Changes to The Employment Act – 1st April 2019

justiceThe Employment Act enacted in 1968 had gone through numerous amendments to stay relevant with the changing business landscape, had once again been amended. The changes took effect from 1st April 2019. The EA is Singapore’s main employment law. It provides for the basic terms and working conditions for employees through the general provisions (sometimes also referred to as the core provisions) and Part IV of the act that provide additional protection.

The general or core provisions under the Act will now extend to all professionals, managers, and executives (PMEs). These include the minimum days of annual leave, paid public holiday and sick leave entitlements, as well as other protections such as timely payment of salary and protection against wrongful dismissal. Previously, only PMEs not earning more than S$4,500 were covered under the general provisions. With the lifting of the S$4,500 cap, almost everyone will be protected by the EA. However, the exclusion clause remains. Domestic maids, Seafarer, and Government servants are still not within the ambit of the EA.

Scope of Coverage

Prior to the changes, the three groups of employees that benefited in being protected by the core provisions were:

  • All workmen: manual workers or blue-collar workers.
  • All non-workmen: rank-and-file white-collar workers.
  • Managers and executives (M&Es) with basic monthly salaries of up to S$4,500.

With the proportion of PMETs expected to make up two-thirds of Singapore’s workforce by 2030, the Government removed the S$4,500 salary threshold for M&Es.

Quoting the Minister for Manpower, Josephine Teo, she said: “In doing so, all employees – whether M&Es, workmen or non-workmen, will be covered by core provisions under the EA. This will benefit an additional 430,000 M&Es.”

This change is very significant. Previously, only Managers and executives earning S$4,500 or less were protected by the EA. By removing the cap, almost all employees and foreign workers would be protected by the EA. Including E-pass holders, regardless of their salary.

A wider scope of protection extended to employees covered under part IV of the EA

In addition to the general provisions, the Act provides a set of additional protections in Part IV, such as on hours of work, rest day and overtime pay. Prior to 1st April 2019, Part IV covers workmen earning up to S$4,500, and non-workmen (white collar) earning up to S$2,500. They are collectively known as Part IV employees. Part IV of the EA continues to exclude all PMEs.

With the new amendments, the salary threshold had increase for non-workmen from S$2,500 to S$2,600. In addition, the amendments had aligned the salary cap of S$2,250 for calculating overtime pay with the new salary threshold of S$2,600. Before the amendments, the over-time (OT) rate is capped at a basic pay of $2,250 for non-workmen. That means if an employee earns more than $2,250 but not more than $2,500, he qualifies for OT pay. However, the basic pay that is being used to calculate was capped at a maximum of $2,250. If he earns less than $2,250, then that amount will be taken as the basis for calculation. With the new amendments, a non-workman will qualify for OT pay (and receive additional protection under part IV of the EA) if he earns S$2,600 or less, and the actual salary that he earns will be used as a basis of calculation. In other words, the S$2,250 cap of the past has been removed.

Public Holidays

Extend option of time off for working on public holiday to more employees:

  • Workmen and non-workmen who are protected under part IV are required to be paid if they work on a public holiday or provide a full day off-in-lieu.
  • The amendment had introduced a third option for workmen and non-workmen who are not Part IV employees. Employers will be able to grant them time off for hours worked on a public holiday, rather than a full day off.
  • With these changes, all employees will continue to be compensated for working on public holidays. Part IV employees, who have lower bargaining power, will continue to receive either an extra day’s pay or a full day off if they are required to work on a public holiday.

Annual Paid Leave

  • Originally, the annual leave was in part IV of the EA. Technically speaking, only those covered under part IV had a statutory right to paid annual leave.
  • The annual leave is being moved from part IV of the EA to the general provisions. By moving the annual leave to the general provisions, all employees (including M&E) protected by the EA would be entitled to statutory leave benefits of 7 days (minimum).
  • For staff under the general provisions of the EA, including Managers and executives. They will need to refer to their employment contracts on the treatment of unused annual leave entitlements. Its basically an offer and acceptance clause.
  • The Act, however, requires employers to allow Part IV employees to carry forward unused annual leave entitlements for another 12-month period. This remains unchanged.

Authorised Deductions

  • Prior to 1st April 2019, the Act limits the type of salary deductions that employers can make, such as absence from work or damaging or losing goods entrusted to the employee based on negligence.
  • Some employers provide voluntary group hospital and surgical insurance for their employees if the employees agree to co-pay the premiums. Previously the Act does not allow such deductions even when the employee agrees. From here on, it shall be allowed.
  • The Act has been amended to allow a deduction if it fulfils two conditions: Firstly, the employee must willingly consent to the deduction in writing; secondly, the employee must be able to withdraw his consent at any time, without any penalty or consequence.
  • In addition, deductions still cannot constitute more than 50% of the employee’s total salary for any one salary period (of a month). Deductions for amenities and services supplied by the employer will continue to require the Commissioner’s approval.

All Adjudication pertaining to Salary Claims and/or Wrongful Dismissal to be Referred to the Employment Claims Tribunal (ECT)

  • Salary-related disputes are adjudicated by the ECT, while prior to the amendments wrongful dismissal claims were adjudicated by Ministry of Manpower (MOM). In fact, both types of disputes were often related.
  • With the recent changes, which provide both employees and employers with a more convenient “one-stop service”, the Government have shifted the adjudication of wrongful dismissal claims from MOM to the ECT. Such claims will be heard by the ECT, following mediation by the Tripartite Alliance for Dispute Management (TADM). In line with this approach, it had also expanded the coverage of the Tripartite Mediation Framework (also known as TADM) to include wrongful dismissal claims.
  • The type of dismissal cases that MOM hears include not only those when the employee was terminated by the employer, but also cases when the employee resigned involuntarily and under duress. Involuntary resignation can be considered wrongful dismissal if the employee was forced to do so for wrongful reasons.
  • Under the Employment Claims Act (ECA), when the ECT adjudicates a case, it must consider the principles and parameters contained in the tripartite guidelines. In cases where a dismissal is found to be wrongful, the ECT will order compensation or reinstatement. There is no change to the scope of remedies. Per the previous practice, the ECT will consider factors beyond just the wages or maternity benefits owed to the employee, in determining the amount of compensation.

Reduce service qualifying period for Managers & Executives being dismissed:

  • When the EA was first expanded in 2009 to protect M&Es, the tripartite partners agreed that M&Es would only be eligible to claim for wrongful dismissal if they have served at least 12 months.
  • This period has been reduced. Therefore, the qualifying period with effect from 1st April 2019 will be that the M&E will have to serve at least six months, before they are able to lodge a complaint with the ECT for wrongful dismissal. There is a reduction from 12 to 6 months.
  • This is in recognition that performance in an M&E role is not so immediately clear, compared to workmen or non-workmen, where there is no qualifying period.

Medical & Hospitalisation Leave

Recognise medical certificates (MCs) from all doctors for paid sick leave and clarify hospitalisation

  • Before the amendments, employers are required under the EA to accord paid sick leave only if the medical certificate (MC) was issued by Government and company-appointed doctors.
  • Moving ahead, employers will be required to recognise MCs from all registered doctors for the purpose of granting paid sick leave.
  • However, the employer is not required to reimburse the consultation fee if the employee visits a non-appointed company doctor or non-government affiliated doctor from the polyclinic or government medical institution.
  • Employers will still be required to reimburse medical consultation fees only for consultation with government doctors; or company-approved doctors, if the medical consultation entitles the employees to paid sick leave.
  • What hospitalisation leave entails under the EA has also been clarified. When it comes to hospitalisation leave, employers are required to recognise medical certificates only if they are issued by hospital doctors. Employers who wish to recognise MCs from their own panel-doctors for granting hospitalisation leave are free to continue doing so.
  • Hospitalisation leave will continue to cover inpatient stays in hospitals and day surgeries. In addition, the post-discharge period of rest or further medical treatment for the condition that the employee was hospitalised for will also be covered.
  • There are also certain circumstances where employers will be required to recognise MCs for purposes of hospitalisation leave. For example, a hospital doctor may assess that a pregnant woman requires hospitalisation for bed rest due to complications in pregnancy, but she may prefer to rest at home. There may also be other specific circumstances such as quarantine orders as required by law which would qualify employees for hospitalisation leave, for example chicken pox. These situations have been provided for in the Act and regulations.

By Martin Gabriel, Senior HR Consultant, HRmatters21

Sources:          Minister, Josephine Teo’s Parliamentary Speech on 20th Nov 2018

                        Employment (Amendment) Bill, No.47/2018

                        Ministry of Manpower’s Website