Employment Law in Singapore – Key Changes in 2018

This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

Introduction

Singapore’s main labour law, the Employment Act (“EA”), has undergone its first comprehensive review since 2012. In addition, Singapore’s Ministry of Manpower (“MOM”) has introduced new guidelines and standards aimed at freelancers and self-employed persons, providing a significant overhaul to Singapore’s employment law landscape.

Key Changes

The Employment Act

• Wider scope of the EA – The scope of the EA will be widened to apply to all employees (with the exception of public servants, domestic workers and seafarers) irrespective of salary levels. Although the exact wording of the amendments has yet to be released, it is expected that professionals, managers and executives who were previously not protected by the EA, will be entitled to the minimum standards stipulated by the EA (for example, paid sick leave, overtime payment and payment of CPF contributions). The amendments to the EA are expected to come into effect by 1 April 2019.
• Expansion of the powers of the Employment Claims Tribunal (“ECT”) to hear wrongful dismissal claims – At present, the ECT’s jurisdiction is limited to salary-related disputes whilst wrongful dismissal claims are heard by MOM. Acknowledging that dismissal-related claims are often salary-related and in an effort to streamline the dispute resolution process, the ECT will commence hearing wrongful dismissal claims. The changes to the powers of the ECT are expected to come into force by 1 April 2019.
• Increase of salary threshold for non-workmen – The salary cap for non-workmen (generally, white collar rank-and-file workers) will be raised from SGD 2,500 to SGD 2,600. This means that the additional protections currently offered under Part IV of the EA (for example, annual leave, hours of work and rest days) will be available to a greater number of non-workmen. In addition, the salary cap under Part IV of the EA for overtime pay will also be increased from SGD 2,250 to SGD 2,600. These changes are expected to come into effect by 1 April 2019.
• Sections under Part IV of the EA to be reviewed – Benefits such as annual leave are expected to be extended to all employees. As annual leave currently falls under Part IV of the EA, it is anticipated that these specific provisions would need to be moved out of Part IV of the EA.

Fair Consideration Framework

• Wider scope– The Fair Consideration Framework (i.e. guidelines governing the fair consideration of Singaporeans for all job opportunities) applies to all companies in Singapore. At present, employers with more than 25 employees and jobs which pay a fixed salary of more than SGD 12,000 per month are exempt from the framework. With effect from 1 July 2018, the Fair Consideration Framework will apply to all employers with at least 10 workers and for jobs paying less than SGD 15,000 per month.

S Pass Holders

• Increase in minimum qualifying salary for S Pass holders (mid-level skilled foreigners) – There will be an increase in the minimum qualifying monthly salary for S Pass Holders from SGD 2,200 to SGD 2,400 in two (2) phases:

• increase to SGD 2,300 (effective 1 January 2019)
• increase to SGD 2,400 (effective 1 January 2020)

Tripartite Standard on Contracting with Self-Employed Persons (“SEPs”)

Who are SEPs?

SEPs are persons who operate their own trade or business and include (but are not limited to) taxi drivers, real estate agents, insurance agents, private hire car drivers and private tutors. They are also loosely described as “freelancers” or “independent contractors” and are not casual, temporary, or term-contract employees who are on employment contracts for fixed periods of time. See MOM’s press release for more information on SEPs.

• Introduction of the Tripartite Standard on Contracting with SEPs (“Tripartite Standard”) – Issued on 5 March 2018, the Tripartite Standard is aimed at providing a non-binding set of guidelines or best practices for businesses to engage SEPs / freelance services (for example, key terms of engagement to be agreed with any SEPs before any production or services are delivered). Businesses that adopt the Tripartite Standard can use its logomark in their corporate and marketing collateral to distinguish themselves and allow SEPs to easily identify progressive service-buyers and intermediaries.
• Prolonged Medical Leave (“PML”) Insurance for SEPs – The Government has identified a need for a standalone PML insurance coverage to mitigate a SEP’s loss of income during prolonged illness or injury. Whilst unlikely to be mandatory for general SEPs, certain high-risk contractors have been identified (for example, taxi drivers and private hire car drivers) for which the Government will encourage the widespread adoption of PML insurance coverage or in some instances, require such coverage in contracts between state-owned entities (SOEs) / Government bodies and SEPs. There is currently no such available standalone PML coverage in the market but the National Trades Union Congress (NTUC) has expressed interest in developing a PML product to launch by 2019.
• Mandatory contributions for SEPs – The Government is studying the implementation of a “contribute-as-you-earn” (“CAYE”) model to help SEPs save for their retirement and healthcare needs. Under CAYE, the service buyer hiring a SEP has to make a contribution to the SEP’s individual Medisave account, as and when the service fee is paid. Whilst it has been noted that this will not be a straightforward model to implement and may only work when a corporation is the service buyer, the Government has indicated that it will take the lead to implement CAYE and work through issues, including the percentage of Medisave contributions. The CAYE pilot project is expected to start by 2020.
• Mediation services extended to SEPs – Since 6 March 2018 the Tripartite Alliance for Dispute Management’s voluntary mediation services has been extended to all SEPs to resolve payment disputes with service buyers.
• Competency frameworks for SEPs in development – The Government has indicated that it will work with various SEP associations to develop competency frameworks for SEPs’ upskilling, to enhance career sustainability and promote professionalism.

Conclusion

The proposed changes are likely to have a significant impact on Singapore’s traditionally pro-employer landscape. From reviewing employment contracts and policies ahead of 1 April 2019 to the adoption of the new Tripartite Standards and compliance with the enhanced Fair Consideration Framework, there will be additional obligations and ongoing requirements for employers and service providers/buyers to meet or at least kick-start in 2018.