E-briefing: Changes to the Employment Act (“EA”)
The Ministry of Manpower laid out plans to change the existing Employment Act framework earlier this year. These changes are expected to become law by 1 April 2019.
The key changes are as follows:-
- The salary threshold for coverage of core employment provisions are to be removed so that all employees will be covered under the EA;
- Extension of Part IV of the EA (i.e. working time protections) to more non-workmen; and
- Expansion of statutory protection against unfair dismissal.
All employees will be covered under the EA
Currently, the EA only applies to (i) All non-managerial and non-executive employees regardless of salary; and (ii) Managerial and executive employees earning up to S$4,500 per month.
The removal of the salary threshold for Managerial and executive employees means that senior managers and executives, regardless of salary and position will also enjoy the following core employee benefits:-
- Minimum 7 days of annual leave
- 11 paid public holidays
- 14 days of paid sick leave and
- 60 days of paid hospitalisation leave
- Timely payment of salary
- Maternity protection and childcare leave
- Statutory protection against wrongful dismissal
- Right to preserve existing terms and conditions for employment transfer resulting from sale of business and business restructuring
Extension of Part IV to more non-workmen
Currently, Part IV of the EA only applies to employees who are non-managerial and non-executive (i) workmen earning up to S$4,500 per month; and (ii) Non-workmen earning up to S$2,500 per month.
The EA amendment will increase the salary threshold for non-workmen from S$2,500 per month to S$2,600 per month and more employees will be able to enjoy protections such as maximum working hours, mandatory rest days and statutory overtime pay.
In addition, the salary threshold for calculating overtime pay for non-workmen will also be amended. Currently, the hourly basic rate of pay for non-workmen who earn S$2,250 or more per month is calculated based on a monthly salary of S$2,250 even if the employee’s actual monthly salary is more than S$2,250.
The EA amendment will increase the salary threshold for calculating overtime pay for non-workmen from S$2,250 to S$2,600.
Expansion of Statutory Protection against Unfair Dismissal
Currently, unfair dismissal appeals are heard by the Ministry of Manpower (“MOM”).
Once the EA is amended to cover all employees, this also means that senior executives will be entitled to statutory protection against unfair dismissal and will be able to raise unfair dismissal claims to the Employment Claims Tribunal (“ECT”) if they consider that they have been terminated “without just cause of excuse.”
The ECT will have jurisdiction over the following types of unfair dismissal: (i) Dismissal on grounds other than poor performance, misconduct or redundancy; (ii) dismissal of pregnant employees; and (iii) constructive dismissal/ forced resignation.
Apart from the above, currently, all salary-related disputes are first mediated at the Tripartite Alliance for Dispute Management (“TADM”). If the disputes are not settled by mediation at TADM, they will be heard at the ECT. As such, moving forward, the EA amendment will provide employers and employees with a “one-stop shop” for dealing with both salary-related disputes as well as claims for wrongful dismissal.
Partner, Eversheds Harry Elias
Senior Associate, Eversheds Harry Elias