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Singapore – Changes To The Employment Act.

8 April, 2014

 

Legal News & Analysis – Asia Pacific – Singapore – Labour & Employment

 

Phase I of the Employment Act review will be implemented as of 1st April 2014. The new rules will require employers to look again at their pool of employees as both the categories of workers and wage limits for eligibility have changed.

 
More For Managers And Executives

 
The old rules excluded managers and executives from protection under the Employment Act save that those who earn less than SGD 4500/month had limited protection in relation to the payment of their salary.

 
From 1st April, managers and executives who earn less than SGD 4500/month are covered by the general provisions of the Employment Act; they have protection not only in relation to the payment of their salary, but also in relation to sick leave, annual leave and unfair dismissal.

 
Part IV Extends Its Reach

 
Part IV of the Employment Act provides additional protection in relation to hours of work, rest days and overtime. Under the old rules, Part IV only applied to workmen who earned less than SGD 4500/month and non workmen who earned less than SGD 2000/month. The wage limit for the latter category has increased to SGD 2500/month as of 1st April 2014.

 
Employers with employees who regularly perform overtime will need to take particular note of this change as a larger pool of employees will now be eligible for overtime payments. To ease this burden, the government has capped the salary relevant for calculating overtime payments at SGD 2250/month.

 
Business Transfers

 
For employees whose employment is transferred to a new employer, under the new rules the employees will have the terms of any collective agreement honoured for a period of at least 18 months post transfer. The position under the old rules was that pre existing collective agreements only bound the new employer until they expired. The additional period of protection is intended to give employees more certainty through the transfer process.

 
Retrenchment Payments?

 
The amendments have not gone so far as to make retrenchment payments compulsory for any employees. However, currently, Part IV employees with less than three years’ service are not entitled to a retrenchment payment. From the 1st April 2015 (later than other Employment Act amendments), the qualifying period reduces to two years. The language of the provision remains the same: it is silent as to any positive entitlement and only states that employees without the qualifying period are not entitled to a retrenchment payment.

 
Unlawful Deductions

 
As of 1st April 2014, an employer who deducts the cost of employer provided accommodation from an employee’s salary will have to ensure that the deduction does not amount to more than 25% of the employee’s salary. This is a significant change from the old position which allowed an employer to deduct up to 50%.

 

Still To Come

 
Phase II of the Employment Act review is still afoot. It is likely that there will be some significant changes for vulnerable workers, including changes for fixed term employees, contractors and lower paid employees.

 

herbert smith Freehills

 

 

For further information, please contact:

 

Fatim Jumabhoy, Herbert Smith Freehills

[email protected]

 

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