Alas, the amended Employment Act has finally come into force on 1 April 2019. For the first time since the enactment of the first Employment Act in 1968, every employee, including all white collar professionals, managers, executives and technicians (“PMETs”) earning more than SGD 4,500, is now covered under the core provisions of Employment Act.[1]
High time for change
At its genesis in 1968, the rationale for excluding PMETs from the Employment Act was mainly due to two (2) reasons: firstly, PMETs were generally seen as being in a better bargaining position, and thus did not require any statutory protection;[2] and secondly, PMETs made up a very small part of Singapore’s work force.[3]
Fast forward 50 years, PMETs now make up for 56% of our work force and this figure is expected to rise to 65% by 2030.[4] Many PMETs are now the sandwich class – for the average PMETS, enforcing their rights by way of litigation is too costly and the reality is that very few are in a position of strength to bargain over their employment terms.[5] Thus, the rationale for excluding PMETs in the first place no longer holds water. The new Employment Act is set to benefit an additional 430,000 PMETs.[6]
So, what is changing?
Now that every employee is covered by the core provisions of the Employment Act, what does this mean from a practical perspective? The short answer may well be very little – the core provisions guarantee every employee basic minimum rights such as minimum days of annual leave, paid public holiday and sick leave entitlements.[7] The reality is that most PMETs would already have more favourable terms in their existing contract. However, we would highlight three (3) changes that are likely to have a greater impact on PMETs: timely payment of salary, ability to make payment in lieu of notice, and access to the Employment Claims Tribunal.
Three (3) things that PMETs should know
- Timely payment of salary
All employers now have a statutory obligation to pay every employee (yes, including PMETs!) his/her salary at least once a month[8] and within seven (7) days after the last day of the salary period. The failure to pay salary in accordance with the Employment Act is an offence punishable by a fine and/or imprisonment. In addition, such an employer would also be deemed to have broken his contract of service and the employee would be entitled to terminate his employment contract and is free to leave.
Prior to the amendments, PMETs who were not covered by the Employment Act were not accorded statutory protection. Aggrieved PMETs did not have any automatic redress under the Employment Act and had to seek redress from the Courts or the Employment Claims Tribunal. In addition, offending employers did not face any criminal liability under the Employment Act.
Rogue employers will no longer be able to side step the law by making use of the salary cap to exclude employees from this statutory right.
- Payment in lieu of notice
Both employers and employees have an implied right in law to make payment in lieu of notice. Prior to the amendments, such a right would be exercisable only if it was an express term in the employment contract. In practice, such a right would usually be a one-way right given to employers only – and employees were often compelled to serve their notice period.
As of 1 April, employees now have an implied right to terminate their employment contracts immediately without having to serve out their notice period (provided, of course, that one is able to pay the salary in lieu!). If an employee has already tendered their resignation and is now serving out the notice period, they may “buy out” the rest of their notice period.
From a practical perspective, this could affect the dynamics of the recruitment and retention of key employees – given that employees may leave the company immediately if they (or their new employers) can afford to pay their notice period.
- Employment Claims Tribunal and Protection from Wrongful Dismissal
As of 1 April, the Employment Claims Tribunal (“ECT”) will now provide employees with a ‘one-stop’ service for both (i) wrongful dismissal claims and (ii) salary-related claims. Prior to the amendments, salary-related disputes were adjudicated by the ECT, while wrongful dismissal claims were adjudicated by the Ministry of Manpower.
As the two types of disputes are often related and tend to go together, [9] this move to consolidate all employment-related disputes and streamline dispute resolution services benefits employees by hopefully shortening the amount of time for the aggrieved employee to seek help[10] and reducing the amount of time a victimized employee is left hanging.[11]
In addition, all PMETs are now protected by the statutory scheme and are may bring wrongful dismissal claims to the ECT. Prior to the amendments, only a limited number of PMETs (i.e. whose salary is not more than SGD 4,500) may bring a claim under the old statutory scheme. PMETs that were excluded from the statutory scheme could only seek redress for wrongful dismissal by way of common law.
Secondly, the minimum period of service required before a PMET is eligible to claim for wrongful dismissal has been reduced from twelve (12) to six (6) months. This was in recognition that six (6) months would be sufficient for an employer to assess a PMET’s suitability for a job.[12]
This amendment enhances the protection conferred upon PMETs, as it provides a greater number of PMETs with access to different avenues to resolve employment related disputes.
Conclusion
As the amendments have just come into effect, the impact of such amendments on the employer-employee relationship remains to be seen. While the amendments do not appear to be radical in nature, they do signal a shift in the Singapore employment landscape to better protect the wellbeing of employees and ensuring a minimum standard of protection for all employees, regardless of the nature of their work and income level.
Feel free to speak to us today to find out more about how we can help ensure that your business is compliant with the changes, or if you wish to find out more about the amendments.
[1] Only three (3) groups of employees were protected under the core provisions of the old Employment Act. They were: (i) all workmen – these are the manual workers or blue-collar workers; (ii) all non-workmen – these are our rank-and-file white-collar workers; and (iii) managers and executives with basic monthly salaries up to $4,500.
[2] Singapore Parliamentary Debates, Official Report (18 November 2011) vol 85 col 950 (Gan Kim Yong, Acting Minister for Manpower).
[3] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Josephine Teo, Minister for Manpower).
[4] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Josephine Teo, Minister for Manpower).
[5] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Associate Professor Walter Theseira, Nominated Member of Parliament).
[6] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Patrick Tay Teck Guan, Member of Parliament for West Coast).
[7] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Josephine Teo, Minister for Manpower).
[8] Ministry of Manpower, Paying salary <https://www.mom.gov.sg/employment-practices/salary/paying-salary>.
[9] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Jessica Tan Soon Neo, Member of Parliament for East Coast).
[10] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Saktiandi Supaat, Member of Parliament for Bishan-Toa Payoh).
[11] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Saktiandi Supaat, Member of Parliament for Bishan-Toa Payoh).
[12] Singapore Parliamentary Debates. Official Report (20 November 2018) vol 94 (Josephine Teo, Minister for Manpower).
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