Singapore’s Employment Act review may include changes to leave entitlements, workers’ protection: observers

The upcoming review of the Employment Act could include higher statutory leave entitlements, raised salary thresholds for coverage, and clearer protections for employees affected by corporate restructuring, said observers. 

However, a suggestion to mandate employer justifications for dismissals is unlikely to be taken up, they added.

The Employment Act review was announced by Manpower Minister Tan See Leng during his ministry’s Committee of Supply debate on Mar 6. 

Dr Tan said the review of the Act – which was last amended in 2019 – aims to ensure that Singapore continues to protect workers, while preserving flexibility for businesses.

The Ministry of Manpower (MOM) will conduct the review with its tripartite partners, the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF), with details to come later this year. 

In a statement on Mar 7, SNEF said it looked forward to the tripartite discussions, but said the review should not “inadvertently mandate progressive employment practices that may reduce flexibilities for employers and undermine business competitiveness”.

More annual leave

The review will consider suggestions by Members of Parliament Patrick Tay and Louis Ng, said Dr Tan.

Ng, an MP for Nee Soon GRC, had suggested raising the minimum statutory annual leave entitlement – currently seven days for an employee who has worked at least three months – to help lower-income workers in particular.

This would help some 18,800 employees who receive only seven days, he said, noting that this entitlement has not been reviewed for 57 years.

Just over half of Singapore’s full-time employees receive no more than 14 days of annual leave, according to MOM data. 

Of the proposals made, this is the most likely suggestion to be taken up, said labour economists and lawyers to whom The Business Times spoke.

“I think there is a chance for the minimum entitlement to be raised, given the incidence of multiple surveys in recent years pointing to the prevalence of workplace stress and burnout in Singapore,” said National University of Singapore economist Kelvin Seah.

Singapore University of Social Sciences labour economist Walter Theseira suggested that MOM benchmark any increase against existing practice, as most larger employers already offer more than the minimum.

Jonathan Yuen, head of employment at Rajah & Tann, expects any changes to be modest and targeted at lower-wage workers, as Ng highlighted.

It is “highly unlikely” that the government will introduce European-style entitlements of 28 days or more, said Yuen. For higher-income employees, the free-market approach to leave entitlements is likely to remain.

SNEF argued that increasing the statutory leave entitlements would raise business costs “without being practical or sustainable”. 

Instead, SNEF said, it remains committed to promoting flexible work arrangements.

Justifying dismissals

Tay, who is also assistant secretary-general at NTUC, made three suggestions. One of them was requiring employers to justify terminations. 

Currently, employers are not legally required to provide reasons for termination, even without notice. This “makes it difficult for employees to bring a case of unfair dismissal against the employer”, said Tay.

Observers found this proposal less likely to be taken up.

Amarjit Kaur, head of employment law at law firm Withers KhattarWong, said that the tripartite-driven nature of Singapore’s employment framework makes it unlikely for this to be mandated.

Yuen from Rajah & Tann said the proposal would be “heavily contested” as it would impose a significant one-sided legal burden on employers without a reciprocal obligation for employees to justify resignations.

He noted that Tripartite Guidelines on Wrongful Dismissal already set out safeguards prohibiting dismissals due to discrimination, benefit deprivation, or retaliation.

Indeed, SNEF said the proposal would not be practical and could make employers more cautious about offering permanent contracts.

It cited MOM data showing that 75 per cent of wrongful dismissal claims in 2022 were assessed to be unsubstantiated at the Tripartite Alliance for Dispute Management.

Nevertheless, Prof Theseira said it would be timely to review how dismissals are handled, given that there are cases where employers force workers to resign.

“If workers perceive they face high job insecurity, then there will be political support for more far-reaching changes to the system, so I think it’s better to get ahead of it,” he added.

Uncertainty in employee transfers

Tay also called for greater clarity on the scope of Section 18A of the Act, which governs the transfer of employees from one entity to another.

There are questions over how this should be interpreted in relation to workers transferred during company restructuring or mergers and acquisitions, he said.

Kaur agreed that the Act does not clearly define what constitutes a transfer, “leading to potential misinterpretations, especially in complex restructuring scenarios”.

She noted other possible updates. For instance, while the Act requires new employers to maintain existing terms and conditions of employment, it lacks enforcement mechanisms to ensure compliance or resolve disputes over perceived changes post-transfer.

Laure de Panafieu, Asia head of employment at Linklaters Singapore, added that Section 18A fails to address what happens when an employee objects to a transfer, or when a foreign employee cannot be transferred due to the new employer being unable to secure a work pass.

“This creates unhelpful uncertainty for both employers and employees and increased exposure to litigation risks,” she said.

Salary thresholds for worker protections

Tay also proposed raising the salary cap for employees covered under Part 4 of the Act, which governs rest days, working hours and other conditions of service. 

Tay told BT that with rising median wages, the current salary caps of S$4,500 for workmen and S$2,600 for non-managerial, non-executive employees (excluding workmen) should be raised to reflect prevailing wage standards.

He added that the higher thresholds should also apply to Section 33, which prioritises employees’ salaries over other debts when an employer’s assets are liquidated.

Tay also wanted more clarity on the definition of workmen, currently defined as employees engaged in manual labour, including cleaners, construction workers, machine operators, and drivers.

Evolving job roles have blurred definitions, said Tay. “It is not immediately clear the extent a workman has to be involved in work which requires some form of physical exertion and toil.”

Labour observers agreed that it is timely to revisit salary thresholds. However, any adjustments must balance worker protection with business costs, said Withers KhattarWong’s Kaur.

Prof Theseira suggested amending the Act to specify that salary thresholds be reviewed annually according to an index or specified principle, such as accounting for inflation or to cover workers at a certain wage percentile.

Source: The Business Times © SPH Media Limited. Permission required for reproduction.

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