Amendments to the Employment Act to cover all PMEs regardless of salary level, broader definition of dismissal

Amendments to the Employment Act to cover all PMEs regardless of salary level, broader definition of dismissal

The extension of core provisions of the Employment Act (EA) to cover all employees is one of the most significant changes proposed in the process of amending the Act, among which include the applicability of statutory annual leave to all employees and a broadened definition of “dismissal”.

Manpower Minister Josephine Teo announced in her second reading of the Amendment Bill in Parliament on 20 Nov that the EA will now include professionals, managers and executives (PMEs) who earn a monthly salary of more than $4,500, who were previously excluded from the Act. Public servants, seafarers and domestic workers, however, are not included in the Amendment.

This means that all PMEs, with the passing of the Amendment Bill, will be entitled to statutory provisions covering minimum days of annual leave, paid sick leave, leave for hospitalisation, and compensation against wrongful dismissal.

The Bill will also observe increased protections for a widened pool of employees under Part IV of the EA as a result of lifting the salary threshold for such employees from S$2,500 a month to S$2,600 a month.

Part IV of the EA lists provisions entailing the amount of rest days, hours of work, annual leave and other conditions of service, which currently only apply to workers in the following categories:

  • A workman (engaged in manual labour) earning a basic monthly salary of not more than $4,500, and;
  • An employee who is not a workman, but who is covered by the Employment Act and earns a monthly basic salary of not more than $2,500.

Part IV does not currently cover all PMEs. 

Annual leave is currently listed in Part IV of the Act as an enhanced protection available only to certain employees, such as workmen and vulnerable non-workmen. However, the passing of the Bill will cement the status of annual leave as a form of core protection under the newly introduced Section 88A, which will encompass all employees covered under the Act, including PMEs.

Definition of “dismiss” will include forced resignation; minimum qualifying period for wrongful dismissal shortened to 6 months

In terms of dismissal, an employer may, under the current Act, dismiss an employee without notice on the grounds of misconduct “inconsistent with the fulfilment of the express or implied conditions of his service” under Section 14(1) after due inquiry.

However, under the Bill, the definition of “dismiss” will also include the resignation of an employee if the employee is able to provide evidence, on a balance of probabilities, that the resignation was forced as a result of any act or omission on the employer’s part.

This particular amendment attempts to minimise the possibility of employers exploiting Section 14 for the purpose of dismissing their employees easily without risking subjecting themselves to any wrongful dismissal claims that may arise out of the dismissal, and to escape potential liability for certain entitlements on the part of the employees that may arise from the same.

On the subject of wrongful dismissal, the minimum qualifying employment period eligible for protection will be shortened from 12 months to 6 months. The Ministry of Manpower (MOM), in addition, will publish a more specific framework in the future to assist employers and employees in dealing with claims based on wrongful dismissal.

Currently, MOM handles the process of dealing with wrongful dismissal claims. However, with the passing of the Bill, wrongful dismissal claims will involve mediation by the Employment Claims Tribunal in a bid to make the Tribunal a “one-stop service” for both wrongful dismissal claims and salary-related claims.

The Commissioner of Labour will also be granted greater statutory powers under the passing of the new amendments, as it will have the power to request more information on the retrenchment of particular employees from the employers in question.

Greater protection for employees can also be seen in the amendment made to the provision related to salary deductions, in which the Bill provides that an employer will require written consent from their employees in the event that the employer needs to make such deductions for provisions such as accommodation, amenities and services supplied by the employer.

The EA, which first came into force in 1968 under the then-Minister for Foreign Affairs and Labour Mr S Rajaratnam, underwent its last review six years ago in 2012. The changes made to the EA are scheduled to take effect starting 1 April next year.

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