New Employer Obligations, Are You Aware?

New Employer Obligations – Are You Aware?

If you are an employer, it’s definitely high time to sit up and take a close look at the slew of new legislative changes to Singapore’s employment scene.

Not only do employers now have numerous new mandatory obligations to fulfill, failure to comply could attract administrative penalties and criminal liabilities, both which could be crippling to a growing business.

To help you avoid such costly, and certainly unnecessary, mistakes, a summary of these changes is provided below.

Employment in general

Since its first announcement in April 2014, the Ministry of Manpower’s (“MOM”) new amendments to the Employment Act (“EA”) have finally taken effect on April 2016: all employers are now required to issue itemised payslips, key employment terms (“KETs”), and keep employment records.

This chain of new requirements forms a part of the MOM’s attempts to statutorily strengthen the protection for workers under “non-traditional work arrangements”, such as term contract workers and freelancers.

Another target group for protection is identified to be the low-wage workers who are often vulnerable to deception and exploitation by their employers. Through these new obligations, employees abound would be able to obtain a better understanding of their employment terms and entitlements. As a result, employers would be able to avoid many potential conflicts with their employees.

While these requirements may sound daunting, the MOM has provided clear details and published guides on its official website, educating employers on how to comply with them.

In addition, the period from April 2016 to end-March 2017 has been kept as a grace period for companies, during which the MOM would adopt a “light touch enforcement approach”: the focus will be on education, and not on punishment for non-compliance. Thus, despite the potential administrative penalties for non-compliance, there is sufficient time and help available to ensure that your business stays in line.

Employment of foreign workers

Apart from the EA, matters relating to foreign workers are also governed by the Employment of Foreign Manpower Act (“EFMA”). In order to fortify the protection of the well-being of foreign workers, EFMA prescribes both administrative penalties and criminal liabilities for breaches of the legislation.

On top of that, the criminal sanctions were strengthened in 2012 in order to act as a more powerful deterrent against potential offenders.

On 17 April 2016, a Singaporean employer was convicted for obtaining work passes for 30 foreign employees to work in his non-existent company and demanding money from the workers for helping them get their work passes. He was charged for 5 offences and sentenced to 27 months of jail. This acts as a timely reminder for other employers: unlike the MOM’s light touch enforcement approach under the EA, the EFMA sanctions are, in contrast, readily enforceable and enforced.

Bearing this in mind, swift action is needed from employers of foreign workers in light of the new increase to the qualifying salary for Employment Pass (“EP”) applications from S$3,300 to S$3,600, as of 1 January 2017. Such a change is unsurprising given that the MOM regularly updates this figure to keep pace with rising local wage, maintain the quality of Singapore’s foreign workforce and enhance their complementarity to the local workforce.

For employers hiring existing EP holders, the MOM has implemented a buffer period so that adjustments can be made accordingly. If your employee’s EP expires before 1 January 2017, he or she will be able to renew, for a duration of up to 3 years, based on the old EP criteria. If it expires between 1 January 2017 and 30 June 2017, he or she will be able to renew, for a duration of 1 year, based on the old EP criteria. However, if your employee’s EP expires 1 July 2017 onward, he or she will have to meet the new criteria for renewal, for a duration of up to 3 years.

All this might sound utterly confusing, but the MOM simplifies matters for employers by providing a Self-Assessment Tool which can help assess if EP candidates will meet the new salary criteria. Such a tool will be up and running on the MOM website by November 2016.

A long-term improvement

With all points considered, while the new statutory amendments seem more burdensome than helpful for employers, both employees and employers do benefit from the overall improvement in the employment standards in the long run, with minimised employment conflicts and an increase in workforce quality.

What is clear, however, is that these legislative reviews demonstrate the government’s determined efforts to ensure that it keeps pace with the “changing labour force profile and employment landscape” in Singapore.

A failure to stay on top of such statutory changes is thus a failure to recognise the dynamic nature of the local work landscape. Ignoring the changes could be fatal to an originally flourishing business.

Stay updated and safeguard your business today!

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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.