With significant changes coming into effect on 1 April 2019, companies in Singapore need to act now to update their HR policies, processes and procedures.
Singapore's Ministry of Manpower (MOM) announced important changes to the Employment Act (EA) in November 2018. Four key areas are affected by these changes, which come into effect from 1 April 2019. Professionals, managers, executives and technicians (PMETs) now make up more than half of Singapore's workforce and this is continuing to grow. The EA changes aim to keep practices relevant and up-to-date with workforce trends.
Extension of core provisions to protect more employees
Until now, the core provisions of the EA excluded managers and executives (M&Es). With PMETs now forming over half of the workforce, and projected to be two-thirds by 2030, it was clear that the EA was falling behind the changes in the workforce demographic. The core provisions are now being extended to include M&Es.
To facilitate this, the S$4,500 per month salary cap is being removed from 1 April, bringing a further 430,000 M&Es within the protection of the core provisions of the EA. This includes a minimum seven to 14 days of annual leave, paid public holidays and sick leave, timely payment of salary and protection against wrongful dismissal. It should be noted that public servants, domestic staff and seafarers are not included under the EA core provisions as they are all covered by separate laws due to the inherently different pattern and nature of their work.
Extension of part IV
Part IV of the EA is being amended to benefit a further 100,000 workers by increasing the monthly salary cap from S$2,500 to S$2,600, and by increasing the cap for the monthly basic salary used to calculate the hourly overtime rate from S$2,250 to S$2,600. This is a recognition of the increase in the median wage level in Singapore and will mainly bring employees whose salaries have increased beyond the caps back under this provision of the EA. The change only applies to non-workmen (ie. white-collar employees not in M&E positions). The previous monthly salary cap for workmen (ie. blue-collar employees involved in manual labour) remains at S$4,500.
Enhancement of the employment dispute resolution framework
In order to centralise employment dispute resolution, the adjudication of wrongful dismissal claims will be transferred from MOM to the Employment Claims Tribunal (ECT), which already adjudicates salary-related disputes. At the same time, the length of service required for M&Es to qualify for protection from wrongful dismissal is being reduced from 12 months to six months. New tripartite guidelines will shortly be issued by MOM to illustrate what might be considered wrongful dismissal.
Enhanced flexibility for employers
There are two main changes that will increase the flexibility that companies have in operating their businesses.
Firstly, there is increased flexibility in compensating employees for working during public holidays. All workmen earning up to S$4,500 per month and non-workmen earning up to S$2,600 per month may be compensated either by payment of an extra day's salary or by granting another whole day off. For M&Es, and for workmen earning more than the S$4,500 cap and non-workmen earning over S$2,600, the company can offer an extra day's salary, a full-day off or time off that is less than a full day.
Currently, companies can only make salary deductions for things such as absence from work or loss and damage to goods entrusted to the employee. From 1 April 2019, this will be extended to allow companies to make other deductions provided that the employee consents to the deduction in writing and the employer allows such deductions to be cancelled at any time by the employee without applying any penalties.
Other amendments to the EA
There are also changes to improve employee protections for sickness. Employers must now accept medical certificates from all doctors registered under the Medical Registration Act, and dentists registered under the Dental Registration Act, as evidence for sickness absence.
There is clarification that paid hospitalisation leave applies to both the period requiring hospital care and the recuperation period after being discharged. It also applies to any quarantine orders imposed under the law and situations where doctors assess a patient as being in need of hospitalisation but they in fact are cared for outside of hospital.
What do employers need to do?
These changes to the EA require immediate action by companies to update their HR processes and practices. Employee handbooks, employment agreements and other company policies will need to be reviewed, updated and published by 1 April 2019.
Talk to us
TMF Singapore can help you to comply and implement new policies and processes as affected by these changes to the EA, and all future statutory changes. Our expert team helps you to maintain high standards of compliance in this ever-changing world.
If you need more information or have any questions, contact us today.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.