Singapore’s platform worker protections kick in from Jan 2025; more cash support for CPF contributions

Singapore's previously-announced labour protections for ride-hailing and on-demand delivery workers – otherwise known as platform workers – will kick in from Jan 1, 2025.

From that date, on-demand service operators such as Grab and foodpanda must provide platform workers with work injury compensation aligned with that of employees. Operators will also have to contribute to the Central Provident Fund (CPF) savings scheme, while workers’ required contribution rates will rise.

The companies must also allow platform workers – who numbered 70,500 in 2023 – to be represented by bodies with similar powers to unions.

The implementation date was announced by Senior Minister of State for Manpower Koh Poh Koon on Thursday (Aug 22), during a visit to foodpanda’s Robinson Road office. This comes two weeks after a Bill was tabled in Parliament to implement the protections.

“The fundamental thing that we want to do is to make sure that the platform economy continues to develop sustainably, and to make sure there is a level playing field for all the operators in this space to also treat all working persons equally,” Dr Koh told reporters.

Platform workers have a “precarious income and are doing jobs that put themselves at risk on the roads very frequently”, raising the need for adequate work injury protection and long-term savings, he noted.

The government chose January 2025 as an “intuitive start time” for the protections, based on industry feedback, said Dr Koh. Some measures, such as the new CPF requirements, were previously expected to start from the second half of 2024.

By starting from a new calendar year, “both workers and the operators will be able to do a more accurate calculation of taxation rebates, as well as CPF contributions”, said Dr Koh.

More support

Separately, the government will enhance its previously-announced CPF transition support scheme for low-wage platform workers, to ease them into making higher CPF contributions.

Announced in Budget 2023, the Platform Workers CPF Transition Support (PCTS) scheme gives monthly cash payouts to low-wage platform workers to offset part of their increase in CPF contributions.

The scheme is being enhanced in two ways. First, the payouts will cover 100 per cent of the increase in platform workers’ CPF Ordinary and Special Account contributions in 2025 – up from the previously announced offset of 75 per cent.

“This means that the government is paying fully for platform workers’ CPF contributions in 2025. Platform workers will not see a drop in their take-home pay and at the same time, will see more contributions into their CPF (next year),” said the Ministry of Manpower in a statement on Thursday.

The offset for 2026 will be increased to 75 per cent, up from the previously announced offset of 50 per cent. The offsets will taper off from 2026 and cease in 2029.

The second enhancement is to the PCTS’ qualifying monthly income cap. This will be raised to S$3,000, up from the previously-announced S$2,500, so that more workers can benefit from the scheme.

This corresponds with a similar enhancement to the Workfare Income Supplement (WIS) scheme, a separate initiative that tops up the salaries of lower-income workers. From January 2025, the WIS’ qualifying monthly income cap will also be raised to S$3,000, from S$2,500 before.

Dr Koh expressed hope that the enhanced PCTS scheme will encourage older workers to opt into the CPF contributions, by easing the impact on their cash flow.

Under the upcoming protections, platform workers and companies will need to make CPF contributions at the same rate as employees and employers, as long as the worker is aged below 30 in 2024 (*see amendment note). Employees aged 55 and below currently contribute 20 per cent of their wages to CPF, while employers contribute 17 per cent.

The increased contribution rates for platform workers will be gradually phased in over a five-year period. Those aged 30 and above this year are not obliged to join the full CPF regime, but can opt in.

Asked why the government chose to enhance the PCTS offsets, instead of increasing the CPF contribution rates more gradually, Dr Koh pointed to the importance of compounding returns.

“CPF works by compounding, and the sooner we get (platform workers) to a higher contribution, the better they can enjoy the compounding effect,” he said.

Platform workers have thus far only needed to contribute up to 10.5 per cent of their net earnings into their MediSave accounts, which serves healthcare needs. This is because they are classified as self-employed persons (SEPs).

But under Singapore’s upcoming measures, platform workers will be designated as a separate legal class, distinct from employees and SEPs. This is similar to what was done in the UK, where an intermediate class of “workers” enjoys some, but not all, the protections that employees have.

Impact on workers, operators

Platform workers BT spoke to at foodpanda’s office welcomed the protections, albeit with some concerns about cash flow.

Food delivery rider Danish Bin Said is positive about the enhanced work injury coverage, but noted that CPF contributions could take up a significant portion of earnings. The 28-year-old student does deliveries on his motorbike on weekends, which brings in about S$1,200 on average monthly.

“There would be a lot of adjustments to lifestyle that has to happen for the riders. But it’s not necessarily a bad thing, it’s just something that we’ve to get used to; it’s for a greater good,” he said.

Fellow food delivery rider Jimmy Tan, 51, is undecided about opting into the full CPF regime due to the impact on take-home pay. He earns between S$1,200 and S$1,800 monthly making deliveries on his mountain bike, and has been doing the job since 2016.

The new CPF scheme “probably works better for those who are younger and saving for buying a house”, said Tan.

Platform operators are meanwhile assessing the impact of the new protections on their operations.

The companies have been working closely with government agencies “to think through many of the complex processes that they need to put in place”, said Dr Koh.

Foodpanda, for instance, is upgrading its systems to implement the CPF requirements seamlessly, said Toshit Bharara, its Singapore managing director.

Asked about the cost impact, he said: “For now, we’ve already invested in additional manpower and system development. It’s a bit too early for us to (know) the exact extent of cost in the longer term.”

Separately, the Digital Platform Industry Association – which represents Grab, foodpanda and Deliveroo – said in a statement on Thursday that the new protections “entail significant costs”.

“For the legislation to succeed, it will require the collective commitment of the entire community – government, platform operators and consumers,” said the association.

Dr Koh noted that it will be hard to predict how the new protections will affect platform operators’ market share.

“But what is important is that when we do this, we do it in an even-handed manner. All operators are subject to the same requirements, so that there’s a level playing field for them to continue to compete fairly. And I think over time, their own competitive advantage will allow them to grow,” he said.

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

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