Amendments to the Singapore Employment Act – harmonisation of employment rules across all employee ranks

From 1 April 2019, the Employment Act (EA) will be expanded to cover all employees. The amendments will lead to a more regulated dismissal regime, enhanced statutory benefits and protections for all employees, and a more flexible approach towards salary deductions. We set out a brief discussion on the salient points in this update.

A More Regulated Dismissal Regime

It is commonly thought that Singapore practises employment at-will. In reality, section 14 of the EA allows employees covered by the EA to seek reinstatement or compensation through the Employment Claims Tribunal where they consider that they had been dismissed "without just cause or excuse" ("Section 14 Remedy"). Following the amendments, the Section 14 Remedy will be available to all employees.

The expression "without just cause or excuse" is currently not fully defined in the EA. While the amendments do not include a specific definition for the expression, the Ministry of Manpower is expected to publish a set of Tripartite Guidelines on Wrongful Dismissal. The amendments will also introduce the concept of constructive dismissal (i.e. forced resignations as a result of the employer's conduct) as a form of wrongful dismissal.

The Employment Claims Tribunal will also be specifically empowered to order reinstatement and/or compensation as part of the Section 14 Remedy. However, whether reinstatement will be ordered in practice remains to be seen, given the long-held common law aversion towards specific performance in the context of employment contracts.

In light of a more regulated dismissal regime, employers may no longer be able to terminate employment by giving notice but without any reasons. Inviting employees to resign "voluntarily" as an alternative to termination may also carry risks. Employee terminations will have to be more carefully planned and managed to minimise risk of claims.

Enhanced Statutory Benefits and Protections for all Employees

Going forward, all employees will be statutorily entitled to receive annual leave, sick leave and maternity/childcare leave, encashment of their accrued unused annual leave on termination (except on grounds of misconduct), paid public holidays (or days off in lieu) and to the right to pay the salary in lieu of notice in order to terminate employment. These rights were previously not guaranteed by statute to managerial and executive employees earning more than S$4,500 per month (although many companies granted these rights to such employees by way of contract).

In terms of employee record-keeping, employers must provide all employees with Key Employment Terms and payslips, and maintain the required employee records for the prescribed retention periods. The Minister for Manpower has also indicated that it will impose administrative penalties on employers who ask employees to indicate receipt of salary before they are paid or to sign blank/inaccurate receipts.

In the context of workplace investigations, the maximum amount of time an employer can suspend an employee on half-pay pending such investigations is 1 week unless it applies to the Ministry of Manpower for permission to suspend the employee for a longer duration.

However, other statutory protections regarding hours of work, rest days and overtime payment under Part IV of the Employment Act will not be extended to managers and executives.

Viewed in totality, the amendments in this regard may not lead to significant practical changes to an employee to the extent that he is already enjoying these benefits either by way of his employment contract, or if his employer is voluntarily providing them as a form of best practice. However, they set the tone for harmonisation of employment rules across all employee ranks and a single standard for employment practices going forward.

A More Flexible Approach towards Salary Deductions

The current EA only allows for salary deductions in very limited circumstances, which may not reflect modern employment relationships where employees may have some bargaining power.

With the amendments, all types of deductions will generally be allowed with an employee's written consent, provided that the employee is allowed to withdraw consent at any time without penalty. However, consent for such deductions must be given specifically, not by way of a general clause in a contract stating that an employer can make any deduction where necessary. Deductions are still subject to the overall limit of 50% of the employee's total salary for any one salary period.

This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. Please contact our lawyers if you have any specific queries.

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