Singapore Employment Act Set for Review

A recent news report confirms that the Singapore Employment Act is set for a major review this year in line with Singapore’s growing cosmopolitan workforce and changes in employment practices. This is a significant move on the part of the Singapore government that clearly demonstrates its commitment to protecting the country’s versatile workforce.

The Singapore Employment Act contains specific regulations regarding the basic terms and conditions of employment and the rights, duties and responsibilities of employers and employees. The Employment Act (EA) that was first introduced in 1968 has been subject to several reviews over the years; the last being conducted in 2008. The decision to review the EA comes at a time when Singapore’s workforce and employment landscape have showed signs of evolving over the past few years prompting the need to revisit the scope of coverage of the EA.

More Professional, Managers and Executives in the labor force

Singapore’s labor force has expanded to include more educated Professional, Managers and Executives (PMEs) that today account for almost 32% of the resident workforce. As of 2011, there were 629,400 resident PMEs in Singapore’s workforce.  However, at present the Employment Act does not cover managers and executives i.e. persons who have direct authority or influence in the hiring, firing, promotion, transfer, reward or discipline of other employees; or whose main duties involve management and running of the business. The Act also does not extend to professionals (possessing tertiary education along with specialised knowledge or skills) who carry out the same or similar responsibilities as managers or executives including lawyers, accountants, dentists, and doctors.

Rising incomes

Secondly, the salaries of employees have risen in recent times. For instance, the median gross monthly income in 2011 was recorded to be S$2,925. This essentially means that lesser workers are protected by the Employment Act given that Part IV of the Act (which provides for rest days, hours of work and other conditions of service) currently covers employees who earn less than S$2,000 a month. Moreover, junior managers and executives earning S$4,500 and below enjoy salary protection (excluding all other provisions) under the Employment Act. However, the median income of managers in recent times has increased to S$6,300 making the S$4,500 salary limit redundant.

More contractual jobs

Furthermore, the nature of jobs being created has shown signs of change. With outsourcing becoming a popular trend, more short-term employment contracts are on the rise. Contractual employees are reported to account for 12% of the 2 million resident workforce. Although contract workers enjoy almost the same protection as permanent full-time employees there is flexibility in employment terms such as pro-rating of employment benefits, encashment of annual leave and provision of rest days. Given the recent increase in contractual staff, it is an opportune time to revisit the provisions set out for this category of the labor force.

Selective medical benefits

Medical benefits extended to low-wage earners has been highlighted as an area that needs to be reviewed this year. According to the Employment Act, the employer is legally bound to only reimburse medical consultation fees of employees who have worked for a minimum of three months. The reimbursement of other medical costs such as medication, treatment or hospitalisation fees will depend upon the contractual terms or the collective agreement signed with the union. This gives unionized workers an unfair advantage over non-unionized ones. Furthermore, employers are required to provide medical insurance by law only to Work Permit and S-Pass holders.

More foreigners in the labor force

Lastly, the influx of a high proportion of foreigners in the labor force presses the need for an anti-discriminatory law especially in the light of recent complaints received by the employment watchdog Tripartite Alliance for Fair Employment Practices on employers preferring foreigners over locals. An anti-discriminatory law will serve to protect the rights of all parties involved and help prevent discrimination on the basis of nationality, gender, age, race, or religion.

Although the authorities have not revealed what changes will come about as a result of the Employment Act review, the above mentioned areas are most likely to be scrutinized. The Ministry of Manpower will take into account the views of stakeholders and the public in order to protect the rights of employers and employees and at the same time ensure that it maintains labor market flexibility and competitiveness of Singapore’s workforce.

The Employment Act is a key statute that governs labour and employment issues and timely amendments are necessary in order to ensure that it remains relevant to present day employment practices. It guarantees a fair working environment for both employers and employees and plays a key role in maintaining labor market efficiency. According to the World Economic Forum’s 2011 Global Competitiveness Index, Singapore ranks #2 in the world for cooperation in labor-employer relations and #1 in the world for pay and productivity. The country’s labor landscape makes it more attractive for MNCs and foreign professionals to relocate to Singapore and Janus welcomes the government’s move to review the Employment Act.

Latest Update: The Ministry of Manpower (MOM) is inviting members of the public to provide feedback on proposed amendments to the Employment of Foreign Manpower Act (EFMA). The proposed changes have been posted on the REACH website and the public consultation will take place from 10 May 2012 to 31 May 2012.