4 Major Areas In The Tripartite Guidelines Every Company Should Know

The Tripartite Guidelines are frequently said to be ‘soft law’ that complement the employment laws in Singapore. But just how important is it to comply with them?

If you thought that they were only “guidelines”, you would be mistaken.

The Tripartite Guidelines, while not legally binding, does have bite. Failure to comply with the Tripartite Guidelines can lead to administrative and statutory penalties, and your company being placed in an unfavourable position when dealing with disputes at the court or tribunal level.

Therefore, compliance with the Tripartite Guidelines is not an option but a necessity.

This article will highlight 4 major areas where every company must closely adhere to the Tripartite Guidelines.

#1 Tripartite Guidelines on Re-employment of Older Employees

While the Retirement and Re-employment Act outlines the eligibility of employees that must be re-employed by employers, the Tripartite Guidelines on Re-employment of Older Employees adds on to the Act by giving further details and directions.

It provides guidance on the timelines for re-employment procedures, the duration of re-employment contracts and the suggested quantum for Employment Assistance Payment (EAP).

According to the Guidelines, employers should engage with employees on re-employment consultations at least 6 months before employees are due for re-employment or extension of re-employment.

At least 3 months before retirement, employers should offer re-employment contracts to eligible employees or inform them if they do not qualify for re-employment.

While the Act stipulates that the period for re-employment contracts should not be less than 1 year, the Guidelines goes on further to propose to employers to offer employees:

  • 5-year re-employment contracts or
  • Term contracts of at least 1 year, renewable up to the prevailing maximum re-employment age.

Employers need to offer EAP to help eligible employees who are not re-employed to tide over the period of unemployment as they look for another job. The Guidelines provides the principles in determining the amount of EAP that employers should offer.

As a general guide, the EAP could be 3.5 months of salary.

  • Minimum EAP being $5,500 ($6,250 from 1 July 2022)
  • Maximum EAP being $13,000 ($14,750 from 1 July 2022)

For employers who are unable to offer re-employment for employees who have been re-employed for 30 months, the EAP could be 2 months of salary.

  • Minimum EAP being $3,500 ($4,000 from 1 July 2022)
  • Maximum EAP being $7,500 ($8,500 from 1 July 2022)

Employers do not have to offer EAP that is more than the salary payable for the remaining period up to the re-employment age for employees nearing the re-employment age.

As for part-time employees, employers can pro-rate the minimum and maximum EAP based on the number of working hours a part-time employee works per week compared to a full-time employee.

Employers should be aware of these details in the Guidelines and review their internal HR policy and procedures on retirement and re-employment to ensure that the company is in compliance with the Act and the Guidelines.

#2 Tripartite Guidelines on Wrongful Dismissal

According to the Employment Act, an employer may after due inquiry dismiss without notice an employee employed by him on the ground of misconduct. However, to dismiss an employee without just cause or excuse is wrongful.

The Tripartite Guidelines on Wrongful Dismissal adds on to the Employment Act by providing illustrations on what does or does not constitute wrongful dismissal.

On what does not constitute wrongful dismissal, the Guidelines states that misconduct is the only ground for dismissal without notice. For dismissal with notice, employers can do so on the ground of poor performance, redundancy or where the right to contractually terminate is invoked.

Dismissal with notice will be wrongful when the employer does so due to discrimination, depriving benefits that an employee would otherwise have earned, punishing an employee for exercising his employment right or giving of a false reason for dismissal.

Employers should review their employment contracts to ensure that the contractual clauses for dismissal adhere to the Guidelines or adequately protects the employer for taking necessary steps to remove an employee. Employee handbooks should also be updated to reflect the Guidelines, where necessary. For example, having a clause on grievance procedures and a disciplinary committee in considering actual misconduct carried out fairly.

#3 Tripartite Guidelines on Mandatory Retrenchment Notifications

The Tripartite Guidelines on Mandatory Retrenchment Notifications states that if 5 or more employees are retrenched within any 6-month period, Singapore-registered businesses with at least 10 employees will need to notify the Ministry of Manpower (MOM) of the retrenchment exercise.

Retrenchments are defined as dismissal on the ground of redundancy or by reason of any business reorganisation. An employer has to submit the notification to MOM within 5 working days after the employee is notified of his retrenchment.

If an employer fails to furnish mandatory retrenchment notifications, it constitutes a civil contravention under the Employment Act and an administrative penalty can be imposed on the employer.

Employers should therefore inspect and update accordingly their internal HR policy and procedures on retrenchment to avoid any breaches of the Guidelines which may result in serious consequences.

#4 Tripartite Guidelines on Fair Employment Practices

The Tripartite Guidelines on Fair Employment Practices prescribes anti-discriminatory employment practices that employers should adopt. Employers should apply consistent and fair selection criteria to all aspects of employment, including recruitment, training, promotions, postings and retrenchments.

To stamp out discriminatory employment practices, the MOM has updated the Fair Consideration Framework to raise penalties for all discrimination cases (such as on the basis of age, race, nationality and mental health condition).

Discriminatory employment practices can attract increased penalties including:

  • A minimum period of 12 months for all work pass debarment (doubled from the previous 6 months) and
  • An expansion of the scope of work pass debarment to include work pass renewals (in addition to new work pass applications)

Under the Employment of Foreign Manpower Act, if an employer makes false declarations that he has considered all candidates fairly in order to apply for or renew a work pass for a foreign employee, he will have to face penalties of imprisonment up to 2 years, or fine up to $20,000, or both.

Employers should provide training to ensure that their HR personnel to understand the requirements of the Guidelines and are able to be compliant with the Guidelines.

Concluding Remarks

Given the importance of complying with the Tripartite Guidelines, employers will need to ensure that their internal HR processes are compliant with the Guidelines. This includes reviewing the HR policies and employee handbooks to put in place suitable re-employment and retrenchment procedures.

Employment contracts will also need to be checked so that dismissal clauses are appropriately taken care with the right procedures, and compliant with the Guidelines.

Lastly, training should be provided to educate HR personnel on the importance of fair employment practices.

Failure to comply with at least 4 of these Tripartite Guidelines could result in unwarranted consequences and unnecessary fines which every employer could have easily avoided.

 

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The contents and views set out above are those of the author(s) and/or are personal views and for information only. It does not constitute in any way any legal advice or representation to the reader even if the facts appear similar to your fact situation. You are strongly encouraged to seek legal advice should you have any legal issues.