Employers need more time to implement changes in the Employment Act; incentives should be awarded to companies with “exemplary employment practices”: NMP Douglas Foo

Employers need more time to implement changes in the Employment Act; incentives should be awarded to companies with “exemplary employment practices”: NMP Douglas Foo

Employers require more time to implement changes brought by the Amendment Bill to the Employment Act, as business leaders have to constantly tread the line between “thinning profit margins” and “rising costs” in “today’s global business economy,” said executive chairman of Sakae Holdings and Nominated Member of Parliament Douglas Foo.

Mr Foo, who is also one of the vice-presidents of the Singapore National Employers Federation (SNEF) revealed that he “was deeply involved in the review of the Employment Act”.

Drawing from the Federation’s engagement with “over 3,000 employers and HR practitioners” on the proposed amendments, Mr Foo spoke about the potential issues and concerns raised during the consultation, which was spread across 12 months.

He stressed that “rising costs in today’s global business economy, coupled with the uncertainty of trade wars in the world, place our business leaders in a highly stressful environment where thinning profit margins have to be carefully managed against rising costs.”

“Except for Part IV of the Employment Act, all managers and executives will now be covered by the Act after the amendments are passed. Accordingly, managers and executives will all receive the same protection as rank-and-file workers. It is happy to note that most employers already provide this minimum coverage of benefits, if not better, for all their employees,” he noted.

“However, it is in the different ways in which companies manage these benefits that operational issues may arise, leading to some employers having to repackage their compensation and benefits for managers and executives. Such repackaging may take into account their roles and responsibilities, the demands of their jobs and the workplace flexibilities accorded to them.

“For example, with globalisation and 24/7 operations, it is common for managers and executives to travel or work during a public holiday and in essential services, the exigencies of service to work outside office hours. Such repackaging will inevitably incur actual or opportunity costs for employers,” stressed Mr Foo.

Employers would also be affected by “higher overtime costs” as a result of “the removal of salary cap of $2,250 for overtime rate and raising of salary threshold to $2,600 in Part IV of the Employment Act”.

“For example, in the Food and Beverage and accommodation services sector in which I operate, labour cost accounts for 42.8% of the operating cost, one of the highest amongst the different industries. While the sector is transforming to raise productivity, the increase in overtime coverage would have an immediate cost impact,” warned Mr Foo.

“Ample time needed for employers to adjust”

Mr Foo emphasised that while “providing ample time for employers to adjust would be crucial,” employers must “take steps to manage their manpower better now,” which can be accomplished “through job redesign, better manpower planning and scheduling, multi-skilling employees for flexible deployment and other innovative ways”.

He added that employees also have a role to play in ensuring a seamless transition in light of the changes that are to be implemented.

“Employees, on their part, should adopt a more open mindset and remove any inertia they may feel about learning new things, and undertake new responsibilities. This may include cross-industry training to better their understanding of supply chain processes and employees must be ready to eradicate any traces of silo-mentality thinking in relation to their job scope,” said Mr Foo.

“I hope the Ministry will lend enhanced support to employers to undertake lean and agile manpower planning,” he suggested.

“While the Lean Enterprise Development Scheme (LEDS) has moved towards ready-to-go solutions rather than bespoke solutions to benefit more SMEs, many of the SMEs may still not know how and where to start.

“A pre-LEDS assistance scheme to evaluate work processes and job roles will help SMEs develop their own lean manpower plan and understand which technologies could help them in their transformation,” said Mr Foo.

He added that both employers and workers will benefit from “greater acknowledgment and incentives can be given to employers who adhere to the Employment Act provisions”.

“If I may humbly suggest, such incentives can come in the form of one-time tax rebates or publicised awards for exemplary employment practices over the course of five years or such time as the Ministry may consider appropriate.

“I acknowledge that some will argue that there is a need to incentivise someone for following the law. Yet, the effect of having such a scheme cannot be underestimated. Even for the simple act of driving, a clean demerit free record can result in so much savings for insurance premiums for drivers,” said Mr Foo.

“Rigid employment regulations” might stifle management’s capacity to “develop their human capital”

Mr Foo also opined that businesses “must not be impeded unnecessarily by rigid laws and high compliance and restructuring costs” in today’s “fast-changing business environment,” as it is necessary for them to “to be able to move and adapt quickly” or risk lagging behind.

This includes a very important aspect of businesses, which is the development of human capital.

“Professionals, Managers, Executives and Technicians (PMETs) which now make up 56.1% of the local workforce would rise to about two-thirds, or 65%, by 2030. The nature of their jobs is however changing.

“Many will need to be reskilled. Some may need to be redeployed or face the prospect of being retrenched. Regional roles may mean travelling over weekends or working odd hours. At the same time, companies are meeting the work-life demands of such employees by providing flexible work arrangements.

“It is therefore imperative that management flexibility to develop their human capital to their full potential must not be impeded by rigid employment regulations,” stressed Mr Foo.

Few channels for employers “wrongly accused of breaches by unhappy employees” to seek recourse

Drawing from the aforementioned consultations between SNEF and employers, Mr Foo said that the latter expressed great concern regarding “section 14” in the amendment of the Employment Act, which relates to “dismissal,” whereby “all employees will be able to make a claim for wrongful dismissals following the proposed amendments”.

“Employers are concerned with frivolous and vexatious claims by disgruntled employees as it is unproductive and a drain on resources and time,” said Mr Foo, adding that “there is little else by way of compensation to employers who are wrongly accused of breaches by unhappy employees” besides “criminal sanctions”.

Monetary compensation alone, argued Mr Foo, “cannot make up for the anxiety and loss of time which employers who have been dragged through a lengthy investigative process undergo”.

He added that there is also a need for “a framework to operationalise section 14 when it is extended to all employees and shifted to the Employment Claims Tribunal”.

“I understand that the Tripartite Alliance for Dispute Management (TADM) is working on this and employers will be briefed on this in due course.

“While we await the same, businesses will need to step up and put in place a strong HR system with more rigorous performance appraisals and engage the employees regularly in discussions regarding their performance. This will prevent unreasonable and unfounded claims from arising,” said Mr Foo.

Tripartite framework pivotal to Singapore’s economic success

Quoting the late Cyrille Tan in a Motion tabled in this House in 1998, Mr Foo illustrated the importance of the tripartite framework – trade unions, government, and businesses – in ensuring Singapore’s economic success:

“The tripartite framework has served us well. Our objective as trade unions is to safeguard the interests of workers. We can do so effectively only if companies become more productive and competitive. Government must continue to provide good infrastructure, transparent regulations and stable conditions to attract investors. Then workers can continue to have good jobs and look forward to fair wage increases. This is the basis of our tripartite relation.

“Singapore has succeeded so far because Government, employers and workers have worked together. Where there is industrial harmony, there is social and economic development; where there is constant strife, it is difficult for businessmen, local or foreign, to make long-term plans. A strong tripartite relationship is not just critical in maintaining this industrial harmony. It is also a key competitive advantage to help us become a developed economy early in the 21st century.”

“That these words made more than 20 years ago are still strongly relevant in today’s economic climate, is a standing testament to the wisdom of the late Cyrille Tan,” said Mr Foo.

“Today, the Tripartite Partnership has worked tirelessly and largely smoothed the sometimes-difficult amendments made to the Employment Act over the years and continue to do so.

“It is important therefore for these partners to be ever aware of the important roles they play in Singapore’s future and so accordingly, continue to educate their members on the same, zealously safeguarding the values to be imparted to their members and pick wisely those elected to their respective councils,” stressed Mr Foo.

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