Removal of Salary Thresholds From Singapore’s Employment Act

Currently, Singapore’s Employment Act (EA) does not cover managers and executives earning more than S$4,500 per month; however, in March 2018, the Singapore Parliament announced that the salary threshold for coverage under the EA would be removed. This will affect core employee benefits as well as statutory protection against dismissal “without just cause or excuse” (unfair dismissal). While details of these developments have not yet been made public, it is expected that the changes will take effect around April 1, 2019.

Core employee benefits under the EA—such as annual leave, sick leave and hospitalization leave, public holidays, child care leave, protection from dismissal while on statutory maternity leave, and the right to preserve the existing terms and conditions of employment in transfers of employment resulting from the sale or restructuring of a business—are likely to be extended to all employees after the amendments take effect.

All employees are also likely to have statutory protection against unfair dismissal as a result of these changes. While exact details have not yet been announced, the procedure for recourse against unfair dismissal will also be amended such that the Employment Claims Tribunal (ECT) will hear these claims instead of the Ministry of Manpower.

Comment

Singapore is well known for being an employment at will jurisdiction, where employment separations are not considered overly complex in terms of cost or procedure. This may change following these legislative amendments. That said, the practical effects may ultimately depend on the attitudes of the ECT and the labor regulator. While all employees may possess a legal right to claim unfair dismissal under the new EA scheduled to take effect in 2019, there are no immediate answers regarding the legal approach toward such claims, the burden of proof required, and the measure of damages. Moreover, Singapore has operated as a fairly hands-off jurisdiction since the original enactment of the EA—leaving further open questions surrounding unfair dismissal issues.

Corporations concerned with the impending changes may want to stop relying on contractual terminations (i.e., termination of employment can occur for any reason or no reason at all, as long as the notice provisions in the employment contract are satisfied) as their default procedure and to develop more carefully planned employee exit strategies.

Written by Goh Seow Hui and Susan de Silva of Bird & Bird and Roger James of Ogletree Deakins