What Are the Latest Employment Act Updates?
The Employment Act updates have changes that took effect April of last year. First, they started to include more employees with a better protection package. Hence, companies have taken note of the changes, mainly on the legislation that governs the employment landscape. An amendment took place in order to change the profile or labour force practices and employment. This is how they can provide greater employee protections.
More importantly, the main guidelines of the EA now cover every professional, manager, and executive (PME). This is in comparison to previously limited protection for PMEs only who earn less than S$4,500 a month. The effect of this change is that over 430,000 employees will have fundamental employment benefits.
Find out more about how businesses are affected by these changes.
Salary Payment in Lieu of the Notice
According to Employment Act updates, employers and employees have the right to pay salary in lieu of notice. It is also allowing employers to terminate employment right away. Even if the employment contracts gave employers the option to pay the salary in lieu of notice, it does not go vice versa. This a mutual obligation that employees can demand.
This gives employees and PMEs permission to buy out notice periods despite the contract not stating that they can do so. This undermines the typical way of companies to facilitate the handover and planning for succession.
In businesses, this is applicable to the resignation of executives. Companies must put measures in place to handover obligations and succession in situations to lessen disruption.
Employee Relations
The changes impact how employers conduct employee relations because companies will be inspected and audited in compliance with the EA provisions.
These inspections give a review of documented procedures and include interviews with employees to make sure each one complies to the EA requirements.
Therefore, employers must review their current employment framework and make necessary changes in the contracts, practices, and handbooks to make sure they are complying with the EA.
Monitoring of Wrongful Dismissal
Previously, wrongful dismissal was only brought to the attention of the Ministry of Manpower. Now, even the Employment Claims Tribunal Claims (ECT) must know about it. The ECT will take note of these matters aside from salary-based claims when presenting both kinds of claims before an employer. In addition, managers and executives must complete a minimum period of service before they can make a wrongful dismissal claim with notice, which has been reduced to six months from one year.
The ECT lets both parties resolve any salary-related and wrongful dismissal claims. The ECT and compulsory mediation at the Tripartite Alliance for Dispute Management give parties a more practical and polished way of disputing resolution mechanisms.
Companies must know that if they base the dismissal on poor performance, they must have proof supporting this claim.
Leave Entitlement
Companies must take note that employees covered by the EA must now have these benefits: at least seven to 14 days of paid annual leave. This includes gazette holidays, 14 days sick leave, childcare leave, maternity protection when it is applicable. Employees can now encash any unused and accrued leave upon their employment termination.
Companies must make sure that their benefit provisions consider these minimum amendments.
Employers have to take into consideration from the beginning of a person’s employment when they want to take a leave and how many days. In addition, employers must have a projected plan when the employees are about to take leave. This is necessary so their absence will not affect the business operations.
Increased CPF Contributions for the Older Workers
Since there is an increased CPF contribution for older workers, it is made to work in line with raising statutory retirement and Singapore re-employment age. This is considering that Singapore has a longer life expectancy. Therefore, they want to ensure that the money will be with the employee for the longest time.
Therefore, business owners must make sure that they comply with this so the older workers can maximize their company benefits.
Since the changes have been made, employers started to modify their employment framework to provide the best for their employees. They are also obligated to comply with the EA, otherwise, they will face penalties and sanctions. This is crucial because employees are protected by the EA.
The Employment Act updates impact businesses in many ways, and you must be guided accordingly. If you need help with this, 3E Accounting offers HR Advisory Services that you can use to modify and make necessary changes. Contact us today!
