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Singapore – Developments In Store For PMEs.

26 February, 2015

In Brief

 

For some time now, the MOM has made reference to “professional, managerial and executive employees” (PMEs). Individuals holding such positions form an integral and ever-increasing population in Singapore and currently make up around 30 per cent of Singapore’s workforce. However, to date there have been limited statutory protections for PMEs. Until recently, these workers were excluded from the application of Singapore’s Employment Act but now, PMEs earning a salary not exceeding SGD 4,500 are covered by the protections under that legislation. Moreover, the Industrial Relations Act (Cap 136) has historically excluded PMEs from most trade union coverage. 2015 will see significant amendments to this Act which will provide this category of employees with formal statutory recognition and greater protections.

 

Greater Protections For PMEs

 

On 19 January 2015, the Singapore Parliament passed the Industrial Relations (Amendment) Bill (Bill). The Bill includes a new definition of “executive employee” meaning an employee “who is employed in a managerial or executive position” and sets out two key changes:

 

  • the scope for union representation on a collective basis for PMEs will be extended. That is, PMEs will be able to be represented as a group by unions whose membership consists predominantly of nonexecutive employees (known as “rank-and-file” unions); and
  • the scope for representation on an individual basis will be expanded to include re-employment matters.

 

Separate from the Bill, a third key change proposed for 2015 is the introduction of a new Employment Claims Tribunal to assist PMEs in expeditiously and affordably settling disputes with their employers.

 

Collective Representation By Unions

 

PMEs have historically been excluded from collective representation by rank-and-file unions on the basis of concerns about managerial effectiveness and potential conflicts of interest arising between management and rank-and-file employees. The amendments recognise that Singapore’s economy has evolved and that there is now a much greater variety of jobs at executive levels from entry level to senior management roles.

 

To address concerns about conflict of interest, certain categories of PMEs are excluded, including those:

 

  • who are employed in a senior management position;
  • with substantial responsibilities for hiring, firing, promotion, dismissal and disciplinary duties;
  • who represent employer’s interests in unionmanagement negotiations; or
  • with access to confidential information, particularly payroll and budgeting information.

 

The Tripartite partners (comprising the MOM, National Trade Union Congress and Singapore National Employers Federation) have issued Guidelines specifying ways in which employers and unions can decide whether a PME qualifies for collective representation.

 

Re-Employment Matters Now Covered

 

Currently, rank-and-file unions can represent PMEs on an individual basis in four limited areas:

 

  • breach of employment contract;
  • retrenchment benefits;
  • unfair dismissal; and
  • victimisation.

 

Once the amendments take effect, unions will be able to represent individual PMEs in certain disputes relating to re-employment after retirement including where the PME alleges that:

 

  • re-employment was denied on the ground that the employer cannot find a suitable vacancy in its enterprise, or that the PME does not satisfy the reemployment eligibility criteria;
  • the re-employment terms and conditions offered were unreasonable; or
  • the amount of any employment assistance payment offered to the PME was unreasonable.

 

Employment Claims Tribunal

 

First announced on 25 April 2014, a specialised Employment Claims Tribunal will be established in 2015 to cater to the needs of PMEs who earn more than SGD 4,500 per month, regardless of their salary levels and whether or not the PME is a member of a union. Currently these PMEs must pursue any employment related claims in the courts and it is hoped that the Tribunal will provide PMEs with a fast and affordable dispute resolution mechanism. The composition of the Tribunal is not yet known, nor is a likely commencement date. However, in line with early comments made by the MOM, it is likely that claims at the Tribunal will be subject to a limit on the amount of payments that may be awarded. PMEs seeking higher awards will continue to need to seek redress through the civil courts.

 

What Does This Mean For Employers?

 

Changes to union representation are expected to come into effect on 1 April 2015 and the degree to which PMEs take up the new protections offered by the Bill remains to be seen. However, employers will need to be prepared for unions’ attempts to gain recognition, and negotiate for collective agreements, in respect of PMEs.

 

We also foresee that employers will be under greater pressure than ever to reach amicable resolutions of disputes with employees to avoid union involvement or matters proceeding to the Tribunal (once established). Where an employment relationship is expected to continue, employers may need to adopt more consultative measures with employees when undertaking workplace changes to reduce the risk of union involvement.

 

We will keep you posted on further developments.


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For further information, please contact:

 

George Cooper, Partner, Ashurst

george.cooper@ashurst.com

 

Sumin Ahn, Ashurst

sumin.ahn@ashurst.com

 

Jennifer Goedhuys, Ashurst

jennifer.goedhuys@ashurst.com

 

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