RECENT AMENDMENTS TO EMPLOYMENT ACT WILL ENHANCE EMPLOYMENT PROTECTION FOR WORKERS WHILE ALLOWING FLEXIBILITY FOR EMPLOYERS

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1 NOVEMBER RECENT AMENDMENTS TO EMPLOYMENT ACT WILL ENHANCE EMPLOYMENT PROTECTION FOR WORKERS WHILE ALLOWING FLEXIBILITY FOR EMPLOYERS On 11 November 2013, Parliament passed the Employment, Parental Leave and Other Measures Act 2013 ( the Act ). Arising from the Act, there will be key changes to the Employment Act ( EA ) to enhance employment protection for workers, whilst allowing flexibility for employers. Most of the amendments under the Act will come into effect on 1 April 2014, with the exception being the amendment to section 45 of the EA relating to retrenchment benefits. The EA is amended by: Extending the coverage of the EA to more employees; Improving employment standards for employees; Giving employers greater flexibility in dealing with employment-related matters; Enhancing the penalties for certain offences; Enhancing the investigative powers of inspecting officers; and Other miscellaneous changes for better administration. As well as amendments to the EA, the Act also amends the Child Development Co- Savings Act ( CDCA ) by updating the CDCA so that it accurately reflects the policy that parents total child care and extended child care leave is based on their youngest qualifying Singapore Citizen child. The EA and the CDCA also prescribe new formulae to compute the minimum number of days of maternity, paternity, shared parental or adoption leave an employee is entitled to, if there is mutual agreement for the leave to be taken flexibly by days instead of by block weeks. This Update will look at the key amendments to the EA and the CDCA. Employment Act Previous Position Amended Position Amended Scope A person employed in a managerial or executive position earning a basic monthly salary of $4,500 or less ( PME ) is only Provisions of EA extended to PMEs Extends application of provisions of EA (except for Part IV) to PMEs. 2(2)

2 NOVEMBER regarded as an employee for the purposes of certain sections of the EA, namely provisions relating to salary protection. (Part IV of the EA relates to rest days, hours of work and other conditions of service.) Increase in salary limit to be covered under Part IV EA Employees other than workmen (e.g., clerical staff, frontline service staff) who receive a basic monthly salary of up to S$2,000 are covered under the provisions of Part IV of the EA. The qualifying salary limit has been increased to $2,500 basic salary per month. 35 Employee Rights Generally With the employee s agreement, an employer may make deductions from an employee s salary for accommodation, amenities, or services supplied. No more than 25% deduction from salary Any deductions from an employee s salary in any one salary period must not exceed 25% of the salary payable for that period. 30 New formulae for calculating pro-rata maternity leave A female employee is entitled to claim one of three options for maternity leave: Block leave of 12 weeks; Block leave of four weeks before confinement and eight weeks after; or Block leave of eight weeks and a further 24 days that can be taken anytime during the period of 12 months after confinement. The change affects the third option, as new formulae is provided for the pro-rata calculation of the number of days of leave the mother is entitled to claim where she is not working six days a week every week. This is to provide greater certainty to employers and employees. 76(1)(c)(ii)

3 NOVEMBER Sick leave does not cover cosmetic procedures Does not expressly provide that sick leave excludes cosmetic consultations and procedures. Employers will not be obliged to grant paid sick leave and bear medical examination expenses of employees for cosmetic consultations and procedures: (New subsection (10)) 89 Employee Rights Under Part IV Only non-workmen earning up to S$2,000 are statutorily obliged to be paid overtime. Salary cap on overtime payable to non-workmen Non-workmen earning between S$2,001 and S$2,500 will now be statutorily entitled to claim overtime. However, to give employers flexibility, for non-workmen earning between S$2,251 and S$2,500, their claim for overtime will be calculated from a base of S$2,250 and not their actual salary. 38(6) Reduction of qualifying service period for retrenchment benefits No retrenchment benefit for redundancy or reorganisation unless employee has been in continuous service for at least three years. Qualifying service period of continuous service with an employer in order to receive a retrenchment benefit has been reduced from three years to two years. 45 Note: This amendment will take effect on 1 April 2015, to provide more time for employers to update their contracts and collective agreements.

4 NOVEMBER Transfers A trade union recognised prior to the transfer of an undertaking under this section will be deemed to be recognised following the transfer for the purpose of representing employees on disputes arising from the collective agreement or the transfer of employment: ( 18A (8)(b)) Collective agreements to continue for 18 months following transfer For the purposes of section 18A(8)(b), a collective agreement entered into before the transfer shall continue for 18 months from the date of transfer, or until the date of its expiry, whichever is later: (New sub-section (8A)) 18A Enforcement Any employer who fails to pay salary is guilty of an offence, the penalty being a fine not exceeding $5,000 or imprisonment for a term not exceeding six months or both for a first offender, and for subsequent offenders, to a fine not exceeding $10,000 or to imprisonment not exceeding 12 months or both. Increase in penalties for failure to pay salary The penalty for failure to pay salaries is raised. A minimum fine is introduced and the maximum fine increased for certain offences relating to failure to pay salary: not less than $3,000 and not more than $15,000 and/or imprisonment for up to six months; for repeat offenders, not less than $6,000 and not more than $30,000 and/or imprisonment for up to 12 months. 34 Power of entry into workplace to conduct audit into conditions of employment Sets out powers of Commissioner for Labour and inspecting officers. A further power is granted for an inspecting officer to enter any place of employment at a reasonable time without prior notice to conduct an audit in relation to the terms 103

5 NOVEMBER and conditions of an employee s employment. Power to arrest without warrant for failure to pay salary An inspecting officer has the power to arrest without warrant in respect of offences for failure to pay salary: ( 105) New sections 105 and 105A to 105F Provision for the mode of arrest, search and seizure are specified: (s 105A to 105F) Increase in composition fines The Commissioner for Labour has power to compound an offence by accepting from person reasonably suspected of committing that offence a sum of no more than $1,000. The maximum composition fine is increased to $5, Child Development Co-Savings Act Technical amendments to CDCA The Act also introduces some technical amendments to the CDCA, in particular: New formulae has been prescribed to compute the minimum number of days of maternity leave, paternity leave, adoption leave or shared parental leave an employee is entitled to in situations where there is mutual agreement for the leave to be taken flexibly by days instead of by block weeks; and The CDCA is amended to accurately reflect the policy that parents total childcare and extended childcare leave is based on their youngest qualifying Singapore Citizen child under the CDCA. An employee will not be entitled to childcare leave or extended childcare leave, or payment in respect of the same, under both the CDCA and section 87A of the EA.

6 NOVEMBER Our Comments These amendments are the outcome of the first phase of a comprehensive review of the Employment Act. In July 2013, the Ministry of Manpower invited views from the public on the second phase of reviews which will focus on further protection for vulnerable workers, particularly those in non-traditional work arrangements such as term contract workers, outsourced workers and freelancers, whilst still balancing employers business and operational needs. The second phase of reviews will also look at additional protection for low-wage earners, for example whether written employment terms and electronic payment of workers salaries should be made mandatory, so as to avoid disputes with employers about such terms and to ensure timely salary payments. It is expected that further amendments to the Employment Act in these areas will come into effect in due course. If you would like information on this or any other area of law, you may wish to contact the partner at WongPartnership that you normally deal with or any of the following partners: Jenny Tsin Joint Head Employment Practice DID: Click here to see Jenny s CV. Vivien Yui Joint Head Employment Practice DID: Click here to see Vivien s CV.

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