Key labour law expanded to protect more workers

Bosses will now be required by law to pay workers' salaries on time, and employees cannot be short-changed on benefits such as paid sick leave or be sacked unfairly.

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Here is the speech made in Parliament:

Employment, Parental Leave and Other Measures Bill 2013, Second Reading Speech by Mr Tan Chuan-Jin, Acting Minister for Manpower, 12 November 2013, 4:15 PM, Parliament

Madam Speaker, with your permission may I ask the Clerks to distribute handouts to Members.

Madam Speaker, I beg to move, "That the Bill be now read a Second time."

Background

Madam, the Employment Act (or the EA) is our main labour law that seeks to ensure reasonable labour standards for workers while balancing employers' need to stay competitive, and staying competitive ultimately benefits workers as well, in terms of creating jobs and opportunities. Since the last amendment in 2009, the profile of our labour force has changed; and employment practices have also evolved. The review is therefore timely to ensure that the EA remains relevant.

During the Committee of Supply Debate in March this year, I updated this House on the review of the Employment Act. My Ministry, together with our tripartite partners carried out extensive consultations and the Bill that I am presenting today is the outcome of this review.

The Bill proposes amendments to the Employment Act in three main areas: firstly, to extend better protection to more workers; secondly, accord flexibility to employers in areas where there are practical business concerns; and thirdly, enhance enforcement and compliance with the Employment Act. Let me elaborate on the key amendments. Firstly, on better protection for more workers.

(I) Better protection for more workers

The first set of amendments proposes to extend better protection to more workers and improve employment standards.

Extend Part IV to more non-workmen

Madam, Part IV of the EA provides for working hours, rest days, over-time (OT) payments and other conditions of employment for the more vulnerable employees. Currently, Part IV applies to workmen engaged in manual labour, such as machine operators and cleaners who are earning a basic monthly salary of up to $4,500, as well as non-workmen such as clerks and receptionists, earning a basic monthly salary of up to $2,000. In line with general salary increases over the years, we propose to raise the salary threshold for non-workmen from $2,000 to $2,500. This effectively extends the coverage to benefit about 150,000 junior staff who are not professionals or executives.

Extend more protection to PMEs

Another significant extension of protection is for Professionals, Managers and Executives, or PMEs for short. They now account for 31 per cent of the resident workforce; this is up from 27 per cent ten years ago. As their proportion increases in our workforce, we propose to extend protection for those earning a basic monthly salary of up to $4,500. With more Singaporeans becoming and aspiring to become PMEs, it is timely to extend the more junior ones protection such as those against unfair dismissal and sick leave benefits. The change will benefit approximately 300,000 PMEs.

Improve employment standards and benefits

This Bill will also improve employment standards and benefits in line with the evolving employment landscape.

To protect employees against excessive salary deductions by unscrupulous employers, we will impose a further 25 per cent sub-cap on deductions for accommodation, amenities and services on top of existing safeguards.

Next, for employees currently covered under Part IV of the Act, we will shorten the non-entitlement period to retrenchment benefits from 3 to 2 years to be in line with shorter employment norms.

In addition, we will extend the validity of the collective agreement for employees transferred to a new company after restructuring. This means the unions can continue to represent employees in the new company for 18 months after the date of transfer or until the expiry of the collective agreement, whichever is later. This will provide greater reassurance for affected employees.

(II) Flexibility for Employers

Madam, even as we enhance employment protection and benefits for workers, we also do need to strike a balance by allowing businesses appropriate leeway to implement these changes. Hence, the theme of the second set of amendments: Flexibility for Employers. There are four key amendments related to this. Firstly, managing OT or overtime cost.

Managing OT cost

One, even as we increase the Part IV salary threshold for non-workmen to $2,500, we will help employers manage overtime or OT cost by capping the OT rate payable at the salary level of $2,250. I have included in the handout examples to help Members better understand the mechanics of how this works.

Qualifying period for PMEs to seek redress against unfair dismissal

Two, we will extend unfair dismissal protection to PMEs earning up to $4,500 a month.

This means that for dismissals without notice, we will provide PMEs with the same protection as rank-and-file employees.

For dismissals where notice is given and the contractual terms of termination are complied with, we will set a 12-month qualifying period before PMEs who claim unfair dismissal are eligible to seek redress. The qualifying period is a fair request from employers, who need time to assess the PMEs' suitability for the job. In such cases, the onus will be on the employee to substantiate the unfair dismissal claim. For instance, by showing that the dismissal arose from the employer's intent to deprive him or her of employment benefits he or she would otherwise has been entitled to.

Time off in lieu for PMEs

Three, one of the general provisions of the EA which will be extended to relevant PMEs is paid public holidays. Currently, employees covered under the EA and who are required to work on public holidays must be compensated with an extra day's pay or a substitute day off. This may be difficult and impractical to apply to PMEs due to the very nature of their work. Therefore, our proposed amendments give employers the additional option to provide time-off in-lieu for PMEs.

Exempt sick leave obligations for cosmetic reasons

Four, we will exempt employers from having to grant paid sick leave and bear medical examination expenses of any employee who chooses to go for treatment for cosmetic purposes. The assessment of whether a treatment is cosmetic or not would be based on the opinion of the medical practitioner performing the examination and providing the appropriate medical certificate.

(III) Enhance Enforcement and Compliance

Thirdly it is on enhancing enforcement and compliance. As we raise employment protection and standards, we also need to correspondingly enhance my Ministry's enforcement ability and the teeth that will accompany that

We propose to put in stiffer penalties for failure to pay salaries. We will introduce a mandatory minimum fine of $3,000 for first-time offenders and $6,000 for repeat offenders. We will also increase the maximum fine from $5,000 to $15,000 for first-time offenders and from $10,000 to $30,000 for repeat offenders. In addition, the maximum composition sum will be increased from $1,000 to $5,000 to bring it in line with the other employment legislation such as the Employment of Foreign Manpower Act (EFMA).

We will also enhance MOM's enforcement and investigatory powers. This includes granting employment inspectors the power to arrest any person reasonably believed to be guilty of the failure to pay salary and to enter workplaces to conduct audits. We will also make individuals, such as directors or partners of companies, more accountable for EA offences committed by the company.

Marriage and Parenthood (M&P) related amendments

Madam, we are also taking the opportunity to make technical amendments to the EA and the Child Development Co-Savings Act (CDCA), associated with the Marriage and Parenthood (M&P) measures announced by DPM Teo Chee Hean in January this year.

The CDCA will be updated to accurately reflect the policy that parents' total child care and extended child care leave is based on their youngest qualifying Singapore Citizen child.

In addition, we will prescribe new formulae in both Acts to facilitate computation of parents' entitlement to maternity, paternity, shared parental or adoption leave to take leave flexibly by days rather than by block weeks if there is mutual agreement.

Timeline

The Bill is proposed to come into effect on 1 April 2014 for most key amendments. For the amendment related to the reduction of the time-bar for retrenchment benefits, this will take effect on 1 April 2015, essentially to provide more time for employers to update their contracts and collective agreements to comply with this new requirement.

A phased approach to introduce payslips

Madam, one issue that received a fair amount of public attention was that of payslips. During our consultations, many members of the public felt that employers should provide payslips to their workers. Indeed, this will raise workers' awareness of their salary entitlements and also protect employers from unsubstantiated claims by their employees. All round I think we all agree this is good HR practice.

However, having said that, we also received strong feedback that many SMEs, especially the smaller ones like retail shops in HDB estates, are not issuing payslips today and would find the process of doing so onerous. We understand their concerns. Not everything, we believe ought to be legislated at once as ultimately, we aim to change behaviour in a sustainable way. We will therefore adopt a pragmatic and phased approach to allow time for businesses to adjust. I just want to clarify that in the main, most businesses are providing payslips. I think the challenge comes really with the small mom-and-pop shops and small companies who will find difficulties in this front.

As a first step, we will issue a set of Tripartite Guidelines by the first half of 2014 to help employers provide payslips and keep employment records for all employees. We will closely monitor the implementation of payslips and employment records before phasing in the requirements over time.

Support for Companies

Madam, even as we seek to raise labour standards, we fully appreciate the anxieties of employers, particularly the smaller ones, about rising compliance costs, because a number of measures are being put in place on the manpower front as well. The Government will provide the necessary support to help them level up their practices. This will be good for employers in the long run. The assistance for companies will come in various forms:

a. MOM is working with the Infocomm Development Authority (or IDA) of Singapore to develop user-friendly tools to help prepare SMEs for the eventual requirements to issue payslips and maintain employment records. We will tailor the support according to the diverse needs of SMEs, and it is indeed very diverse. This will range from providing simple payslip booklets and downloadable templates, to funding support to develop customised solutions. These will be made available by 1st April 2014.

b. We will work with our tripartite partners, SNEF and NTUC to conduct briefings and workshops to communicate the EA changes to employers and employees. In particular, we will be collaborating with SME centres, supported by SPRING, to reach out to SMEs on the EA changes and provide hands-on guidance on the tools available. And we encourage members of this house to do your part as well to reach out to your constituents.

Conclusion

Madam Speaker, we started this important journey to review the Employment Act in April last year. The views and feedback from all stakeholders have helped to make the process more robust. I would like to in particular thank everyone who has contributed to the review, especially NTUC, SNEF, SBF and Members of this House.

The proposed amendments will better protect our workers, raise employment standards and provide employers with the flexibility to manage these changes. It will bolster our efforts to institute good employment norms and develop progressive and good workplaces for our people.

Madam, I beg to move.