Speech at 2nd Reading of the Employment (Amendment) Bill 2008

Mr Gan Kim Yong, Acting Minister for Manpower, Parliament

Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time.”

2.   The Employment Act (EA) is the primary legislation that sets out the minimum employment terms and conditions in Singapore. It serves a dual role. First, it safeguards basic employment standards, particularly for workers who are more vulnerable and need to be protected by law. Second, the Act regulates employment relations by establishing the basic duties of employers and workers, and providing mechanisms to settle employment disputes. The Act seeks to strike a balance between worker protection and labour market flexibility. While according workers with basic employment protection and benefits, it gives employers sufficient flexibility to manage their manpower resources.

3.   There have been significant changes in our labour market since the Act was last amended in 1995. The services sector now employs more than two-thirds of the workforce in 2007, up from 61.5% of the workforce in 1997. Our workforce profile has also changed. Notably, Professionals, Managers, Executives and Technicians, (or PMETs), now form nearly half the resident workforce, up from 40% a decade ago. Outsourcing is also becoming more prevalent, and with it, employment tenures have shortened. The number of contract workers has increased, accounting for 12% of the resident workforce currently. Wages have also gone up significantly since 1997.

4.   In light of these changes, it is timely to update the EA to ensure that it remains relevant and responsive to the changing labour market conditions. Employment protection and benefits for certain groups of vulnerable workers need to be enhanced. Employment standards also need to be revised to better reflect employment norms while maintaining labour market flexibility.

5.   My Ministry has worked closely with the unions and employers in the review of the EA to ensure that the amended Act balances the interests of both employees and employers. The amendments that I will be presenting today are the outcome of extensive discussions among the tripartite partners. As part of the consultation process, feedback from the public was also sought on the proposed changes.

6.   This Bill, which is proposed to take effect on 1st of January 2009, covers changes to the EA in three key areas. First, the coverage will be revised to keep pace with changes in the workforce profile. Second, we have updated the employment standards and benefits. Third, we will enhance penalties and enforcement powers, and rationalise administrative processes and outdated provisions. Let me now elaborate on the amendments.

Revising Coverage

Confidential Staff: No Longer Excluded from the Act

7.   First, we will revise the coverage of the Act. Currently, the Employment Act covers all employees, except seamen, domestic workers, confidential staff, and employees in managerial and executive positions.

8.   Confidential staff were previously excluded to avoid conflict of interest as some of them may be dealing with sensitive personnel matters. Today, most confidential staff, such as secretaries and HR clerks, hold rank-and-file positions and are seldom directly involved in sensitive matters. There is therefore no reason to continue excluding them from coverage under the EA. Accordingly, clause 2(c) amends the definition of “employees” to extend the EA's coverage to the 153,000 confidential staff in Singapore.

Managers and Executives: Access to Labour Court for Salary Claims

9.   Managers and executives are also currently not covered as they are generally in a better bargaining position. However, based on the Ministry's experience, the most common type of assistance managers and executives require is the recovery of salary claims, especially those who are more junior and paid less. They often find it costly to take up civil suits to recover salary arrears.

10.   Therefore, we will allow junior managers and executives earning $2,500 and below in basic monthly salary, to have access to the Labour Court for salary claims. With the increasing proportion of PMETs, a significant number of employees will benefit from the access to this lower-cost dispute resolution mechanism. Such a mechanism will also be helpful to employers by providing them with an efficient and expeditious avenue for resolving salary disputes with their PMETs. This will benefit 44,000 PMET employees.

Non-Workmen: Increase Part IV Salary Threshold to $2,000 per month

11.   Part IV of the Employment Act provides additional employment protection and benefits for the more vulnerable employees who are engaged in manual labour, or are paid lower wages, such as machine operators and cleaners. Currently, Part IV applies only to non-workmen earning a basic monthly salary of $1,600 and below, and all workmen regardless of salary. In line with the significant wage increase since the last revision of the EA in 1995, Clause 11 will update the basic monthly salary threshold for non-workmen from $1,600 to $2,000, benefiting some 82,000 employees.

Workmen: Introduce Part IV Salary Threshold of $4,500 per month

12.   On the other hand, highly paid and skilled workmen are able to negotiate for favourable employment terms without having to be protected under Part IV. Accordingly, after extensive consultation with the tripartite partners, we will introduce a basic monthly salary threshold of $4,500 for workmen under Part IV. Workmen with lower income will not be affected, and will continue to be protected under Part IV.

13.   This change will affect a relatively small proportion of workmen, making up about 0.6% of all workmen, the majority of whom are employed in fewer than 10 companies in the petroleum, petrochemical and aerospace industries. The exclusion will provide these highly skilled workmen and their employers the flexibility to design employment packages that better suit their needs. MOM and the unions will work with employers to ensure that the affected workmen continue to be fairly treated and properly compensated when they work overtime and on rest days. In this regard, my Ministry, through the Singapore National Employers Federation (or SNEF), has discussed with employers on how the concerns of affected workmen can be addressed.

Reviewing Employment Standards and Benefits

Extend Paid Public Holidays and Paid Sick Leave to All Employees

14.   Second, this Bill will enhance employment standards and benefits, and keep pace with employment practices. Paid public holidays and sick leave are well-established industry norms provided by nearly all employers. However, the Act currently only prescribes these benefits for those employees covered under Part IV. Clause 28 will extend these benefits to all employees covered under the Act. This amendment will maintain the flexibility of employers request employees to work on public holidays for an extra day's wage, or substitute a public holiday with another working day.

Shorten the Paid Sick Leave Qualifying Period

15.   At the same time, in line with the trend of shorter employment tenures, we have reduced the qualifying period for paid sick leave. Under clause 28, a new employee will be entitled to paid sick leave after 3 months' of service, compared to 6 months previously. This is aligned with the qualifying periods for paid annual leave. To alleviate the cost burden on employers, sick leave entitlements for new employees will be phased-in from the start of their fourth month of service, until the completion of their sixth month of service. Other changes include the recognition of medical certificates from public medical institutions for paid sick leave, and provisions to enable the Minister or the Commissioner for Labour to deem an employer as having fulfilled his statutory obligation to bear medical examination fees, if he has complied with certain requirements, such as the provision of specified healthcare plans.

Re-define Part-Time Employment

16.   Employers have also cited the short statutory part-time working hours as a barrier to offering part-time employment. Although the share of part-time employment has increased from 3.4% in 1997 to 6.2% in 2007, we still lag behind many developed countries such as the Netherlands and the UK where part-time employment constitutes 36% and 23% of the total employment respectively. To further encourage employers to offer more part-time employment opportunities, clause 23 re-defines part-time employees as those who work less than 35 hours a week, up from less than 30 hours a week. This takes into account public feedback that full-time employees working 5 seven-hour days should not be re-classified as part-time employees and have their employment benefits reduced. The amendment will benefit employees who require flexible working arrangements to attend to family or personal commitments and potential entrants to the workforce seeking part-time employment.

Reviewing Penalties and Streamlining Administrative Processes

Enhancing Enforcement Powers

17.   Third, we have enhanced the enforcement powers and penalties under the Act to facilitate efforts to ensure compliance with the basic employment standards. Clause 32 provides the Commissioner and Employment Inspectors with additional powers to search and examine premises for evidence, obtain photographic and videographic evidence, and summon witnesses to furnish information, articles or documents. These are similar to existing enforcement powers provided under other legislations, such as the Employment of Foreign Manpower Act (EFMA) and the Workplace Safety and Health Act.

Enhancing Penalties

18.   The penalties, which were last revised in 1984, will be increased to be aligned with those for commensurate offences in other legislations, such as the EFMA. The maximum financial penalties will be increased from $1,000 to $5,000 for first-time offences, and from $2,000 to $10,000 for subsequent offences. The maximum composition amount will similarly be increased from $200 to $1,000 under clause 41.

Other Amendments

19.   Finally, this Bill makes other technical and administrative amendments to the Act. The Employment Act currently allows employees to seek redress for unfair dismissal. To remove ambiguities on interpretation, the term "dismiss" is defined under clause 2(b) as a termination of employment by an employer, with or without notice, and whether on the grounds of misconduct or otherwise. This clarification on the application of the Act is important because an overly narrow interpretation of the term “dismissal” defeats the redress mechanism for unfair dismissal. The employer's responsibility, which is that any dismissal should not be done unfairly, remains unchanged. MOM will continue to be stringent in assessing appeals against unfair dismissals to discourage any abuse of this avenue of redress. Where employers dismiss employees without notice on grounds of misconduct, they will be required to show cause for the dismissal and that due inquiry has been carried out. In cases where notice is given and the contractual terms of termination are complied with, the onus would be on employees to substantiate their claims. They may do so for instance by showing that their dismissal arose from the employer's intent to deprive them of employment benefits they would otherwise have been entitled to.

20.   We have also rationalised and removed some outdated provisions. Clause 28 repeals Part X (Employment Exchange) and Part XI (Health, Accommodation and Medical Care), while clause 43 repeals s 123 because these provisions are no longer required. Similarly, clause 26 removes the outdated restriction on collective agreements in offering maternity benefits that are more favourable than those stipulated in the EA.

Conclusion

21.   Sir, in conclusion, the amendments will ensure that the Employment Act continues to be relevant and meets the changing needs of employers, workers and our labour market. Understandably, some employers might be concerned about the impact on business costs, particularly given the economic slowdown. It is worth highlighting that the amendments will benefit mainly the lower wage and vulnerable workers, who would feel the bite of the economic downturn most keenly. Moreover, many of the changes, such as the extension of public holidays and sick leave benefits to all employees, are already industry norms and should not significantly increase business costs. It is imperative that we set the fundamentals right in our employment framework so that our labour force will remain responsive and productive, so that we will be well-positioned when the economy recovers. SNEF and SBF were closely consulted, and we have taken into account employers' concerns and feedback in the development of the proposals. The overall package of amendments balances the protection of workers, with measures to maintain the flexibility of our labour market and competitiveness of our workforce. I am confident that the enhanced employment conditions would better motivate employees, which would translate to higher productivity and greater competitiveness. On this note, I would like to thank all who have contributed to the review of the Employment Act, in particular the National Trades Union Congress, the Singapore National Employers Federation (or SNEF) and the Singapore Business Federation (or SBF). The tripartite consensus on the amendments is a testament to our strong tripartite partnership, which has brought about industrial harmony and a favourable investment climate for economic growth and job creation. This has benefited businesses, our workers and the economy significantly over the years.

22.   Mr Speaker, I beg to move.