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The Latest Employment Act Amendments Your Boss Won’t Tell You About

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Jeff Cuellar

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For some employers, “employee protection” falls just below the procurement of toilet paper in terms of business priorities. That goes for both small and medium enterprises (SMEs) and multinational corporations (MNCs) in Singapore – as both are equally capable of unreasonable actions such as unfairly dismissing employees.

That’s where the Employment Act (EA) comes into play.

Taking into account the interests of both business owners and employees, the Ministry of Manpower (MOM) updates the EA to ensure its vision of “A Great Workforce. A Great Workplace.”

Recently, MOM added some very interesting amendments to the EA that went into effect on 1 April 2014. I know, that was April Fools day, but I’m sure that was just a coincidence.

As you’ll see, some of these amendments are long overdue, but as the saying goes, “better late than never,” right?

 

More Protection for Non-Workmen

What is a “non-workman?” No, it doesn’t mean someone who plays Warcraft all day and refuses to find a job. It refers to employees who aren’t working as professionals, managers, or executives (PMEs) such as clerical and frontline staff.

If you’re a non-workman, you’re entitled to the following protections under Part IV of the EA:

  • To work no more than 8 hours a day or 44 hours a week
  • Allowance of a “rest” day
  • Allowance of a “break” after no more than 6 consecutive hours of work
  • If you work on your “rest” day for more than half a “normal” work day, you’ll  get paid for a full day’s work
  • Overtime pay (1.5X daily rate) for each hour exceeding the 44-hour weekly limit (capped at $2,250 for those making up to $2,000 a month)
  • Annual leave of at least 7 days for the first 12 months of continuous service

However, for non-workmen, there’s a $2,000 salary threshold to receiving these protections. If you make more than $2,000 a month, you won’t benefit.

Thankfully, the latest EA amendments raised the monthly salary threshold from $2,000 to $2,500, which will protect about 150,000 workers.

Note: The protections offered under Part IV also apply to PMEs who make a base salary that’s no more than $4,500 a month.

 

 More Protection for Professionals, Managers, and Executives (PMEs)

If you think the only employees being exploited in Singapore are the non-workers, think again. PMEs are just as vulnerable to receiving unfair treatment from employers, especially when it comes to unfair dismissal.

Unfair dismissal is by far one of the biggest problems facing PMEs today. You don’t have to look farther than your favorite alternative media sites to read stories about longstanding PMEs employees who were let go for unclear reasons.

However, terminations often followed some extended leave of absence due to military obligations, hospitalization, and pregnancy.  If you’ve read a recent AsiaOne article regarding unfair dismissals, you’d be surprised to learn that about 70% of women who were let go were pregnant.

To address this troubling issue, the latest EA amendments provide the following protections to PMEs:

  • If you’re a PME earning up to $4,500, you can redress unfair dismissal with your employer as long as you have worked for the same employer for at least 12 months.
  • If you’re a PME earning up to $4,500, you’ll be covered under EA general provisions related to sick leave, public holidays, and hospitalization leave

According to the EA revisions, this will protect about 300,000 PMEs in Singapore.

 

More Protection for Employees Paying Excessive Deductions

Currently, there’s a 50% cap on how much an employer can deduct from your salary for authorized deductions such as accommodation, meals, advance/loan repayments, and Central Provident Fund (CPF) contributions.

Unfortunately, some employers think that a 50% cap on deductions means that they’re entitled to take half of your pay to cover the cost of accommodation and meals.

Fortunately, the latest EA amendments address this issue by implementing a 25% sub-cap within the total 50% cap on accommodation, meals, amenities, and other services.

That means that if you’re making $2,000 and your boss consistently deducts the full 50% ($1,000) every month for your accommodation and food, the most he can take out now is $500 according to the EA amendments.

 

More Punishment for Employers Who Fail to Pay Salaries

It’s sad that in order to get the government’s attention, workers either need to go on strike or had to climb on top of cranes to say “we haven’t been paid in a month!”

Either not being paid for an extended amount of time or being paid consistently late is a major problem with not just SMEs, but with large companies as well. Why?

The main reason is cash flow – companies just don’t have the money on hand to pay staff. However, employers might not pay staff on time because they believe that employees will just “endure” it.

On this issue, the EA amendments took a spiked club to non- and late-paying employers by imposing the following punishments:

  • Employers with a first-time offence will pay a fine between $3,000 and $12,000 and/or 6 months at Changi… that’s prison, not cove.
  • Employers with subsequent violations will pay a fine between $6,000 and $15,000 and/or 12 months in Changi prison.

Who gets to go to prison you might ask? Well, the first people that employment inspectors will be looking at are company directors and partners.

 

Do you think MOM’s amendments to the EA offer enough protection for Singapore professionals? Tell us what you think on Facebook! And to find even more useful information on everything personal finance, visit MoneySmart today!

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Michael Coghlan

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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.

  • Martin Gregory Goh

    Having trouble with its finances is no excuse for late payment or non-payment of salaries. Payment of salaries is an obligation. Don’t expect your staff to finance your business. They deserve payment just as any of your creditors if not more. You owe them that obligation. If you have trouble with finances, it is not your employees fault. You can lay them off but don’t make them work without pay. They have financial commitments too. They have mortgages and bills to pay too.

  • Martin Gregory Goh

    I hope to see something done in making payment of AWS (Annual Wage Supplement) compulsory. MOM regards AWS as a year end bonus. But is it?
    AWS was meant to supplement the workers on the extra number of days they worked in a year due to a monthly wage system. You will notice that MOM based a lot of their computations or policies on weekly wages. For example, you are entitled to a paid day of rest in a week… 44 working hours a week… etc…
    Thus, a monthly wage actually short-changes employees. Going by a weekly wage system, an employee should only work 28 days a month (with a paid day-off every week excluding public holidays). But on a monthly wage system, employees worked two to three days extra every month (other than February in a non-leap year that has exactly 28 days). This worked out to be 29 days extra in a year and that is excluding paid day-offs.
    Hence, the AWS is meant to compensate employees for the extra days they worked and hence, AWS is the 13th month pay for the extra days worked. It is NOT A BONUS but wages for the extra days of work performed by employees. And it should be compulsory for employers to pay AWS because they are for the extra number of days worked in a year.