26 October, 2018
On 2 October 2018, the Employment (Amendment) Bill (“Bill”) was introduced in Parliament. This client update will provide an overview of the key changes to the Employment Act (“Act”) as proposed in the Bill.
For a brief overview of the present legal framework under the Act, please see our earlier client update here.
Introduction of PMETs as employees under the Act
One of the biggest changes to the Act will be the introduction of managers and executives who receive a salary of more than $4,500 (“PMETs”), into the scope of employees covered under the Act. As such, PMETs will be afforded core protections such as, holiday and sick leave entitlements, redress on wrongful dismissal, contract termination rights, and salary payment rights.
Another key consequence of such change, is that employers will generally be required to give PMETs a written record of their key employment terms under section 95A of the Act, which includes but is not limited to a description of such employee’s main duties and responsibilities, daily working hours, number of working days per week and rest days, salary period, basic rate of pay, fixed allowance and deductions during each salary period (if any), any other salary-related component, leave entitlement, medical benefits and notice period for dismissal or termination (as the case may be).
The scales are not tipped entirely in favour of PMETs either, since their salary will be subject to authorised deductions under the Act.
It should also be noted that in the event of a transfer of undertaking covered by the Act, this amendment will render PMETs under the transferor’s employment to be deemed as “affected employees” for the purposes of automatic transfer of employment under section 18A of the Act. Upon such transfer of undertaking, their contracts of service will generally have effect as if originally made between the person so employed and the transferee.
Greater protection afforded to employees
Broadened definition of vulnerable non-workman employees
Under the Bill, the proposed scope of vulnerable non-workman employees will be expanded to employees (other than workmen) who are in receipt of a salary not exceeding $2,600 a month, as opposed to the current cap of $2,500 a month. This will increase the number of vulnerable non-workman employees entitled to have their due salaries paid in priority to the employer’s other debtors who have obtained a judgment or decree against the employer in connection with a mortgage, charge or lien.
Similarly, the number of vulnerable non-workman employees entitled to the enhanced protections under Part IV of the Act (such as protection in relation to hours of work, rest days, overtime payments and annual wage supplements), in addition to the core protections under the Act will also increase.
Annual leave as core protection
Under the current Act, annual leave is an enhanced protection under Part IV of the Act that only certain employees (such as workmen and vulnerable non-workmen) are entitled to. However, pursuant to the Bill, annual leave will become a core protection under the new section 88A, which all employees under the Act, including PMETs, will be entitled to.
Wider definition of dismissal
Under the current Act, an employer may after due inquiry, dismiss an employee without notice on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his service.
“Dismiss” currently means the termination of the contract of service of an employee by his employer, with or without notice and whether on the grounds of misconduct or otherwise. However, under the Bill, the definition of “dismiss” will be expanded to include the resignation of an employee if the employee can show, on a balance of probabilities, that he did not resign voluntarily but was forced to do so because of any (course of) conduct or omission engaged by the employer.
The nuanced amendment closes the existing possible loophole that employers may resort to, in order to terminate an employee without:
(a) subjecting themselves to potential wrongful dismissal claims; or
(b) being liable for certain employee entitlements that may arise in the event that the employer terminates the contract of service.
Redress for wrongful dismissal
The Employment Claims Tribunal (“ECT”) was set up in 2016, under the Employment Claims Act 2016 to address salary-related disputes. Under the Bill, the ECT will replace the Minister for Manpower (“Minister”) in relation to dealing with disputes over dismissal by an employer without just cause or excuse (“wrongful dismissal”). Since disputes over wrongful dismissal generally relate to salary as well, the ECT’s jurisdiction over both types of disputes will streamline the dispute resolution process for both employers and employees.
It should also be noted that employees must comply with section 3 of the Employment Claims Act 2016 before lodging a wrongful dismissal claim with the ECT, which generally requires employees to submit a mediation request to the Commissioner for Labour first for such a claim.
The Bill also introduces the remedy of compensation as an alternative to the reinstatement of former employment for wrongful dismissal claims. This additional recourse strengthens the protection afforded to employees in circumstances where the employment relationship has broken down irretrievably such that a reinstatement of former employment is not a feasible option.
Under the current Act, an executive or manager earning up to $4,500 a month who is dismissed either with notice or with salary in lieu of notice, must have served his employer (whether or not in a managerial or an executive position) for at least 12 months, before such employee may seek redress for wrongful dismissal.
The Bill seeks to reduce this minimum period of service to six months. The widening effect of such amendment is two-fold. More employees will be eligible to seek redress for wrongful dismissal given:
(a) the shortened minimum service period; and
(b) the expanded scope of executives and managers deemed to be employees under the Act, upon the removal of the $4,500 a month salary cap (please see “Introduction of PMETs as employees under the Act” above).
New scope of authorised deductions
Amongst other changes to the scope of authorised salary deductions that an employer can make from an employee’s salary, deductions for:
(a) house accommodation supplied by the employer; and
(b) authorised amenities and services supplied by the employer,
shall only be made with the written consent of employees under the Bill. The amendments will also allow employees to withdraw such written consent at any time before the deduction is made, without being penalised by the employer.
Wider scope of medical professionals who can certify paid sick leave
Under the current Act, only a medical practitioner appointed by the employer or a medical officer (which generally refers to dentists registered under the Dental Registration Act (“registered dentists”)), can certify that an employee (who has served his employer for not less than six months) is entitled to paid sick leave after examination of such employee. The Bill expands the range of medical professionals who may certify such paid sick leave to, all medical practitioners, including those not appointed by the employer, and registered dentists.
This bill, however, does not expressly provide that Traditional Chinese Medicine Practitioners (or other traditional medicine practitioners) may certify that an employee is entitled to paid sick leave.
Greater protection for employers
Alternative forms of compensation for work on public holidays available for larger range of employees
Section 88(4A) of the current Act requires an employer to compensate executives and managers earning up to $4,500 a month for working on a public holiday, at the employer’s request, by paying such employee his gross rate of pay for that day and granting the employee one of the following:
(a) a day off in substitution for that holiday;
(b) an extra day’s salary at the basic rate of pay;
(c) part day off on a working day comprising such number of hours as may be agreed between the employee and his employer;
(d) part day off on a working day comprising four hours if the employee worked on that holiday for a period not exceeding four hours; or
(e) day off on a working day if the employee worked on that holiday for a period of more than four hours.
For all other employees who work on a public holiday at the employer’s request, such employer does not enjoy the flexibility of section 88(4A) of the Act above. Instead, employers are required to pay an extra day’s salary at the basic rate of pay for one day’s work in addition to the gross rate of pay for that day. Where travelling allowance is payable under such employee’s contract of service, the employer is also obliged to pay such allowance for one day.
Under the Bill, the flexibility that employers enjoy under section 88(4A), now extends to all employees other than an employee to whom Part IV of the Act applies (namely, workmen and vulnerable non-workmen).
Narrower scope of paid sick leave where hospitalisation is necessary
Currently, an employee is deemed to be hospitalised for the purposes of determining the number of days of paid sick leave he is entitled to under the Act, so long as he is certified ill enough to need to be hospitalised, regardless of whether he is actually hospitalised or not. Under the Bill, an employee is hospitalised only if he is warded in an approved hospital.
Transition to the new Employment Act
While the changes to the Act are significant, it should be noted that the Minister may prescribe additional provisions of a saving or transitional nature as the Minister may consider necessary or expedient, for a period of two years after the date of commencement of any provision of the Bill.
Implementation of the new Employment Act
The Second Reading of the Bill is scheduled on 19 November 2018. If the Bill is passed, all changes to the new Employment Act will be implemented on 1 April 2019.
For more information, please find the Employment (Amendment) Bill 2018 here.
