Employer Obligations In The Amendments To The Employment Act
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1 Employer Obligations In The Amendments To The Employment Act Executive summary The recently passed Employment (Amendment) Bill will likely take effect from 1 April Employers to review current HR documentation and practices. Employers should take this interim period to review their current human resource documentation and practices to ensure that they will comply with the amendments to be introduced ( Amendments ), including:- (1) New obligations imposed on employers, such as making it compulsory to:- (a) maintain employment records of employees, (b) provide written records of key terms of employment, and (c) issue pay slips to employees. (2) Introduction of a civil penalty regime as a more proportionate approach towards the enforcement of certain administrative breaches under the Employment Act (Chapter 91 of Singapore) (the Act ). New obligations imposed on employers Two years to implement employers obligations The Amendments build on prescribed obligations, which have been publicly made known since the first review of the Act in The Ministry of Manpower ( MOM ) has since adopted a progressive approach in implementation, by providing a deliberate two-year window to allow employers time to prepare for these obligations. During this interim period, MOM issued guidelines with the purpose of informing and clarifying the scope of the obligations and educating employers on practical ways to comply with the obligations. While the Amendments are scheduled to take effect on 1 April 2016, the MOM will adopt a light-touch approach to enforcement until end March During this period, it will focus on assisting employers in overcoming any administrative difficulties with the obligations imposed by the Amendments. 1
2 Obligation to maintain employment records Register of employee records At present, section 95 of the Act compels employers to keep a register of employee records which include information, such as:- (1) the employee s name; (2) the employee s address; (3) basic rate of pay; (4) allowances; (5) the amount earned; and (6) the amount of deductions made from the earnings of the employee. Two years employee records to be maintained Employee records The new section 95 imposes a more onerous obligation on employers. They are required to maintain the latest two years of records for every current employee, and the last two years of records for every former employee (for one year after the employee leaves). The records to be maintained have now been broadened, and can be categorised into salary records (similar to items that are required in itemised pay slips set out below) and employee records. The employee records to be maintained are:- (1) the employee s address; (2) the employee s NRIC number (or work pass number for non-citizens and the date of expiry); (3) the employee s date of birth; (4) the employee s gender; (5) date of starting employment; (6) date of leaving employment (if applicable); (7) working hours (including duration of meals and tea breaks); and (8) dates and other details of public holidays and leave taken. Employers should take note that the new section 95 will penalise employers who fail to comply with the requirement to maintain employee records that are complete and accurate. This is regardless of whether the employer knew that the records were incomplete or inaccurate. Obligation to provide written key employment terms Access to key employment terms The Amendments will enact a new section 95A that requires employers to provide a complete and accurate record of key employment terms to every employee covered under the Act:- (1) who has commenced employment with the employer on or after 1 April 2016; and (2) is employed for a continuous period of 14 days or more. 2
3 While the new section 95A requires employers to provide a written record of key employment terms, it gives employers the option of providing the key employment terms electronically. Electronic records Key employment terms However, employers must ensure that the electronic records are accessible and useable by employees for subsequent reference, or the written key employment terms are published on an Internet website which is authorised by the employer and readily accessible to the employee. These website addresses should be disseminated to all employees. A written record of the key employment terms must be provided within 14 days from the commencement of employment with the employer and must include the following items (where applicable to the employee):- (1) Full name of employer; (2) Full name of employee; (3) Job title, main duties and responsibilities; (4) Date of commencement of employment; (5) Duration of employment (if the employee is on a fixed-term contract); (6) Working arrangements, such as: (a) Daily working hours; (b) Number of working days per week; and (c) Rest day(s); (7) Salary period; (8) Basic salary per salary period; (9) Fixed allowances per salary period; (10) Fixed deductions per salary period; (11) Overtime payment period; (12) Overtime rate of pay; (13) Other salary-related pay, such as: (a) Bonuses; and (b) Incentives; (14) Leave entitlements, such as: (a) Annual leave; (b) Outpatient sick leave; (c) Hospitalisation leave; (d) Maternity leave; and (e) Childcare leave;
4 (15) Other medical benefits, such as: (a) Insurance; (b) Medical benefits; and (c) Dental benefits; (16) Probation period; and (17) Notice period. The new section 95A requires employers to provide a complete and accurate record of key employment terms, whether in a single source or multiple sources (i.e. contract and employee handbook). The provision of an incomplete or inaccurate record would be considered a failure to comply, regardless if the employer was aware or not. Obligation to provide pay slips Itemised pay slips The Amendments to the Act requires employers to provide itemised pay slips that are complete and accurate to every employee covered under the Act:- (1) for all salary paid by the employer for the salary period which the pay slip refers to (at least once a month) and the itemised pay slips should be given together with salary payment to the employee (or within three working days from payment of the salary); and (2) for any amount paid in the case of termination/dismissal, for which an itemised pay slip should be given with the outstanding salary paid. Monthly consolidation of payments Acknowledging the practical difficulties faced by small businesses, the new section 96 allows some flexibility in the issuance of pay slips. For example, employers have the option of issuing pay slips either electronically or in hard copy, as long as the pay slip contains the prescribed information and is accessible and usable by the employee for subsequent reference. Also, to reduce burdensome issuance of pay slips for employees who are paid on a weekly or fortnightly basis, employers will be allowed to consolidate payments into a monthly pay slip. 43
5 Compulsory items in pay slips The following items (as they are applicable in the circumstances) are compulsory to satisfy an employer s obligation to issue a complete and accurate pay slip:- (1) Full name of employer; (2) Full name of employee; (3) Date(s) of payment; (4) Basic salary for each salary period; (5) Start and end dates of each salary period; (6) Allowances paid for each salary period, such as: (a) all fixed allowances; (b) and all ad-hoc allowances; (7) Any other additional payment for each salary period, such as: (a) Bonuses; (b) Rest day pay; and (c) Public holiday pay; (8) Deductions made for each salary period, such as: (a) All fixed deductions; and (b) All ad-hoc deductions; (9) Overtime hours; (10) Overtime pay for each overtime payment period; (11) Start and end dates of each overtime payment period; and (12) Net salary paid in the month. Two years of pay slips to be maintained Aligned with the obligation to maintain employment records, employers are also required to keep a record of all pay slips issued to employees and former employees. The prescribed period for the retention of records of pay slips is:- (1) Current employees: the latest two years of employment; and (2) Former employees: a record of pay slips issued to the individual in the last two years of the employment with the employer and this is to be kept for one year after the individual leaves employment. As with the above obligations, employers are required to ensure that the pay slips provided are complete and accurate. Introduction of civil penalty regime At present, all breaches under the Act are criminal offences regardless of the severity of the breach. These range from administrative breaches such as the failure to maintain employment records, to more serious offences such as the non-payment of salary. 5
6 Non-criminal infringement penalties The Amendments will address this disproportionate approach towards enforcement of the Act. For a start, the following administrative-type breaches will be treated as noncriminal infringements, for which penalties would typically be limited to fines:- (1) Failure to maintain detailed employment records or the failure to maintain a complete and accurate record (under the new section 95); (2) Failure to provide key employment terms or the failure to provide a complete and accurate record of key employment terms (under the new section 95A); (3) Failure to issue itemised pay slips or the failure to provide a complete and accurate pay slip (under the new section 96); and (4) The provision by an employer of inaccurate information or particulars to the Commissioner for Labour or inspecting officers, inadvertently or without intent to mislead or defraud. Conclusion Employers should review their current human resource documentation and practices, to ensure that they comply with the Act once the Amendments are introduced. As a reasonable amount of time is required to conduct such a review (e.g. to review the current documentation to ensure that all key employment terms are provided), employers are encouraged to proceed with their review early. 6
7 ::: CONTACTS ::: Gerald SINGHAM Partner Corporate Ray CHIANG Partner Corporate Nicole TEO Associate Corporate RODYK & DAVIDSON LLP SINGAPORE 80 Raffles Place #33-00 UOB Plaza 1 Singapore Tel Fax mail@rodyk.com SHANGHAI Unit Ocean Towers No. 550 Yan An East Road Shanghai , China Tel +86 (21) Fax +86 (21) shanghai.mail@rodyk.com Our newsletter is for general information purposes only. Its contents are not intended to be legal or professional advice and are not a substitute for specific advice relating to particular circumstances. Rodyk & Davidson LLP does not accept responsibility for any loss or damage arising from any reliance on the contents of this article. If you require specific advice or have any ques tions, please contact academy@rodyk.com. Rodyk & Davidson LLP Limited Liability Partnership Registration No. T07LL0439G. 7
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