments are expected to become law by 1 April 2019 ("Effective Date").
The key major changes are:
- Senior managers and executives will be covered under the EA.
- Statutory protection against unfair dismissal will be expanded.
- Part IV of the EA on working time protections will cover more employees
More details on these upcoming changes are set out below.
1. EA extended to cover senior managers and executives
Currently, the EA applies to:
(a) All non-managerial and non-executive employees regardless of salary ("rank & file"); and
(b) Managerial and executive employees earning up to S$4,500 per month ("junior PMEs").
The EA amendment will remove the salary cap for managerial and executive employees, so that senior managers and executives (regardless of salary, position or the confidential nature of their jobs ("senior executives") will be covered by the EA from the Effective Date.
Effect of amendment
This major change will result in all core employee benefits under the EA being extended to senior executives, in addition to the rank & file and junior PMEs currently covered by the EA. These core benefits include:
- Annual leave, paid sick leave / hospitalisation leave;
- Paid public holidays;
- Timely payment of salary;
- Maternity protection;
- Childcare leave;
- Right to preserve existing terms and conditions in employment transfers resulting from sale of business and business restructuring; and
- Statutory protection against dismissal "without just cause or excuse" ("unfair dismissal").
In particular, the extending of annual leave to all employees is significant because this statutory entitlement is currently only available to non-managerial and non-executive employees who are earning up to a specified salary cap ("Part IV employees" – see section 3 below). The announced changes now suggest that statutory annual leave is likely to be moved out of Part IV of the EA so as to apply to all employees. It remains to be seen whether any other Part IV provisions will be extended to all employees.
2. Unfair dismissal protection expanded
The implication of extending the EA to all managers and executives also means that senior executives will be entitled to statutory protection against unfair dismissal if they meet the criteria under section 14 of the EA. This means that all managers and executives, including senior executives, will have recourse to the Employment Claims Tribunals ("ECT") if they consider that their employment had been terminated "without just cause or excuse".
This is another important change as currently, claims in relation to unfair dismissal are heard by the Ministry of Manpower ("MOM"). From the Effective Date, employees who seek recourse in respect of both unfair dismissal and salary-related claims will not have to submit two separate claims through the MOM and ECT respectively, and can instead bring their claims to the ECT.
In relation to unfair dismissal, it has been announced that the ECT will have jurisdiction over the following types of unfair dismissal:
- Dismissal on grounds other than poor performance, misconduct or redundancy;
- Dismissal of pregnant employees; and
- Constructive dismissal / forced resignation.
Second Manpower Minister Josephine Teo has said that the MOM will work with employers and the labour movement to produce a set of answers to frequently asked questions on what amounts to unfair dismissal.
3. Extension of Part IV protection to more non-workmen
The salary criteria for protection of non-workmen under Part IV of the EA will also be amended. Currently, Part IV applies to employees who are non-managerial and non-executive
(a) Workmen earning up to S$4,500 per month; and
(b) Non-workmen earning up to S$2,500 per month.
The EA amendment will increase the salary cap for non-workmen to S$2,600 per month so that more non-workmen will be covered under Part IV of the EA from the Effective Date. Key Part IV protections include maximum working hours, mandatory rest days and statutory overtime pay.
Further, the salary cap for calculating overtime pay for non-workmen will be amended. Currently, the hourly basic rate of pay for non-workmen who earn S$2,250 or more per month is calculated based on a monthly salary of S$2,250 (even if the monthly salary is more than S$2,250). However, from the Effective Date, this cap will be increased to S$2,600.
What these EA amendments mean for employers
After details of the amendments are released later this year, employers should undertake a review of their employment documentation and procedures to ensure compliance with the extended statutory obligations, especially in relation to
(i) senior executives;
(ii) non-workmen earning between S$2,500 and S$2,600 (who are non-managerial and non-executive); and
(iii) substantiating grounds for dismissal for all levels of employees.
For further information, please contact:act:
Susan de Silva, Partner, Bird & Bird
susan.desilva@twobirds.com
