Changes to the Employment Act Singapore
Since 1 April 2016, employers are required to issue itemised payslips and written key employment terms (KETs) to employees covered under the Employment Act. Employers must also maintain detailed employment records. In addition, there will be a new framework to treat less severe breaches of the Employment Act.
The recent amendments to the Employment Act shall avoid misunderstandings regarding the terms of employment and, by doing so, enable employees to better understand how their salary is calculated, what benefits they are entitled to and how to enforce their rights. These changes are the latest ones in a series of other changes to the Employment Act made in the preceding years, with the intention to extend better protection to employees. Employers should review their practices, handbooks and other guidelines to ensure compliance with the various changes.
Employers have the following new obligations:
Employers must issue written itemised payslips to all employees at latest within three working days after the payment.
There are a number of items to be included on the payslips in so far as they are applicable. The items to be shown on the payslip are the following: full name of employer; full name of employee; date of payment; basic salary and, in case of hourly or other special rates, the rate per hour or respective other criteria; allowances; other additional payments such as bonus, rest day pay or public holiday pay; deductions made e.g for CPF or no-pay leave; overtime hours worked, overtime pay and total paid net salary.
Until the end of March 2016, employment agreements could still be concluded verbally or impliedly, as there is no written form requirement for such agreements. Since 1 April 2016, however, it is now required that the main terms of the employment are given to the employees covered under the Employment Act in writing, whereby such provisions are referred to as KETs.
The following items are KET’s and must therefore be issued in written form where applicable: full name of employer, full name of employee, job title, main duties and responsibilities, start date of employment, duration of employment (for fix-term
contracts), working arrangements such as daily working hours and rest days, salary period, basic salary, fixed allowances, fixed deductions, overtime payment period, overtime rate of pay, other salary related components (i.e. bonuses), type of leave, other medical benefits, probation period and notice period.
Employers are required to maintain and keep detailed employment records of employees covered under the Employment Act in soft or hard copy, including handwritten records. The records to be kept include employee and salary records, whereby the salary records include those that are relevant for the items to be stated on the payslip. Employee records include: address of the employee, NRIC or FIN with expiry date, date of birth, gender, date of starting and leaving employment, working hours including duration of meals and breaks, dates and other details of public holidays and leave taken.
For current employees, the records must be kept for the latest two years. For ex-employees, the records of the last two years
of employment must be maintained for one year after the employment ended.
The new requirements came into force on 1 April 2016 and generally must be met by then.
The changes apply to all employees covered under the Employment Act. In short, generally all employees (local and foreign) working for an employer in Singapore are covered under the Act, unless they are in a managerial or executive position with a basic monthly salary exceeding 4,500, are a seafarer, domestic worker, statutory board employee or a civil servant.
With respect to the requirement to issue KETs, employers must only provide such terms to employees with whom a contract of service has been entered into on or after 1 April 2016 and who are employed for 14 days or more.
With effect of 1 April 2014, the possibility for employees to appeal against an unfair dismissal was significantly widened. In cases of termination of the employment contract with notice or without notice on grounds of misconduct; employees covered under the Employment Act can, since 1. April 2014, appeal to the Minister of Manpower to be reinstated if they feel that the dismissal was unfair. The appeal must be received by MOM within one month from the date of dismissal. If the Minister is satisfied that the employee was unfairly dismissed, he may do one of the following:
- Order reinstatement to your former job; or
- Order a sum of money as compensation.
Managers and executives (only those with salaries of up to S$ 4,500 are covered under the Employment Act and can therefore appeal) must have served their employer for at least 12 months before they are entitled to appeal against a dismissal where contractual notice was given. For dismissals without notice for cause, PME’s are afforded the same protection as the other employees covered by the Employment Act.
Previously, the possibility to appeal against an unfair dismissal under the Employment Act was not at all provided to professionals, managers and executives (“PME’s”).
Previously the appeal was also only possible in cases of dismissal for cause without notice. Now, an appeal is possible also in case of termination with proper notice or payment in lieu of notice.
While employers still do not have to state grounds for a termination when terminating an employment with notice or payment in lieu of notice, employers should however be able to show to MOM that the termination was not unfair in case the termination is challenged by the employee. Employers should therefore maintain records to show that a termination was fair.