18 October, 2018
In March 2018 the Singapore Government announced its intention to legislate sweeping changes to the Employment Act (Cap. 91) (EA), to be implemented by 1 April 2019.
Most significantly, this included the expansion of the coverage of the EA to include all professional, managerial and executive employees (PMEs) and the extension of certain protections and entitlements to those employees. However, questions remained about the detail of the changes and their impact on employers in Singapore.
On 2 October 2018 Manpower Minister Josephine Teo tabled the Employment Amendment Bill (Amendment Bill) in Parliament, providing clarity regarding these very significant changes.
Coverage of the EA
As expected, the Amendment Bill extends coverage of the general provisions of the EA to all employees, other than civil servants, seafarers and domestic workers. This is a very significant change. It means that virtually all non-public sector employees, including highly paid executives (including expatriates), will have access to statutory unfair dismissal protections (discussed further below).
Further, the Amendment Bill extends the application of the provisions of Part IV of the EA (which deal with overtime etc.) to employees earning no more than SGD2,600 per month (but not professional or managerial employees). This threshold is up from SGD2,500. Note that these provisions concern non-"workmen" employees. As is presently the case, workmen earning not more SGD4,500 per month are also covered by Part IV.
Unfair dismissal and reinstatement
In another very significant change, responsibility for unfair dismissal claims will be moved from the Ministry of Manpower to the Employment Claims Tribunal (ECT). Under the Amendment Bill and consequential amendments to the Employment Claims Act 2016 (ECT Act):
- all employees covered by the EA will be able to make an unfair dismissal claim to the ECT. As above, this includes highly paid executive employees (including expatriate employees). A minimum six months' service requirement applies for PMEs dismissed on notice, or where a payment in lieu of notice is made;
- a claim can be made where the employee considers that he or she has been dismissed "without just cause or excuse", and must be made within one month of the date of dismissal;
- the claimant may seek reinstatement to employment (with backpay) OR compensation in lieu of reinstatement.
The Amendment Bill does not include a definition of "without just cause or excuse", however consequential amendments proposed with respect to the ECT Act suggest that a new Tripartite Guideline will be issued on the topic, which may provide further guidance. Given the requirement in the EA to dismiss only "after due inquiry", it is likely that there will be both substantive and procedural requirements for a dismissal to take place with "just cause or excuse".
It is clear that in the event of an unfair dismissal claim, the onus will be on the employer to demonstrate that there was "just cause or excuse" for termination – and in the case of termination on notice due to poor performance or misconduct, to prove the ground for giving notice of dismissal.
One issue not dealt with in the Amendment Bill is the interaction between the compensation regime and the jurisdictional limits of the ECT. At present, a jurisdictional limit of SGD20,000 applies to claims made before the ECT (this can extend to SGD30,000 where a union is involved). However, a claim for back wages or compensation may be much more than this, especially where the termination involves a highly paid employee.
Given that the jurisdictional caps of the ECT are set by the Employment Claims Regulations 2017 (which is unaffected by the Amendment Bill) rather than the ECT Act itself, we may see further changes to the cap once the Amendment Bill is passed. It is also possible that regulations will be introduced regarding the calculation of compensation, where an employee seeks that remedy instead of reinstatement.
Investigation and suspension
The Amendment Bill retains the EA provisions regarding the suspension of an employee during an investigation into misconduct. However, the Amendment Bill clarifies that:
- this can only occur for a period of one week, unless the Commissioner approves a longer period upon an employer's application; and
- the suspension must be on half-pay.
Many employers currently have contractual provisions that apply to employees not covered by the EA that allow for suspension of a longer period, or without pay, in the event of suspected misconduct. There is a real question as to whether those contractual provisions can continue to be relied upon once these amendments take effect.
Annual leave
As foreshadowed in March, provisions regarding annual leave have been removed from Part IV of the EA, and moved to the general part of the EA. This means that all employees covered by the EA will be entitled to statutory annual leave.
Public holidays
The extension of coverage of the EA means that virtually all employees will be entitled to paid public holidays, as a matter of statute. Further, employees who are required to work on a public holiday are entitled to an extra day's salary for that public holiday or a substituted holiday. However the Amendment Bill provides that an employee (other than a Part IV employee or a workman) will instead have the option of receiving a day or part-day off work instead of an extra payment for the day or a substituted holiday.
Maternity protections
The extension of coverage of the EA means that all female employees meeting the requisite service threshold will be entitled to 12 weeks' maternity leave, eight weeks of which must be paid. This includes executive and foreign employees .
The Amendment Bill also changes the claim process in the event of the dismissal of a pregnant employee. The EA already provides that a notice of termination issued to a pregnant woman will not disentitle that woman to maternity leave, if the notice was "given without sufficient cause". Currently, the EA provides that the Minister of Manpower will resolve a dispute about whether a notice of dismissal was "given without sufficient cause" (and therefore, whether she is still entitled to maternity leave or a payment in lieu). Under the Amendment Bill, such claims will instead be heard by the ECT and the employer will be required to demonstrate that there was sufficient cause to terminate the pregnant employee's employment.
Similar to the unfair dismissal regime, the ECT will have the power to reinstate an employee to her employment and order payment of back wages, where it is satisfied there was no sufficient cause for termination.
Similar provisions have also been proposed for employees entitled to leave under the Child Development Co-Savings Act.
Sick leave
Under the Amendment Bill, any medical practitioner will be able to certify an employee for sick or hospitalisation leave, rather than the current approach of restricting certification to a practitioner appointed by the employer.
Deductions
The Amendment Bill makes changes to the current deductions regime. Relevantly:
- it removes of the ability of an employer to make deductions for the actual cost of meals supplied by the employer at the request of the employee;
- an employee's written consent will be required for the making of deductions regarding accommodation and amenities and services. This consent can be withdrawn at any time, and no penalty can be imposed by the employer for such withdrawal; and
- an employer will be entitled to deduct sums for "unearned employment benefits", which does not include salary, but will include things such as annual leave taken in advance.
Importantly, an employer remains entitled to make deductions from salary for the purposes of adjusting salary over-payments.
Requirement to furnish information
The Amendment Act also confers on the Commissioner of Labour power to require employers to furnish information regarding the retrenchment of employees. This power seems to sit separately from the obligations present in the Tripartite Guidelines on Mandatory Retrenchment Notifications on employers to provide information regarding retrenchments.
Ability to regulate employer's conduct
Finally, the Amendment Bill provides the Minister of Manpower power to make regulations that regulate the conduct of an employer towards an employee, for the purposes of protecting the employee from any employment practice that may adversely affect the well-being of the employee.
It is not clear at this stage whether such regulations will be made, but this power could be used, for example, to reissue current Tripartite Guidelines or issue new ones as legally-binding regulations, thereby increasing the ability of the Tripartite bodies to enforce compliance with the terms of those Guidelines.
What does this mean for you?
The extension of coverage of the EA, and therefore the associated protections and benefits, to all private sector employees in Singapore is extremely significant. The granting of a power of reinstatement to the ECT, which will now hear unfair dismissal claims, is particularly significant.
Employers should take the time to familiarise themselves with the terms of the EA, with the proposed amendments, and consider changes to their employment contracts and internal policies and procedures to ensure compliance, in advance of an expected effective date of 1 April 2019.
For further information, please contact:
George Cooper, Partner, Ashurst
george.cooper@ashurst.com
