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OVERVIEW
The Singapore government has a wellthought out and structured legislation in place in the form of the Singapore Employment Act (SEA), which is the main labor law of the country . The SEA clearly spells out the basic terms and conditions of employment and the rights and responsibilities of employers as well as employees under a contract of service.
As a regional business hub and an open economy, Singapore has an eclectic mix of human capital. The Singapore government has a wellthought out and structured legislation in place in the form of the Singapore Employment Act (SEA), which is the main labor law of the country. The SEA clearly spells out the basic terms and conditions of employment and the rights and responsibilities of employers as well as employees under a contract of service. The Singapore government also ensures that the Act, while in line with the international legislations, also provides adequate protection to all vested parties in the process of employment. Developing a proactive and harmonious labor, industrial and government relationship has remained the top priority of the legislation. The following overview of the Singapore Employment Act aims to provide a basic understanding of the legislation so that both prospective entrepreneurs and employees are aware of their rights and duties under a contract of service in Singapore.
BACKGROUND
The relationship between employer and employee is determined largely by the contract of employment between them.
The relationship between employer and employee is determined largely by the contract of employment between them. Generally, under Singapore Law, parties are free to contract as they choose and any matters arising between them would have to be resolved by looking at either the expressed and/or implied terms of the contract in question. However, legislations are in place to regulate the terms of contract to prevent unreasonable restrains and limitations on the parties involved. Common law and specific statutes govern the terms of contracts of employment. The principal statutes regulating employment in Singapore are contained in Employment Act. Other pertinent statutes shaping employment practices include the Workplace Safety and Health Act (WSHA), which came into effect on March 1, 2006; the Children Development Co-Savings Act (Cap 38A) (CDCSA); the Retirement Age Act (Cap 274A) (RA); the Trade Unions Act (Cap 333) and the Industrial Relations Act (Cap 136) (IRA). The Employment Act (Cap 91) (EA) was first passed in 1968 and was last amended on January 1, 2009. In May 2012, Singapores Ministry of Manpower announced a major review of the Act following the massive change in employment landscape that was fast departing from conventional practices in terms of time, payment, mode of work, type of people etc.
SCOPE OF COVERAGE
Scope of Coverage The EA covers every workmen, (regardless of nationality) who is under a contract of service with an employer in Singapore. It does not make any distinction between a temporary employee, contract employee, daily-rated employee or employee on tenured employment. The term workmen includes manual laborers, drivers of commercial vehicles and certain other categories of workers. Exclusions & Partial Coverage The act does not apply to persons holding positions such as manager or executive, and also excludes seamen, domestic workers, government employees or employees of statutory boards. Junior managers and executives earning basic monthly salaries worth S$4,500 and below are only covered partially on the basic payment of salary. Professionals with tertiary education and specialized knowledge/ skills such as doctors and lawyers, and whose employment terms are comparable to those of managers and executives are not covered by SEA. Part IV of the Singapore Employment Act, which prescribes certain minimum requirements regarding rest days, hours of work, holidays, annual leave, sick leave, payment of retrenchment benefits, retirement benefits and certain other conditions of service, are applicable only to: Workmen earning under S$4,500 in basic monthly salaries, and Employees earning no more than S$2,000 in basic monthly salaries.
It must be noted that the Employment of Part-Time Employees Regulation covers part-time employees who work for less than 35 hours a week.
The SEA dictates the minimum standards for the terms and conditions of the employment contract and such terms must be equal to or more favorable than the conditions set out by the SEA. Where the terms of a contract are less favorable than the provisions of the EA the provisions of the Act will take precedence over such less favorable contract terms.
B. Without Notice Both employer and employee may terminate a contract of service without giving a notice when a party of the contract breaches the contractual terms. In lieu of notice, the party who breaks the contract will have to pay to the other party a sum equal to the salary that the employee would have earned during the notice period. An employee may terminate a contract of employment without giving a notice to the employer, if: The employer fails to pay salary within seven days after salary is due; or If the employee is required to perform duties that are not within the terms of the contract of service.
An employer may terminate an employee without giving notice , if: The employee is absent from work continuously for more than two working days, without approval or good reason or without informing or attempting to inform the employer of the reason for absence.
Employers cannot change the terms of the contract without the consent of the employee...
Note: Maximum deductable sum is 50% of the salary due for the salary period, not including deductions made for absence from work, recovery of loans/advances, income tax or for the purpose of payments to be made to registered societies at the consent of the employee. However, if the contract of service is terminated, then in order to recover all sums due from an employee, the deductions from his last salary may exceed 50%.
Central Provident Fund (CPF) is a savings scheme, to uphold the financial security of Singaporeans and Permanent Residents. It is a comprehensive scheme addressing the needs of a person not only after retirement but also their home-ownership, medical requirements, asset enhancement and the protection of dependants. Employers are required to pay the employers and employees share of CPF contributions every month for all employees (Singapore Citizens and Singapore Permanent Residents) at the rates set out in the CPF Act. The contributions payable should be based on the employees actual wages earned for the month. Payment to the CPF board must be made within 14 days from the end of the month for which CPF contributions are due. The employer can deduct the employees share of the contribution from the salary at the time of payment of wages.
Employers are required to pay the employers and employees share of CPF contributions monthly for all Singapore Citizens and Singapore Permanent Residents.
Part VIII of the Employment Act and The Employment of Children and Young Persons Regulations contains the provisions regarding employment of children. A child must be at least 13 years of age to be employed and must be engaged in suitable forms of work as defined by the Act. A child aged between 13 and 15 years of age cannot be engaged in any industrial undertaking or vessel unless it is under the personal charge of parents. Employers engaging Young persons, aged between 15 and 16 years of age, must inform the Commissioner of Labor within 30 days of such employment and submit a medical report certifying the young persons fitness for employment. Persons below 16 years of age are not allowed to work in places with hazardous conditions or conditions that are injurious to health. They cannot be made to work in or near machineries in motion, or ineffectively insulated electrical equipments. They cannot be employed in underground work. Subject to the following conditions, children can be employed as workmen, that is, work involving physical labor. They cannot work during the night. For a child, the hours of work cannot exceed six hours in a day and a break of 30 minutes must be provided after three hours of work. For a young person work cannot exceed seven hours in a day and a break of 30 minutes must be provided after four hours of work. They are not allowed to work on their rest days without the permission of the Commissioner for Labor.
A child must be at least 13 years of age to be employed and must be engaged in suitable forms of work as defined by the Act.
There is no expressed provision for marriage and compassionate leave. It depends on terms of contract or mutual agreement between employer and employee. Sick Leave Employees covered under the EA are allowed paid sick leave provided: He has worked for the employer for at least three months; Informs the employer or at least makes reasonable attempts to inform of his absence within 48 hours; He is certified by an approved medical practitioner.
Days of leave
7 8 9 10 11 12 13 14
An employee, who has worked for more than six months with an employer, is entitled to 14 days of paid outpatient sick leave and 60 days of paid hospitalization leave. New employees, who have worked for more than three months, are entitled to 5 days of paid outpatient leave and 15 days of paid hospitalization leave. Such new employees get 3 days and 15 days of paid outpatient and hospitalization leave respectively, for every additional month of service until they acquire six months of service. Salary to employees on paid sick leave must be paid at his gross rate of pay. If an employee has worked for at least three months, his employer is legally obliged to bear the medical consultation fees. Reimbursement of other charges depends on the terms of contract or the collective agreement signed between the employer and the union. Public Holidays All employees covered by the Employment Act are entitled to 11 paid public holidays in a year. Upon mutual agreement, the public holiday can be substituted for any other day. If the holiday falls on a rest day, the next working day will be a paid holiday. If an employee is required to work on a public holiday, then the employer is required to pay an extra days salary at the basic rate of pay for working on the public holiday, in addition to the gross rate of pay for that holiday.
Where an employee has been in service for less than a year, then the annual leave entitlement must be prorated in proportion to the service period. Annual leave taken on a half working day such as a Saturday, will still be considered as one day of Annual leave. However, it is left to the employers discretion whether to treat it as half-day leave. If less than fullday of leave is taken by an employee, if the fraction is half or more, it will still be considered as one full day of annual leave. The annual leave entitlement can be forfeited if the employee is absent from work without permission or reasonable excuse for more than 20% of the working days or if the employee is terminated on grounds of misconduct. An employees annual leave entitlement that remains unutilized beyond 12 months will also be forfeited.
Last updated on 22 February 2013
The shared parental leave is to be consumed as a continuous block within 12 months of the birth of the child. Upon mutual agreement with the employer, it can be taken flexibly within the first 12 months of the childs birth. Working fathers, meeting the criteria below will be entitled to 1 week of Government-Paid Paternity Leave for all births. Child is a Singapore Citizen born on or after 01 May 2013; The childs parents are lawfully married; Father must have served his employer for a continuous duration of at least 3 calendar months immediately preceding the birth of the child
Such leave is to be taken within 16 weeks of the birth of the child and it can be flexibly taken within 12 months of the birth of the child if there is a mutual agreement between the employer and employee. The government funding for the paternity leave and shared parental leave for qualifying fathers is capped at $2,500 including CPF contributions.
Last updated on 22 February 2013 Copyright 2013 Rikvin Pte Ltd
The Governments funding is capped at S$500 per day including CPF contributions. Note: Parents with children in both the age groups, that is, children aged under 7 years and children aged between 7 and 12 years are entitled to total of six days leave annually per parent. Adoption Leave Currently, in order to help mothers of adopted child to care and bond with the child, the Government reimburses up to 4 calendar weeks of GovernmentPaid Adoption Leave (subject to a cap of $10,000) to employers who voluntarily grant adoption leave to their employees. From May 1 2013, adoption leave has been made statutory and employers are required by law to provide the same to qualifying mothers. Adoption leave is required to be consumed within the first birthday of the child.
Qualifying mothers are entitled to consume the leave from the date of Court Application to Adopt or from the date of issuance of In-Principal Approval of Dependent Pass for the child, as the case may be.
RETIREMENT
The statutory retirement age is 62 years. However, according to the recently-enacted Retirement and Reemployment Act (RRA), employers are required to make an offer of re-employment to eligible employees, who turn 62, up to the age of 65. The employees must have satisfactory work performance and must be medically fit to be eligible for this. All Singapore Citizens and Permanent Residents, unless exempted by MOM, are eligible for this re-employment provision. Re-employment Terms An offer of annually renewable re-employment contract can be made until the employee turns 65 years of age. However, employers are advised to make a three-year contract to provide a greater sense of certainty to the employees. The terms of re-employment must be fair and measures must be taken to avoid disputes. The employer must carry out re-employment process in a congenial manner and a consultative approach with the employee who must present an open mind for the proposal discussed. Salary/wages can be adjusted based on the revised nature of duties and responsibilities, productivity etc. Where there is a seniority-based wage and benefits
scheme in place, it may impose high costs on the employer; therefore they are allowed to renegotiate the salary & benefits part of the employment and such adjustments must be reasonable and just. If the employer is unable to accommodate the employee on retirement to a suitable job, the employer may make a one-time Employment Assistance Payment (EAP) to enable the employee to financially manage himself until he finds another job. For employees with more than 18 months service, the EAP amount could be 3 months of salary. A minimum amount of S$4,500 and a maximum amount of S$10,000 could be considered. Employers are advised to refer to the Tripartite Guidelines on Re-employment of Older Employees, to ease the re-employment process for their retiring workers. In case of any disputes that the employee has with the re-employment, he may seek the unions assistance or report to the Commissioner of Labor. If the employee is not offered a re-employment contract, a report must be made within 1 month of last day of employment; and for unacceptable terms of contract of re-employment or non-payment or inadequacy, EAP reports must be lodged within six months of last day of work.
RETRENCHMENT
A retrenchment exercise must be carried out responsibly and all efforts must be taken to ensure that the affected employees receive all payments and compensation according to the contract or as agreed mutually by the trade union and employer. Notice of Retrenchment Any impending retrenchment program must be made known to the affected employees prior to serving the notice of retrenchment. The notice period of retrenchment must meet the minimum stipulation set out by the EA as below: Length of service Less than 26 weeks 26 weeks to less than 2 years 2 years to less than 5 years 5 years and above Retrenchment Benefits Employees who have a minimum service period of three years are entitled to benefits on retrenchment. Though employees who have less than three years of service are not entitled to benefits, the company may provide some benefits on grounds of compassion. Notice Period 1 day 1 week 2 weeks 4 weeks
The benefits are not stipulated by the Act and depend on the mutual agreement between the employer and employee and the financial situation of the company. Benefit payments do not attract CPF contributions. Temporary Lay-offs & Shorter work weeks As an alternative to retrenchment, which will adversely affect employees, employers have the option of implementing temporary lay-offs and shorter workweeks to mitigate the impact. Shorter workweeks cannot last more than two months and the reduction cannot be more than two days in a week. Employees must be paid at least half of their gross salary during the lay-off period. Companies paying halfday salary during layoffs may allow their employees to go on half-day paid annual leave, thus the employees will get their full salary. However, employees are not allowed to consume more than 50% of their annual leave for this purpose.
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