Greater protection for employees and gig workers

Written on 25 Apr 2018

On 5 March 2018, the Singapore government introduced a raft of legislative changes which can be grouped into three broad themes:

  • Expanded protections for employees;
  • Introducing protections for gig workers; and
  • Increased regulatory focus on the use of foreign manpower.

We discuss these changes and explain what this may mean for your business.

Expanded protections for employees

The Employment Act is the primary piece of employment legislation. It does not apply to managerial or executive employees who earn more than S$4,500 per month. For such employees who do not come within the ambit of the Employment Act, their rights and obligations are governed solely by their employment agreement.

The Minister of Manpower has announced that the Employment Act will be revised to include these managerial or executive employees. This means that the protections under the Employment Act, such as redress for wrongful dismissal, public holiday and sick leave entitlements, and salary payment protections, will be extended to these employees.

The Employment Claims Tribunal (ECT) has also been given a wider remit. Previously, the ECT would hear statutory and contractual claims relating to salary, whereas the Ministry of Manpower would hear wrongful dismissal claims. Employees would thus have to approach two different bodies to adjudicate on salary claims and wrongful dismissal claims, even if these claims were related.

The process has now been rationalised, and the ECT will now handle wrongful dismissal claims as well. This means that the ECT will effectively handle the bulk of employment-related claims.

The government will also set up a new Workplace Safety and Health committee to develop plans to further lower the workplace fatality rate.

Commentary: These legislative amendments point to greater protections afforded to employees. Singapore has typically been considered to be an employer-friendly jurisdiction, including at-will dismissal. However, in recent years, there has been a move towards strengthening the protections afforded to employees. This trend is likely to continue, in line with international developments.

The gig economy

Self-employed persons, such as gig workers, including drivers of ride-hailing services such as Grab and Uber, are typically regarded as independent contractors. Therefore, the protections in the Employment Act do not apply to these persons. Although there have been recent attempts by gig workers in other countries (e.g. in the United Kingdom and United States) to be considered employees, these developments have not reached Singapore yet.

Nonetheless, the Ministry of Manpower recognises that self-employed persons are vulnerable, typically working without insurance, medical leave, and pension fund contributions. Any inability to work will disrupt their income.
To address these issues, the Ministry of Manpower intends to allow self-employed persons to deduct a share of their income for government-run medical insurance schemes, and will also introduce an insurance scheme to protect these workers from a disruption of income from prolonged medical leave.

Commentary: While Singapore does not presently consider gig workers as employees, the new initiatives introduce a safety net for these self-employed persons to support themselves. It is likely that stronger measures will be introduced in due course, given the growing proportion of self-employed persons and the popularity of the gig economy.

Foreign manpower

In response to calls for greater protections for Singaporean employees, the Ministry of Manpower introduced the Fair Consideration Framework (FCF) watch list in 2014. Companies would be placed on the FCF watch list for failing to give local applicants due consideration.

The Ministry of Manpower will subject these companies to greater scrutiny when they apply for work passes. In extreme cases, these companies will have their work pass privileges curtailed, such as being unable to make new work pass applications or renew existing work passes.

On 5 March 2018, the Ministry of Manpower announced that since the introduction of the FCF watch list, some 500 companies have been placed on the watch list for failing to do enough to hire Singaporeans.

The Ministry of Manpower intends to broaden the scope of the FCF watch list by expanding the FCF requirements, such that companies with at least 10 employees, who are looking to fill positions with a fixed monthly salary of up to S$15,000, will be required to comply with the FCF. Previously, only firms with 25 or more employees, looking to fill positions with a fixed monthly salary of up to S$12,000, were required to comply with the FCF.

The Minister of Manpower also signalled the importance of advertising jobs on the national Jobs Bank, a national employment database, prior to making any employment pass applications. As part of the revised FCF, employers will also be required to advertise jobs on the national Jobs Bank for 14 days, before an employer can submit an employment pass application.

Separately, the salary criteria for the S-pass, a type of employment pass, will be raised to S$2,400. This will effectively make it more expensive for employers to hire foreign employees on an S-pass.

Commentary: These moves by the Ministry of Manpower signal a greater curtailment on, and economic disincentives to discourage, the use of foreign manpower. This is likely to give employers a greater impetus for automation in the work force, to reduce their reliance on foreign manpower. In the short term, however, this may lead to manpower shortages, particularly in high-growth and burgeoning sectors where the local talent pool is not sufficiently experienced or developed to sustain these sectors.