Singapore: Changes in Employee Exit Strategies Following Amendments to the Employment Act

The changes to the Employment Act (EA), which took effect on April 1, 2019, extend statutory protections with regard to employment terminations to all employees and set out statutory recourse for termination “without just cause or excuse” (i.e., an unfair dismissal). Further, the changes to the EA expand the statutory definition of “dismissal” to include constructive dismissal, i.e., involuntary resignation of an employee who was forced to do so because of any action or omission of the employer. These changes will affect how employers handle employment terminations going forward.

Details

As of April 1, 2019, the EA will provide all employees with statutory protections with regard to terminations of employment, and employers will not be able to contract out of these statutory provisions. These include the statutory right to terminate employment by paying the employee salary in lieu of notice, the requirement that the same notice periods must apply to both the employer and employee, and statutory minimum notice periods (one day’s notice up to four weeks’ notice, depending on the length of service) applying to all employees.

Employers must also ensure that salary payment is made to all employees in accordance with the EA. If they fail to do so, they will be deemed to have broken the employment contract. On the other hand, employees will be statutorily deemed to have broken the employment contract if they are absent from work for more than two days continuously without prior leave or reasonable excuse, or not informing or attempting to inform the employer of such an excuse.

Employees who meet the prescribed criteria under section 14 of the EA will be able to bring a claim to the Employment Claims Tribunals (ECT) to seek reinstatement or compensation, if they believe that they had been unfairly dismissed. While reinstatement so far has been rarely ordered in practice by the Ministry of Manpower (MOM), it remains to be seen whether the ECT will continue the same approach.

Comment

Singapore has been a well-known “employment at-will” jurisdiction in which employee exits are not considered overly complex in terms of cost or procedure. This is likely to change following the legislative amendments (although the practical effects of these changes may ultimately depend on the attitudes of the ECT and the MOM).

Employers may want to amend employment contracts currently containing notice provisions that are not aligned with the upcoming changes to the EA, e.g., asymmetrical notice provisions or notice periods shorter than the statutory minimum, to ensure compliance with the expanded statutory requirements going forward.

Employers should recognize that the current approach of being able to terminate employment without reason as long as contractual notice is provided may not be as risk-free as before, and that the approach of offering employees the option of resigning (or persuading them to do so) may pose difficulties in light of the expansion to the statutory definition of “dismissal” and the statutory recourse available for such employees through the ECT.

Written by Goh Seow Hui and Shu Yi Chye of Bird & Bird and Roger James of Ogletree Deakins

© 2019 Bird & Bird and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.