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The Industrial Relations (Amendment) Bill 2010, Second Reading Speech by Gan Kim Yong, Minister for Manpower, 22 November 2010, 5:30 PM, Parliament

Employment practices
  1. Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time.”
  2. As our economy evolves and the educational profile of our workforce improves, we are seeing a larger proportion of professionals, managers and executives (PMEs) within the workforce. Currently, they make up about half of our local workforce and this proportion is likely to increase further in the future.
  3. Like rank-and-file workers, PMEs do encounter employment disputes with their employers from time to time, particularly on salary-related matters. In 2008, 245 PMEs sought my Ministry’s assistance to mediate disputes. In 2009, the number rose to about 360. With increased economic volatility and shorter business cycles, the frequency of employment disputes is likely to rise.
  4. While PMEs could use the civil litigation process to settle their disputes, this route can be costly and protracted. There are already existing mechanisms to help rank-and-file employees and junior executives earning $2,500 a month or less to resolve employment disputes, including access to the mediation and the adjudication of salary claims at the Labour Court. This has proven to be effective. We want to extend a similar mechanism of support to professionals, managers and executives.
  5. Sir, this Bill will enable my Ministry to establish a new employment dispute resolution mechanism for PMEs. The mechanism comprises two components, namely adjudication and tripartite mediation. We will allow PMEs to have their salary claims adjudicated at the Labour Court. To facilitate early and amicable resolution of employment disputes, a new tripartite mediation process will also be introduced to help PMEs resolve common employment disputes, including salary claims. This would help to minimise the need to resort to adjudication or civil litigation actions.

    TRIPARTITE MEDIATION
  6. I will first explain the amendments relating to the introduction of the tripartite mediation process.
  7. Mediation provides greater flexibility for the settlement of employment disputes. Over the years, we have built up an effective system of resolving employment disputes in the unionised sector under our existing tripartite framework. Disputes have been amicably resolved with positive outcomes and paved the way for closer labour-management relations in workplaces.
  8. The tripartite mediation process is a new concept. It leverages on the expertise and experience of our tripartite partners to help employers and employees resolve employment disputes and foster workplace harmony.
  9. Currently, PMEs in the unionised sector can seek conciliation to resolve their employment disputes if they are eligible for full or limited representation through their trade unions. A new Part IVA in the Industrial Relations Act will be introduced to provide an avenue for PMEs in the non-unionised sector to seek remedy for their disputes through the new tripartite mediation process.

    Eligibility
  10. Section 30F of the new Part IVA spells out the eligibility criteria for tripartite mediation.
  11. As a first step, we will allow PMEs who earn up to $4,500 a month and have joined any registered trade union as individual members without any form of representation rights to have access to tripartite mediation. The salary cap of $4,500 will potentially cover about half (or about 500,000) of the professionals, managers and executives in the workforce. This includes both those PMEs who are already individual union members and those who may join trade unions as individual members in future. Union membership is integral to the design of the tripartite mediation process which leverages on the expertise of tripartite partners in resolving industrial and employment related disputes. For PMEs who are not union members, my Ministry will continue to offer advice and assistance, as well as voluntary mediation services through the Executive Mediation Unit if disputing parties consent to participate.

    Scope
  12. The scope of tripartite mediation, as specified in Section 30G, will cover disputes arising from salary arrears, breach of individual employment contracts and payment of retrenchment benefits, which are the most common employment issues faced by PMEs. We should encourage employees to surface their disputes as early as possible when the facts of the case are still clear so as to have higher chances of successful mediation. Therefore, the dispute must be lodged within a year from occurrence of the material fact that gives rise to the dispute. For disputes arising out of termination of contract of employment, the case must be lodged within 6 months from the date of termination.
  13. To address employers' concern of potential conflict of interest, Section 30I provides employers with the right to object to the eligibility of certain categories of employees, such as those in senior management positions, those involved in hiring, firing, promotion, dismissals and disciplinary duties; those with access to confidential information, such as payroll and budgeting information; those who represent employers' interest in union-management matters and those whose access to tripartite mediation may give rise to a conflict of interest. This is similar to the provision for employers’ objections under limited representation in Part IV of the Industrial Relations Act. The Commissioner for Labour will consider the employer’s objection and decide whether it will stand.

    Procedure
  14. Under Section 30H, PMEs who wish to make use of the tripartite mediation mechanism should lodge the case with the Ministry of Manpower through the registered trade union of which he is an individual member, or any federation that his union may be affiliated to. The Commissioner would then arrange for a tripartite mediation session to be conducted by a conciliation officer.
  15. The Commissioner would also assign tripartite mediation advisors, or TMAs, to assist the employee and his employer respectively in the mediation. The TMAs will be appointed by the Minister for Manpower, with nominations from our tripartite partners namely, the Singapore National Employers Federation (SNEF) and National Trades Union Congress (NTUC). These advisors should have a track-record and be experienced in managing and resolving employment disputes, and be knowledgeable in employment practices and norms. The conciliation officer may allow other persons to assist the TMAs at the request of the disputing parties. Such persons may include the employee’s union official or a representative of an employer or business association which the employer is a member of. However, practising lawyers would not be allowed to participate in the mediation process, in line with the current provisions for conciliation in the Industrial Relations Act.

    Attendance
  16. Successful mediation requires the commitment from both parties to resolve the dispute on mutually agreeable terms. It is important for both employer and employee to attend the tripartite mediation as it provides an opportunity for them to explore options and to arrive at an amicable settlement. The Bill therefore provides for measures that can be taken if either party to the dispute fail to attend any mediation process. Non-attendance without reasonable excuse by the employee may result in the termination of the tripartite mediation proceedings. An employer who fails to attend repeatedly can be ordered by the Minister to attend tripartite mediation. If he again fails to do so, he may be fined up to $5,000.
  17. Effective mediation will reduce the likelihood of disputes being referred for litigation. It also encourages the adoption of good employment practices to avoid disputes in future. If the dispute cannot be resolved through mediation, the employee concerned may pursue their claim through the Civil Courts. If the dispute involves a salary claim, the claim may be adjudicated by my Ministry through the Labour Court following amendments to the Employment Act. Salary, being the most fundamental employment right for employees, requires a low-cost and an expeditious settlement through adjudication.

    ADJUDICATION OF SALARY CLAIMS
  18. Sir, currently, the Employment Act allows junior managers and executives whose basic monthly salary is $2,500 and below to have access to the Labour Court for adjudication on salary claims. Clause 6(a) raises this salary ceiling to give professionals, managers and executives with basic monthly salary of up to $4,500 access to the Labour Court for salary claims. This is open to PMEs in all companies regardless of whether they are unionised or otherwise.
  19. Clause 6(b) introduces a cap of $20,000 on the amount which the Commissioner can award for each lodged claim. Imposing a cap encourages employees to surface their salary claims as early as possible, before salary arrears accumulate to large amounts. Based on our records, all past disputes involving PMEs were below the $20,000 limit. Those who wish to claim for an amount higher than $20,000 or pursue non-salary claims can continue to do so through the civil courts.
  20. This Bill also makes a technical amendment to the Employment Act to clarify that the adjudication process in the Labour Court shall not involve any trade unions unless the company involved is already unionised and his employee is a union member with full representation and collective bargaining rights. This is already the current practice.

    ENHANCING PENALTIES UNDER THE INDUSTRIAL RELATIONS ACT
  21. Sir, let me now move to the other changes in the Bill.
  22. Penalties under the Industrial Relations Act have remained unchanged since 1966. Clause 5 of the Bill seeks to align the IRA penalties with those for commensurate offences in the Employment Act. For other offences, the maximum fines will also be updated.
  23. To provide greater flexibility to impose appropriate penalties in lieu of prosecution, Section 88 has been inserted allowing the Commissioner to compound any offence with a composition fine not exceeding $1,000.

    Conclusion
  24. Mr Speaker, Sir, the introduction of this new mechanism involving adjudication and tripartite mediation ensures that our employment laws and practices continue to remain relevant to the changing workforce profile and needs. If the Bill is passed in Parliament, we intend for it to take effect on 1 February 2011. The new mechanism would help the growing population of professionals, managers and executives resolve employment disputes amicably. Effective implementation of this new mechanism will foster workplace harmony for the benefit of all.
  25. In formulating the mechanism, we have engaged the tripartite partners to design a system that is workable and fair to all parties. As part of the consultation process, we have also sought feedback from the public. This new mechanism gives our tripartite partners an important institutional role in helping to resolve employment disputes pertaining to professionals, managers and executives. As we move forward, we will work closely with the tripartite partners to ensure smooth implementation.
  26. Sir, I beg to move.