Proposed Amendments to the Employment Act

Ministry of Manpower - Corporate Communications MOM

Consultation Period: 19 Nov 2012 - 11 Jan 2013

Status: Closed

Summary

As part of the review of the Employment Act (EA), the Ministry of Manpower (MOM) is seeking feedback from the public on the proposed areas being considered in Phase I.

Detailed Description

AIM

As part of the review of the Employment Act (EA), the Ministry of Manpower (MOM) is seeking feedback from the public on the proposed areas being considered in Phase I.

BACKGROUND

2. In April 2012, Acting Minister for Manpower Tan Chuan-Jin had announced that MOM would be reviewing the EA. He had invited members of the public to share their preliminary feedback on areas that could be reviewed. We have since received numerous suggestions, including proposals to expand the scope and coverage of the Act, to improve employment terms and benefits of workers, as well as to enhance operational flexibility for employers (refer to Appendix A for summary of feedback received to date).

3. We have also consulted relevant stakeholders. MOM, together with our tripartite partners – the Singapore National Employers Federation (SNEF)/ Singapore Business Federation (SBF) and the National Trades Union Congress (NTUC), have formed a Tripartite Workgroup (see Appendix B for composition of the workgroup) to study the feedback received as well as to deliberate on other possible amendments to the Act.

RATIONALE FOR REVIEW

4. The EA, enacted in 1968, stipulates the rights and obligations of employers and employees and harmonises the interests of both parties. It provides for basic employment benefits such as salary protection, minimum employment terms and dispute resolution.¹ The last major review was conducted in 2008 and implemented from 1 January 2009.

5. There is a need to review the EA to ensure that the Act remains relevant to the changing workforce profile, particularly the (i) increasing proportion of professionals, managers and executives (PMEs); (ii) rising salary levels; and (iii) evolving employment norms and practices.

SCOPE OF REVIEW

6. The feedback received from the public so far has been useful in helping us scope and prioritise the issues for review. Given the complexity of some of the issues, the review will be conducted in two phases:

   a. Phase 1 (2Q 2012 – 1Q 2013) will review:

   (A) Extending Coverage of the EA
   (B) Improving Employment Standards and Benefits for Employees
   (C) Reducing Rigidity and Augmenting Flexibility for Employers

   b. Phase 2 (from 4Q 2013) will focus on the more complicated issues that require further study including, but not limited to:

   (D) Enhancing protection for employees in Non-traditional Work Arrangements, such as contract work, self-employment and outsourcing
   (E) Better Mechanisms to Facilitate Employment Dispute Resolution between employers and employees

PROPOSED AREAS FOR REVIEW FOR PHASE I

A. Extending Coverage of the Employment Act

• To cover more employees, particularly on provisions relating to hours of work, rest days and annual leave: Today, workmen earning up to $4,500 and non-workmen earning up to $2,000² are covered under Part IV of the EA which relates to time-based conditions such as hours of work and rest days. Since the EA was last reviewed, the median gross monthly salaries have increased by about 25% (see Chart 1 in Appendix C for income trend over the years). To keep pace with salary increases, it is therefore proposed that the salary threshold for non-workmen be similarly adjusted.

• Similarly, is there a need for salary thresholds for workmen to also be adjusted?

• The lines between workmen and non-workmen are increasingly blurring due to changes in the nature of work. In the longer term, we hope to remove this distinction. How do we best achieve that without significantly increasing business costs in the interim?

Proposal:
·        Adjust the salary threshold of non-workmen in line with salary increases;
·        Review the need to adjust salary threshold for workmen.

• To extend more protection to professionals, managers & executives (PMEs): Currently, PMEs earning a basic monthly salary of up to $4,500 are only accorded basic salary protection and access to the Labour Court for salary claims. They are not covered by other provisions of the EA (e.g. notice period requirements and conditions pertaining to termination of service, public holiday and sick leave entitlements and protection against unfair dismissal) because they are considered to be in a better bargaining position as compared to rank and file workers.
   

• With better education, the proportion of PMEs in the resident workforce has been increasing - from 15% in 1991 to 27% in 2001 and 32% 2011. Some of the entry-level PMEs do not have strong bargaining positions. The EA needs to respond to this changing workforce composition. It is therefore proposed that appropriate additional protection under the EA be extended to PMEs. Time-based provisions (e.g. hours of work, rest day) are generally not applicable to PMEs due to the nature of their work.

Proposal:
·         Extend appropriate additional protection beyond salary protection to professional, managerial and executive employees.

B. Improving Employment Standards and Benefits for Employees

• To better safeguard employees’ salaries against unauthorised deductions: The EA currently provides a list of authorised deductions that employers may make from a worker’s salary. Although the amount of all deductions with respect to any one salary period is capped at 50% of an employee’s salary, we understand that errant employers may make excessive or illegal deductions, especially with respect to deductions for food and accommodation, amenities and services; as well as recovery of dubious advances and loans that cause financial hardship to employees. To better safeguard the interests of vulnerable workers, it is proposed that additional limits be put in place against salary deductions.

Proposal:
Additional safeguards by:
·           Imposing sub-caps that limit deductions allowed for accommodation, amenities and services; and
·           Requiring employers to show proof of loans and advances before deductions for these can be allowed.

• To minimise disputes and raise awareness of employee’s salary entitlement: The EA currently does not require employers to provide their employees with a copy of their monthly salary records or maintain other forms of employment records such as records of their employees’ working hours and paid sick leave entitlements. To raise awareness among employees of their salary and employment rights; and to help employers minimise instances of disputes arising from inadequate documentation, it is proposed that employers be required to maintain detailed employment records of their employees and that employees be accorded the right to a written salary payslip.

Proposal:
·         Require employers to maintain detailed employment records and to provide written payslips to their employees upon request.

• To review non-entitlement period for retrenchment benefits: The EA stipulates that an employee having less than three years’ service with the same employer is not entitled to retrenchment benefits. In view of shorter employment tenures, it is proposed that this non-entitlement period be shortened to align with prevailing industry practices.

Proposal:
·         Shorten the qualifying period of 3 years for non-entitlement of retrenchment benefits.

C. Reducing Rigidity and Augmenting Flexibility for Employers

• To balance rights and responsibilities by giving employers greater flexibilities in view of possible increased protection for PMEs: Work arrangements for PMEs are many and varied. In proposing to extend EA protection to PMEs, we are careful not to impose labour market rigidities that affect overall business competitiveness. It is a delicate balancing act.

• Employers have asked for flexibilities in the application of the law with respect to PMEs. Specifically, for appeals against dismissals with notice, employers have asked for a service qualifying period to be introduced before PMEs can seek redress.

• In addition, the EA requires employees to be compensated with an extra day’s pay in addition to the paid holiday for working on a Public Holiday. They can also, by mutual consent, substitute the Public Holiday for another day. This is difficult and impractical to apply strictly to PMEs due to their very nature of work. It is proposed that employers be given the flexibility to provide time-off-in-lieu for work done on Public Holidays for such employees.

Proposal:
·         Introduce a qualifying period for dismissal with notice provision for PMEs.
·         Give employers the flexibility to provide time-off-in-lieu for work done on Public Holidays by PMEs.

• To review employers’ non-liability in situations of cosmetic consultations and procedures: Currently, employers are required to provide paid sick leave and bear medical consultation fees for eligible employees. To provide clarity on employers’ responsibilities, it is proposed that the law be reviewed to exempt employers from granting paid sick leave and bearing medical examination expenses when their employees undergo cosmetic consultations and procedures.

Proposal:
·         Review whether employers are required to provide paid sick leave and bear medical examination expenses with respect to cosmetic consultations and procedures.

PERIOD OF CONSULTATION

7. In the course of public consultation, MOM encourages all stakeholders to share with us your views on the proposed areas of the Employment Act for review, as outlined above. This will allow us to better understand the needs and challenges of the workers and employers. The consultation exercise will last for 8 weeks, from 19 November 2012 to 11 January 2013.

FEEDBACK CHANNELS

8. We seek your full support to ensure that the consultation exercise is productive and focused, and we would like to request that respondents follow these guidelines:

   a. Identify yourself and the organisation you represent (if any), as that would assist in our understanding of the impact of the proposed changes to different stakeholder groups;
   b. Make your comments clear and concise;
   c. Identify the specific proposal you are commenting on, and focus your comments on how the proposals/features can be improved or be made clearer; and
   d. As far as possible, explain your points with illustrations and examples.

9. Your feedback is important to us and we encourage you to submit your feedback through this email address: MOM_EA_Feedback@mom.gov.sg as it will reach us faster and speed up the process of consideration.

10. Alternatively, you can also send your comments through the following channels:

• Fax to 6534 0559; or

• Post to:

  Ministry of Manpower, Singapore
  18 Havelock Road, #06-02
  Singapore 059764

11. Please send your comments by 11 January 2013, 5pm. Comments received by our Ministry after the deadline may not be in time for incorporation into final amendments.

SUMMARY OF RESPONSES

12. All feedback received will be taken into consideration in the review of the Employment Act. However, we regret that we will not be able to separately address or acknowledge every single comment we receive. Instead, we will consolidate and publish a summary of the key comments received, together with our responses, on the REACH website after the consultation exercise closes. The summary will maintain confidentiality of the feedback received and we will not disclose the identity of person(s) providing the feedback.

RELATED CONSULTATION DOCUMENTS

13. For your convenience, the relevant documents relating to this public consultation exercise can be downloaded below:

• Employment Act (

  download here

  )

• Changes Made to Employment Act in 2009 (

  download here

  ) *Note: In Feb 2011, the Employment Act was subsequently amended to raise the salary ceiling of junior managers and executives who are able to access Labour Court for salary claims from $2,500 to $4,500.

14. Thank you.

¹ For more details on the scope of the Employment Act, please refer to www.mom.gov.sg > Employment Practices > Employment Rights & Conditions 

² Generally, workmen are blue collar workers, broadly defined as an employee whose work involves manual labour in the EA (e.g. plant and machine operators, technicians, cleaners, production craftsmen and bus drivers).  Non-workmen refers to white collar workers who are not PMEs (e.g. Administrative staff, clerks).

Annex B - Feedback Template for EA Public Consultation [DOCX, 17 KB]

Annex A- Appendices to the REACH document-EA Amendments [PDF, 53 KB]

SUMMARY OF RESPONSES TO KEY FEEDBACK FROM PUBLIC CONSULTATION ON PROPOSED AMENDMENTS TO EMPLOYMENT ACT [PDF, 245 KB]