Proposed Amendments to the Employment Act
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- Charles Chapman
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1 Proposed Amendments to the Employment Act Introduction On 13 July 2015, the Minister for Manpower introduced a bill in Parliament to amend the Employment Act ( EA ). These proposed amendments mark the second time that the EA will be amended in as many years and come just 15 months after the last set of amendments in April As part of the proposed amendments, employers will be required to issue itemised payslips to employees, make and keep employee records, and provide employees with written key terms of their employment. Besides imposing obligations on employers, the proposed amendments provide clarifications on family related benefits under the EA. Given these impending changes, this update provides a review of the proposed amendments and hopes to set you thinking about planning ahead insofar as the relevant human resource issues are concerned if you have not already been doing so. Background to Proposed Amendments While the proposed amendments to the EA are new, the obligations prescribed are not. Since the phase 1 review of the EA ended two years ago, the Ministry of Manpower ( MOM ) has progressively announced these obligations. In relation to itemised payslips and written key employment terms, MOM also jointly issued guidelines with the National Trades Union Congress and Singapore National Employers Federation to respond to small and medium enterprises concerns over increased costs and administrative hassle associated with these obligations. These guidelines, vis, the Tripartite Guidelines on Issuance of Itemised Payslips ( Payslips Guidelines ) and the Tripartite Guidelines on Issuance of Written Key Employment Terms ( Key Employment Terms Guidelines ), provide useful clarifications on the scope of these obligations and practical ways to comply with these obligations. MOM has taken this progressive approach to ensure that employers have ample time to put in place the required processes to effectively comply with these obligations. In line with earlier MOM announcements on these obligations, the proposed amendments are expected to be in force in the first half of In MOM s view, these obligations are intended to bring about better protection of employees even though employers will also benefit. For instance, the provision of key employment terms in writing benefits both employers and employees by assuring employees of their main employment benefits, and preventing or resolving employment disputes that may arise. Similarly, the issuance of itemised payslips protects not only employees but also helps employers in the event of a salary dispute. Proposed Amendments Issuing Itemised Payslips Under the proposed amendments, the current section 96 of the EA will be repealed to make way for a new section 96 that will make it compulsory for employers to give complete and accurate itemised payslips to their employees. Specifically, the new section 96 requires every employer to give employees payslips in a prescribed form: within the prescribed time, for all salary paid by the employer for the salary period or salary periods to which the payslip relates; and 1
2 in the event that an employee is dismissed or resigns. The new section 96 also clarifies that the payslips can be provided electronically so long as the electronic payslip is in the prescribed form and accessible and useable by employees for subsequent reference. Prescribed Form of Payslips The proposed amendments are, however, silent on the prescribed form of payslips. Notwithstanding this, the Payslips Guidelines has stipulated what should be included in itemised payslips and it is likely that the prescribed form will be substantially similar to what the Payslip Guidelines stipulated. In this regard, the Payslips Guidelines state that, where relevant, the following items should be included in payslips: (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) Name of employer; Name of employee; Date(s) of payment; Mode of payment (cash/cheque/bank deposit); Start and end dates of each salary period within the month; Basic salary for each salary period; Allowances paid for each salary period such as: (i) All fixed allowances (e.g. transport); and (ii) All ad-hoc allowances (e.g. one off uniform allowance); Any other additional payment for each salary period such as: (i) Bonuses; (ii) Rest day pay; and (iii) Public holiday pay; Start and end dates of each overtime payment period within the month; Overtime hours worked; Overtime pay for each overtime payment period; Actual deductions made for each salary period such as: (i) All fixed deductions (e.g. employee s CPF contribution); and (ii) All ad-hoc deductions (e.g. deductions, for damage to or loss of goods); Net salary paid in the month; and Employer s CPF contribution. Prescribed Time for Issuing Payslips Similarly, although the proposed amendments are silent on the prescribed time for the issuance of itemised payslips, it is likely that such prescribed time will be similar to the stipulation under the Payslips Guidelines. Specifically, the Payslips Guidelines advise employers to issue itemised payslips at least once every month and within 7 days after the last day of a month where the salary period is on a monthly basis. Where there is more than one salary period within a month, the Payslips Guidelines also advise employers to consolidate all salary payment details in that calendar month into a single payslip. This will assist from an administrative standpoint. Making and Keeping of Employee Records The proposed amendments will also require employers to make and keep employee records containing information about the employment of their employees and former employees through the repealing and re-enacting of section 95. Specifically, the new section 95 requires employee records to contain prescribed particulars and be retained for a prescribed period. 2
3 However, what the prescribed particulars encompass and the duration of the prescribed period remain unclear as the proposed amendments are silent on these issues and hitherto no guidelines on making and keeping of employee records have been issued. Notwithstanding this uncertainty, it is likely that the new section 95 would require employers to provide more information than what is required under the current section 95. Currently, section 95 makes it mandatory for employers to keep a register showing the name, address, the basic rate of pay and allowances, the amount earned, and the amount of deductions made from the earnings of each employee. Under the new section 95, employers must also ensure that employee records are readily accessible by employees or former employees during the prescribed retention period. In this regard, different retention periods may be prescribed for different classes of employees or former employees. The making and keeping of records must also be complete and accurate and an employer is taken to have failed to comply with the new section 95 if an employee record is found to be incomplete or inaccurate. This is regardless of whether the employer knew that the record is incomplete or inaccurate. Providing Written Key Employment Terms The proposed amendments will enact a new section 95A to impose a duty on employers to give employees a written record of the employees key employment terms. This will apply to employees under contracts of service for a period not shorter than the prescribed minimum period of service. Such written key employment terms must be provided to employees no later than 14 days after the start of employment or within such other period prescribed by regulations in substitution. Under section 95A, employers may issue the written key employment terms electronically if: the electronic key employment terms are accessible and useable by employees for subsequent reference; or the written key employment terms are published on an Internet website readily accessible to employees. In this regard, the Internet website must be authorised by the employer and the address of the Internet Website must be disseminated by the employer to the employee. Employers may also choose to provide the written key terms of employment in any other manner in addition or alternative to the electronic form, such as in a hardcopy employee handbook given by the employer to the employee. The new section 95A also requires employers to give a complete and accurate written record. Where the written record provided is incomplete or inaccurate, an employer is taken to have failed to comply with section 95A. This is regardless of whether the employer knew that the record is incomplete or inaccurate. Prescribed Minimum Period of Service While the proposed amendments do not specify the length of the prescribed minimum period of service required before an employee is provided his written key terms of employment, this prescribed period is likely to be substantially similar to the period stipulated by the Key Employment Terms Guidelines, that is, a continuous employment of at least 14 days. Constitution of Key Employment Terms In addition, what constitutes key employment terms is not defined under the proposed amendments. In this regard, the Key Employment Terms Guidelines has identified 17 terms as key employment terms and it is likely that section 95A will consider the following terms as key employment terms: (c) Name of employer; Name of employee; Job title and main duties and responsibilities; 3
4 (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) Date of commencing employment; Duration of employment (only for employees on fixed-term contract); Daily working hours, number of working days per week and rest day(s) (for employees on irregular work patterns, employers should work out a roster indicating the expected working hours, working days and rest days in a month, to be conveyed to the worker before the commencement of that month); Salary period; Basic salary per salary period (for hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay, e.g. $10 per hour, and the total number of hours or days worked or pieces produced as agreed, within each salary period); Fixed allowances per salary period; Fixed deductions per salary period; Overtime payment period (only if different from salary period); Overtime rate of pay; Other salary-related components (e.g. bonuses, incentives); Leave entitlements (e.g. annual leave, outpatient sick leave, hospitalization leave, maternity leave, childcare leave); Other medical benefits (e.g. insurance, medical, dental benefits); Probation period; and Notice period for termination of employment initiated by either party. Clarification of Family Related Benefits Besides imposing additional obligations on employers, the proposed amendments also provide clarifications on family related benefits such as in relation to payments for maternity leave and childcare leave for parents. With regard to payments for maternity leave, the proposed amendment to section 76 clarifies that so long as a female employee has served for a period of three months before delivery, she will be entitled to paid maternity leave notwithstanding that the three months is not immediately prior to delivery. Further, the proposed amendment to section 77 also makes clear that any payment in relation to maternity leave shall not take into account the period which the female employee is on no-pay leave. As for childcare leave for parents, the proposed amendments introduce a new subsection under section 87A to state that an employee is not entitled to take childcare leave on a day that the employee is on nopay leave. Concluding Words The proposed amendments to the EA will likely require certain changes to be made to an employer s human resource processes. Employers should therefore consider adopting pre-emptive measures to comply with the new laws before these changes come into effect in the first half of 2016, such as by proactively preparing their employment agreements and human resource management programs. 4
5 Contacts Kala Anandarajah Head, Competition & Antitrust and Trade D (65) F (65) kala.anandarajah@rajahtann.com Abdul Jabbar Head, Corporate and Transactional Practice D (65) F (65) abdul.jabbar@rajahtann.com Desmond O. Wee Head, Corporate Commercial D (65) F (65) desmond.wee@rajahtann.com Jonathan Yuen Commercial Litigation D (65) F (65) jonathan.yuen@rajahtann.com Please feel free to also contact Knowledge and Risk Management at eoasis@rajahtann.com ASEAN Economic Community Portal Ahead of the launch of the ASEAN Economic Community ( AEC ) in December this year, businesses looking to tap the opportunities presented by the integrated markets of the AEC can now get help a click away. Rajah & Tann Asia, United Overseas Bank and RSM Chio Lim Stone Forest, have teamed up to launch Business in ASEAN, a portal that provides companies with a single platform that helps businesses navigate the complexities of setting up operations in ASEAN. By tapping into the professional knowledge and resources of the three organisations through this portal, small- and medium-sized enterprises across the 10-member economic grouping can equip themselves with the tools and knowhow to navigate ASEAN s business landscape. Of particular interest to businesses is the "Ask a Question" feature of the portal which enables companies to pose questions to the three organisations which have an extensive network in the region. The portal can be accessed at 5
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