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Amendments to the Singapore Employment Act
The Employment Act (Chapter 91) (“EA”) is Singapore’s main labour legislation. The EA seeks to ensure reasonable employment standards while balancing the needs of businesses to stay competitive. It specifies the minimum terms and conditions of employment, as well as the rights and responsibilities of employers and employees under a contract of service.
The following amendments to the EA have been introduced and will take effect on 1 April 2016. They are intended to assist employees in better understanding their benefits, to prevent misunderstandings and minimise disputes between employers and employees and to create a more proportionate penalty regime.
The Ministry of Manpower (“MOM”) will require employers to provide itemised payslips to all their employees covered under the EA together with their salary payments. Items to be reflected include employer name, employee name, date of payment, basic salary, start and end date of employment, allowances and deductions.
To include some flexibility, employers can choose to issue the payslips in either soft or hard copy, as long as the payslips reflect the required breakdown of items. Employers also have the option to consolidate payslips if payments are made more than once a month.
MOM will require employers to provide written key employment terms (“KETs”) to all employees covered under the EA with continuous employment of at least 14 days with the company. KETs include basic salary, working arrangements, fixed allowance, fixed deductions, type of leave, medical benefits, probation period and notice period.
Employers will have the flexibility to issue KETs in either soft or hard copy, including handwritten copies. Common KETs can also be provided in the company’s employee handbook or website, as long as the information is easily accessible to its employees. Employers also need not give KETs to casual employees who work for only a few days.
Together with the requirement to provide itemised payslips, such amendments will allow employees to better understand their regular salary components, as well as their employment terms and benefits. This may also serve to prevent misunderstandings and minimise disputes between employers and employees at the workplace.
Employers must keep a record of all payslips issued. For current employees, payslips for the latest two years of employment must be kept. For ex-employees, payslips of the last two years must be kept for one year after the employee leaves employment.
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Currently, all breaches under the EA are considered criminal offences, regardless of the type and severity of offences, which can range from administrative offences such as the failure to maintain employment records to serious offences such as the failure to make payment to employees. In an effort to create a more proportionate penalty regime, MOM has introduced a framework to deal with the less severe breaches as “civil breaches,” which attract administrative penalties.
For a start, the breaches will include:
- failure to provide itemised payslips;
- failure to provide written KETs;
- failure to keep detailed employment records; and
- provision of inaccurate information without fraudulent intent to the Commissioner for Labour or inspecting officers without the intent to defraud and mislead.
Employers in breach of the above requirements may be imposed with a fine starting from S$100 to S$200 per employee or occurrence, depending on the breach in question. In the case of repeated non-compliance, such breaches will be regarded as a criminal offence. This means that employers who do not issue payslips or KETs may face a financial penalty, but without a criminal record. This process appears to be more appropriate as it prevents companies from being penalised too heavily for administrative breaches, especially small and medium-sized businesses.
In consideration of the feedback from small businesses, MOM will provide a one-year grace period in enforcement. Commencing from April 2016 to end March 2017, MOM will adopt a light-touch enforcement approach and focus on educating smaller employers on how to comply with the requirements under the amended law, instead of punishing employers who fail to comply.
The proposed amendments are key changes as they serve to raise employment standards and facilitate dispute resolution at the workplace. Flexibility is also afforded to employers to integrate these changes into their workplace at a comfortable pace and in a practical manner. Together, such amendments will likely strengthen efforts to foster good employment practices and achieve more progressive, fair and productive workplaces in Singapore.
Written by Rachel Choo.
Please contact Rachel Choo at RChoo@duanemorrisselvam.com for more information.
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