Techblog
Amendments to the Employment Act: What you need to know
Singapore's Ministry of Manpower recently made a number of changes to the Employment Act which small business owners need to be aware of. Here's an overview.
The beginning of April this year saw a number of changes to employment laws introduced by Singapore's Ministry of Manpower. With the Ministry's recent focus on increasing compliance with employment regulations, employers would be well advised to ensure their business is in order, particularly as the new laws allow for increased penalties for enterprises that do not comply with the Act.
The changes cover a number of areas including:
Employee protection
- A greater proportion of clerical staff and other non-workmen employees are now covered by work-hours regulations, including overtime requirements.
- Professional, managerial and executive employees (PMEs) earning up to $4500 must now be provided sick leave benefits and unfair-dismissal protection.
- A 25 per cent sub-cap will now be imposed for deductions to employees’ salaries for accommodation, amenities and services. This is within the existing 50 per cent total cap for authorised deductions.
- The Ministry has also announced that companies will be required to pay retrenchment benefits to employees after two years of employment rather than three. This requirement will take effect in 2015.
Increased flexibility for employers
- Although the number of employees covered by overtime requirements has risen, with non-workmen employees earning up to $2500 now covered (up from $2000), the government has limited the maximum overtime penalty rate required for these workers. The highest required overtime rate for these workers will be based on a monthly salary of $2250 rather than the full $2500.
- Access to unfair-dismissal protection will only be available to PMEs who have been with a business for more than 12 months.
- Companies that require managers to work on public holidays have also been given greater flexibility by allowing PMEs to receive time in lieu rather than the previous public holiday overtime rate requirements.
Increased penalties
- Employers failing to pay salaries in line with the Employment Act face higher penalties, with initial offences now attracting fines of up to $15,000 and six months in prison.
- Directors or partners of companies have greater liability for offences committed under the Act. It is now up to directors or partners to prove that they were not negligent in their oversight of the company if the business is found to have broken the law.
- Inspectors from the Ministry of Manpower now have the power to enter any workplace to carry out checks on employment law compliance.
Other changes
- The Ministry is introducing guidelines for employers to provide itemised payslips to employees, with the ministry providing software and templates to create these payslips through its website. Itemised payslips are expected to become mandatory by 2016.
- The Ministry is also changing regulations for employing foreigners, with the minimum monthly wage for those applying for an Employment Pass rising to $3300.
- In accordance with the new Fair Consideration Framework, companies are required to advertise job openings on a local job portal first, before they are allowed to consider foreign talents for positions.
While this may all seem a little daunting to get your head around, there are already a number of initiatives and resources in place to help employers manage these changes and ensure they are compliant. This includes the aforementioned payslip template booklets, which contain a sample to help you better understand how to fill in payslips, as well as tearable blank payslips for use. There are also apps such MecWise Payroll, a fully-automated payroll solution that keeps you updated with statutory legislations to ensure compliance. MecWise Time Management helps simplify timesheet tracking and roster planning in your business.
If you would like to check how the changes affect your business or you are unsure about any of the changes, the Ministry of Manpower has provided an assistance package through its website. The Ministry's SME Centres also provide an advisory service if you would like to speak to somebody directly about the changes.