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Industrial Relations (Amendment) Bill 2014, Second Reading Speech by Mr Tan Chuan-Jin, Minister for Manpower, 19 January 2015, 4:15 PM, Parliament

Mr Tan Chuan-Jin, Minister for Manpower, Parliament

Employment practices
  1. Mr Deputy Speaker, I beg to move, “That the Bill be now read a second time”.

    Background
  2. Sir, the proposed changes to the Industrial Relations Act (or the IR Act) are intended to better meet the needs of our professionals, managers and executives (or PMEs), as well as help employers and unions to work together to more effectively engage this growing group of employees. We will be strengthening an already constructive tripartite partnership, and making it more inclusive.
  3. The Industrial Relations Act (or the IR Act) sets the landscape for harmonious labour-management relations. The law helps to prevent and settle trade disputes by collective bargaining, facilitates conciliation and arbitration; and helps to provide for tripartite mediation of individual disputes. Over the years, it has allowed us to meet the growing needs of all our workers. At the same time, it ensures that our companies remain competitive and agile so that they can respond to the changing business environment and thereby benefitting everyone.
  4. Sir, we know that the profile of our workforce is evolving. PMEs now form more than 30% of our workforce and this proportion is expected to increase further as Singaporeans become better educated and aspire to such jobs.
  5. As such we need to see how this group of employees can be better represented at the workplace and how we can better embrace them into the tripartite process. At the same time, we need to see how employers can better work together with unions to engage these employees. The tripartite partners agreed that we would do this in a measured and sensible way without undermining labour market flexibility and management prerogatives on issues which the unions can enter into negotiations with management.
  6. To enable this, tripartite partners have taken the approach of gradually broadening the options for workplace representation for PMEs. In fact, this journey started back in 2002 when we amended the IR Act to allow rank-and-file unions to represent employees in managerial and executive positions on an individual basis for limited matters. In 2011, we introduced further amendments to provide for a tripartite mediation mechanism to assist PMEs in non-unionised companies in resolving individual disputes with their employers.
  7. In the last 2 to 3 years, the Government has also undertaken a broad review of our laws and institutions to see how we can better meet the changing needs of our workforce. As a result, we updated the Employment Act last year to deepen protection for managers and executives earning up to $4,500. We also plan to set up an Employment Claims Tribunal to provide all employees, including PMEs, with an expeditious and affordable dispute resolution mechanism; and strengthen the tripartite mediation mechanism we introduced in 2011.
  8. In 2012, alongside the review of the Employment Act, tripartite partners agreed it was timely to review the IR Act to see how unions can play a role to better represent the needs of PMEs. The amendments we are proposing today seek to build on these changes to further strengthen the channels of union representation for PMEs and provide them with a wider set of options for union representation. I shall refer to these workers as “executives” henceforth for alignment with the terminology in the Bill. They are the result of extensive consultations with the public, as well as more than 4,000 employers and union leaders at various platforms.
  9. A Tripartite Consultation Workgroup with employer and union leader representatives was also set up to study issues relating to amendments in the IR Act and to develop tripartite understanding and guidelines to guide implementation on the ground.
  10. The two main changes addressed in this Bill are:

    a) Extending the scope of union representation on a collective basis for executives; and secondly

    b) Expanding the scope of limited representation on an individual basis to re-employment matters.
  11. I will elaborate on each of these in more details.

    (I) Extending the Scope of Union Representation on a Collective Basis for Executives
  12. The first key amendment proposes to remove the legal barrier for rank-and-file unions to represent executives collectively.
  13. Executives presently cannot be collectively represented by rank-and-file unions. This prohibition was introduced in the context where the large majority of employees were traditional rank-and-file workers and executives then constituted a very thin but senior layer of the workforce of a company. There were concerns that representation of such workers by rank-and-file unions would give rise to a conflict of interest and would undermine management effectiveness.
  14. Since then, our economy has evolved and the educational profile of our workforce has improved – it’s changed quite dramatically and will continue to change. There is now a much greater variety of jobs especially at executive levels, from entry level jobs to senior management roles. Recognising that rank-and-file unions have played an effective role to help rank-and-file members address their workplace issues, tripartite partners recommended to provide an additional option for executives, particularly the more junior ones, to join rank-and-file unions for collective representation if they wish. This is an extension of the 2002 amendment, where executives were allowed to be represented by rank-and-file unions on an individual basis for limited matters.
  15. Some employers are concerned that such representation may give rise to a conflict of interest and undermine management effectiveness. To address this concern, we will continue to exclude executives with certain responsibilities from joining the rank-and-file unions for collective representation. These include executives:

    a) Who are employed in a senior management position;

    b) With substantial responsibilities for hiring, firing, promotion, dismissal and disciplinary duties;

    c) Employees who represent employers’ interest in union-management matters;

    d) Those with access to confidential information, such as payroll and budgeting information; and

    e) Whose union affiliation would give rise to a conflict of interest.
  16. Tripartite partners have discussed a few criteria to be used to determine eligibility for collective representation such as salary levels and workforce distribution, but they recognise that company structures and pay-scales differ widely across industries and between organisations. Partners thus agreed that job function or responsibility is probably the most relevant and practicable criterion for determining eligibility, as it directly addresses employers’ concerns of conflict of interest and loss of management effectiveness. This approach will also be able to take into account the organisational structure and circumstances of different industries or organisations. This is similar to the criterion for limited representation and tripartite mediation for executives within the IR Act.  

    (II) Expanding the Scope of Limited Representation on an Individual Basis to Re-employment Matters
  17. The second key amendment in this Bill proposes to expand the scope of areas which the rank-and-file unions can represent executives on an individual basis include matters relating to re-employment.
  18. Sir, currently, rank-and-file unions can represent executives on an individual basis in four limited areas, specifically firstly, breach of individual contract of employment, secondly, retrenchment benefits, thirdly, unfair dismissal and fourthly victimisation. This provides executives with an additional and lower cost alternative to settle their employment disputes through union and management negotiations.
  19. While the tripartite partners have proposed extending the scope of collective representation of executives by rank-and-file unions, there is still value in retaining the limited representation framework which I have just mentioned. Employers have given feedback that reward systems for executives have evolved to be relatively individualised and not all executives will desire to be represented collectively. In addition, not all existing rank-and-file unions may be prepared for or given recognition to full collective representation immediately.
  20. To further broaden executives’ options for workplace representation, tripartite partners have recommended expanding the scope of limited representation framework to include matters relating to re-employment after retirement. These include:

    a) Firstly, the denial of re-employment to an employee on the ground that the employee does not satisfy the re-employment eligibility criteria;

    b) Secondly, the denial of re-employment to an employee on the ground that the employer is unable to find a vacancy in his establishment which is suitable for the employee:

    c) Thirdly, the reasonableness of the terms and conditions of any re-employment offer made by the employers; and

    d) Lastly, the reasonableness of the amount of any employment assistance payment offered to an employee.

    Miscellaneous Amendments
  21. In addition to the two key amendments that I elaborated on earlier, this Bill also proposes some amendments, to improve the functioning of the Industrial Arbitration Court, by allowing for flexibility on the number of employer and employee panel members which the Minister for Manpower can appoint to hear industrial disputes as well as increasing the duration of appointment of such panel members from one to two years.

    Related Amendments to the Retirement and Re-employment Act (RRA) and the Trade Unions Act (TUA)
  22. Sir, in view of the two earlier proposed amendments, consequential amendments to the Retirement and Re-employment Act and the Trade Unions Act are required. In the case of the Retirement and Re-employment Act, the amendment is to allow the unions to also represent executives under the limited representation framework in proceedings before the Commissioner for Labour on re-employment claims. Amendments to the Trade Unions Act are also required so as to enable rank-and-file unions to represent executive employees, except executive employees with certain responsibilities, for collective bargaining.

    Timeline
  23. The Bill is proposed to come into effect on 1 April 2015. To supplement the proposed amendments, we have released two sets of Tripartite Guidelines at the Singapore Tripartism Forum’s Industrial Relations Seminar in November last year to help prepare unions and employers early and address their concerns about how they should adapt to the proposed amendments. These guidelines are the result of the extensive efforts of the Tripartite Consultation Workgroup I mentioned earlier.

    Tripartite Guidelines
  24. The first set of Tripartite Guidelines on Extending the Scope of Union Representation for Executives, spells out the various options for representation of executives and provides supplementary criteria for unions and companies to negotiate on the level of executives in the organisation eligible for collective representation so that both parties can move at a pace that they are comfortable with. The second set of Tripartite Guidelines on Expanding the Scope of Limited Representation for Executives is an update of the existing guidelines in relation to the limited representation framework, where individual re-employment disputes is included as an additional area for negotiation between employers and unions.
  25. Following the various consultation sessions the Ministry had with employers and union leaders, there was tripartite agreement that while the guidelines should provide clarity, they should also not be overly prescriptive. This is to allow flexibility at the implementation level for employers and unions to work out the modalities that best suit the needs of executives and the organisational circumstances. I know that in many cases, we would all like clearer and more precise directions, but the nature of the space is not homogeneous. Therefore you do need a level of flexibility and you need to create that space so that the different partners can negotiate and discuss what these details might be and for them to proceed from that point on. I am happy to note that the Workgroup members took this into consideration in developing the tripartite guidelines and as a result, the guidelines have broad tripartite support. In this regard, I would like to urge employers and unions to consider the various options available to them by openly sharing, discussing and understanding each other’s concerns and needs, and to work out a suitable arrangement. The guidelines will take effect together with the commencement of these amendments to the IR Act.

    Conclusion
  26. Mr Deputy Speaker, we started this very important journey to provide greater scope for representation for executives as far back as 2002. We have over the many years built up a strong tripartite partnership here in Singapore. We do intend to keep to that, the basis upon which we have established that successful partnership, we intend to continue that. But the space is also evolving, the economy is evolving, the workforce is evolving. Therefore, we need to find a new formulation that can continue on this trajectory. The legislative amendments I have proposed will offer more options for union representation of executives at the workplace, because we do have many more executives in the workplace today, and it will continue. To allow us to harness established channels under the IR Act for employers, executives and unions, to engage in dialogue to resolve any industrial disputes.
  27. I would like to, in particular, thank everyone who has contributed to the review, especially NTUC, SNEF and Members of this House as well as the members of this Workgroup for their contributions in developing the guidelines. MOM will continue to work with our partners, NTUC and SNEF to communicate the IR Act changes and the tripartite guidelines to employers, unions and employees, to ensure that the proposed amendments are implemented in a way that creates a win-win outcome for both employees and employers as we have done so over the many years. We are confident that the proposed amendments will make our tripartite model even more inclusive. It will strengthen Singapore’s model of tripartism and benefit employees, unions and employers.
  28. Mr Deputy Speaker sir, I beg to move.