30 September, 2013

Background

The Singapore Manpower Ministry has invited public views for phase 2 of its employment reforms. Key changes in phase 1 included extending the basic protections under the Employment Act (EA) to junior professionals, managers & executives earning up to S$4,500 per month, adding to the traditionally protected categories of non-managerial/non executive employees and workmen. 

Phase 2 focuses on protecting workers in “non-traditional work arrangements” and foreign employees holding work permits. 

Non-traditional workers 

Non-traditional workers are employees on fixed-term contracts, outsourced workers, and freelancers. 

Fixed-term contract employees 

Fixed-term contract employees are already protected by the EA as “employees”. However because a minimum period of 3 months’ continuous service is required to qualify for certain benefits under the EA, employers may place them on contracts which expire before the end of 3 months’ service, with short breaks in between, to avoid having to provide the benefits. Employees may also be placed on recurrent fixed term contracts which are renewed multiple times, and then allowed to expire without notice of non-renewal. The Ministry is reviewing protections for such employees. 

Outsourced workers 

Outsourced workers are employed by a service provider (the employer), which provides the workers’ services to a company (the principal). Common examples are security guards and cleaners. Outsourced workers are vulnerable to salary defaults from their own employers who compete for outsourced contracts on price, sometimes set unrealistically low. The EA already includes provisions which require principals to pay up to one month’s wages of outsourced workers if their employers’ default in doing so. Principals can also be ordered to pay the Ministry money which is owed to  the service provider, for the purpose of paying the unpaid outsourced workers. The Ministry is reviewing whether reasonable additional responsibilities should be imposed on principals to further protect outsourced workers. 

Freelancers 

Freelancers are individuals who operate their own business of providing services without employing other workers. Freelancers are not covered by the EA since they are not employees. However, many freelancer arrangements resemble employer-employee relationships. The Ministry is reviewing whether such individuals should be accorded statutory protections given to employees. 

Work permit holders

Lower income foreign workers hold work permits which currently restrict them to working for the employer and industry stated on the work permit. The Ministry is reviewing whether such foreign workers should be allowed to change employers.

Low wage workers

Possible considerations under review for low wage workers are written employment terms to avoid disputes on the terms of employment, and electronic payment of workers’ salaries for timely payments.

For further information, please contact:

Susan de Silva, Partner, ATMD Bird & Bird
susan.desilva@twobirds.com

ATMD Bird & Bird Labour & Employment Practice Profile in Singapore