Attention Employers: Guidelines to Protect Contract Employees Rights

Background

There has been a shift in the hiring pattern among employers in Singapore. Amidst the increasing economic uncertainty, organizations have been tweaking their hiring policy. Many have halted hiring permanent headcounts and contract employees are the norm, even among Professional, Managerial, Executive and Technical (PMET) jobs.

Contract and temporary employees have been in existence for a long time but have become more prevalent in recent times. Such arrangements are generally made to fill interim vacancies arising due to long leave of permanent employees or during peak period. Contract employees are also hired for tasks that require special skills that are not available among permanent staff. Employees may be recruited on contract basis to help an organization explore the need and costs of a permanent role. Contracts have also been used during the current economic situation, as the uncertainty has created sudden surges and falls in the demand for services and products. Predicting manpower requirements under so much of uncertainty is increasingly challenging. Hence organizations are currently heavily skewed towards contract employees because such arrangements offer them the flexibility to retain staff at times of need and to cut back during lean times without liabilities.

Jobseekers generally look for stability, hence the preference for a permanent position is only natural. However, given the changed hiring scenario, job seekers, especially those in their early stage of building their career, are in a catch-22 situation. Unless they accept and settle with contract positions, they will have to go without a job or remain unemployed for a longer time between jobs.

Singapore Scenario

As of 2014, there was total of 205,500 resident contract employees, accounting for 11.8% of resident employees. Compared to 2013, the number of contract employees has increased by 8.4%. This is up from 118,600 contract employees in 2013. Of the total contract resident employees, 54.6% had a contract term of less than a year. The remaining 45.5% had a contract term of one year or more. Interestingly, the Public Administration and Education industry employed the largest number of contract workers – a total of 35,400 contract employees. The Wholesale and Retail Trade and Accommodation and Food Services industries had the second and third largest share of contract employees.

Contract employees enjoy the same protections and privileges accorded under the Employment Act (EA), Work Injury Compensation Act (WICA), the Central Provident Fund (CPF) Act and the Employment of Foreign Manpower Act (EFMA). However, discriminatory and unfair employment practices are not uncommon. The new guidelines address two key areas: leave entitlements and notice period of contract expiry.

Leave Entitlement

An area where the contract employees face severe discrimination is leave entitlements. The guideline directs employers regarding the leave benefits of contract employees who have worked for a long term with them.

The Employment Act (EA) and the Child Development Co-Savings Act (CDCA) provides that an employee is entitled to statutory leave benefits if the employee has worked with the organization for at least three consecutive months without a break in service. Term contract employees are also entitled to such leave benefits if they meet the condition.

Subject to Condition Renewed Contracts To Be Treated As Continuous Service

In order to override the stipulation and to deny the leave benefits, some employers hire employees on contracts that are shorter than three months and would continue to rehire them on separate contracts of less than three-month term, with a short interval between each contract. Thus they ensure that the requisite minimum three-month continuous service period is never fulfilled and the contract employee will be deprived of the statutory leave benefits despite their long service. To prevent such unfair practice, the guideline recommends employers to treat contracts of 14 days or more that are renewed within one month from the expiry of previous contract as continuous.

For example, company ABC Limited hired Ms. Sandra on a contract basis. Each contract of service lasted for one month with a varying period of break between each contract, such that the break did not exceed one month. After three such contracts, with breaks not exceeding one month, she was rehired on a contract for one month. On completing a cumulative three month period of service, any subsequent renewal of contract for a term of more than 14 days will have to be treated as continuous period of service. Ms. Sandra is deemed to have completed a three-month cumulative period of service. ABC Limited is therefore recommended to give Ms. Sandra the relevant leave benefits since she has completed three months of service.

Illustration:

Employers are also directed to grant or accrue leave benefits on the basis of the cumulative period of service, if it meets the qualifying period criteria stated in the EA and CDCA. As with other permanent employees, the employers could prorate the leave benefits depending on the length of term contract. Statutory leave benefits include annual leave, sick leave and child care leave.

The following is a summary of leave schemes available under EA and CDCA:

Notice of Non-Renewal of Contract

Some employers continuously rehire their contract employees by re-contracting with them. This practice is purely to benefit employers who can easily forsake their obligations under the various employment regulation acts such as the EA. Although the roles are of permanent nature, they are rendered transient by the recurring contracts that strip the employees of their rights to statutory benefits.

An employee who is under such recurring re-contract arrangement gets accustomed to the practice and expects a routine renewal after his contract is ending, but his employer may renege the renewal routine and will refute all liabilities. The employees caught in such a perplexing situation may have to endure redundancy.

To prevent such an unfair situation, the guideline recommends both parties to give sufficient notice before the expiry of the contract whether either party wishes to renew the contract. This will save any unwarranted hassles for both the parties involved.

The notice period can be the same as the one required for early contract termination. In the absence of such an agreement the notice period shall be:

Not less than a day’s notice if the cumulative employment is less than 26 weeks;

• One week’s notice if his cumulative employment is 26 weeks or more but less than 2 years;
• 2 weeks’ notice if his cumulative employment is 2 years or more but less than 5 years; and
• 4 weeks’ notice if his cumulative employment is 5 years or more.