Employment Law Guide 2016 - CNP Law
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Employment
Law
Guide 2016
Colin Ng & Partners LLP (UEN T08LL0403K) is registered with limited liability.
© 2017 Colin Ng & Partners LLP
CONTENT
An overview 3
The Employment Act 4
Entering into a contract of employment 4
Salary 5
Overtime Entitlements 5
Leave Entitlements 6
Termination of employment contracts and notice 10
Restructuring and Retrenchment 12
Retirement 13
Maintaining detailed employment records 14
Restrictive covenants: Non-competition and non-solicitation 14
Confidentiality and non-disclosure: Protection of Employer’s proprietary 16
interests after termination of employment
Dispute Resolution 16
Industrial relations 17
Workplace Safety and Health 18
Employer’s tax considerations 18
Central Provident Fund 20
Employment of Foreign Manpower 21
Contact details 23
An overview
The relationship between employer and employee is regulated largely by the contract of
employment between them. Generally under Singapore law, parties are free to contract
as they choose and any matters arising between them would have to be resolved by look-
ing at either the express and/or implied terms of the contract in question. However, the
law imposes certain limits on this freedom to contract.
The sources of these limits include common law and statutes such as the Employment Act
(Cap. 91) ("EA"), first passed in 1968, with the latest amendments coming into effect on 1
April 2016. The EA sets a minimum standard for the key / basic terms and conditions of a
given employment contract. Therefore, the terms of one's contract of service must be at
least equal to, or more favourable than the provisions in the EA, with less favourable terms
rendered illegal, null and void to the extent that it is so less favourable.
Other pertinent statutes shaping employment law include the Workplace Safety and
Health Act (“WSHA”); the Child Development Co-Savings Act (Cap. 38A) (“CDCSA”); the
Retirement and Re-employment Act (Cap. 274A) (“RRA”); the Trade Unions Act (Cap.
333); the Industrial Relations Act (Cap. 136) (“IRA”); and the Income Tax Act (Cap. 134).
Additionally, employers should be aware of the Central Provident Fund Act (Cap. 36) and
their monthly obligations to the Central Provident Fund (“CPF”), a comprehensive social
security savings plan, as well as the Employment of Foreign Manpower Act (Cap. 91A)
(“EFMA”), which regulates the terms and conditions for the employment of foreign workers
and is particularly relevant in relation to foreign workers who are not protected under the
EA (e.g. foreign domestic workers).
PAGE 3
In recent years, there have been a number of changes to the employment laws, with a
shift towards increasing awareness of employment rights and obligations. In late 2012, the
Singapore Ministry of Manpower (“MOM”) embarked on an exercise to review the EA to
ensure its continued relevance given the changing labour market conditions and trends.
The review gave rise to the Employment, Parental Leave and Other Measures Act (the
“EPLOMA”) which was enacted on 12 November 2013 to amend various provisions in the
EA, with a majority of the amendments taking effect from 1 April 2014. The review also fo-
cused on further protection of vulnerable workers, particularly those in non-traditional work
arrangements (e.g. term contract workers, outsourced workers and freelancers) and the
EFMA. The Employment (Amendment) Bill 2015, which was effective in two tranches, on 22
August 2015 and 1 April 2016, amended the EA, with consequential amendments to the
CDCSA and the EPLOMA.
In April 2016, further amendments to the employment legislation were proposed and are
slated to be effective in early to mid 2017. These covered parental benefits which will en-
hance the position of fathers, adoptive and unwed mothers with amendments to be
made to the CDCSA, and re-employment policy changes which encourage the hiring of
older workers.
Please note that the following guide is a summary for general information, aimed at aiding
understanding of Singapore employment law as at the date of writing. It is not exhaustive
or comprehensive and reading this memorandum is not a substitute for reading the text of
the various statutes to fully understand the extent of the obligations owed. This guide
should also not be relied upon as legal advice.
August 2016
1. The Employment Act KETs must include the items below, unless the item
is not applicable:
The EA covers every employee (regardless of S/N Item
nationality) who is under a contract of service
1. Full name of employer.
with an employer, except:-
2. Full name of employee.
any person employed in a managerial or
3. Job title, main duties and responsibilities.
executive position earning more than
$4,500 basic monthly salary; 4. Start date of employment.
any seaman; Duration of employment (if employee is on
5.
fixed-term contract).
any domestic worker; and
Working arrangements, such as:
any person employed by a Statutory Board
Daily working hours (e.g. 8.30am -
or the Government. 6pm)
6.
Number of working days per week
Specifically, Part IV of the EA, which provides (e.g. six)
for rest days, hours of work and other conditions Rest day (e.g. Saturday)
of service, applies only to:
7. Salary period.
workmen earning not more than $4,500 Basic salary: For hourly, daily or piece-rated
basic month salaries; and workers, employers should also indicate the
8.
basic rate of pay (e.g. $X per hour, day or
non-workmen covered under the EA earn-
piece).
ing not more than a basic monthly salary of
$2,500. 9. Fixed allowances.
It should be noted that Part IV of the EA does 10. Fixed deductions.
not apply to any person employed in a mana-
gerial or executive position.
Overtime payment period (if different from
11.
PAGE 4
Employees working less than 35 hours a week item 7 above).
are covered by the Employment (Part-Time
Employees) Regulations, which provide certain
12. Overtime rate of pay.
flexibility for both the employers and employ-
ees, including the pro-rating of employment
benefits, encashment of annual leave and pro- Other salary-related components, such as:
vision of rest days.
13. Bonuses
2. Entering into a contract of employ- Incentives
ment
Types of leave, such as:
Prior to 1 April 2016, there was generally no re- Annual leave
quirement for a contract of employment to be
Outpatient sick leave
in writing. However, following the latest amend- 14.
ments to the EA that came into effect on 1 Hospitalisation leave
April 2016, employers are required to issue key Maternity leave
employment terms (“KETs”) in writing to all em- Childcare leave
ployees who:
Other medical benefits, such as:
are covered by the Employment Act; and
Insurance
15.
are employed for 14 days or more. Medical benefits
Dental benefits
The KETs were introduced to allow employees
to better understand how their salary is calcu- 16. Probation period.
lated, their employment terms and benefits. 17. Notice period.
The KETs also help employers prevent misunder-
standings and minimise disputes at the work-
place.
Failure to issue KETs (in writing) in accordance Total amount of overtime pay for the
11.
with the EA would be a civil breach, attracting relevant overtime payment period.
administrative penalties of a fine of S$100 to
$200 per employee or occurrence, depending Start and end date of the relevant over-
12.
on the type of breach, and/or an MOM order time payment period.
to rectify the breach. A failure to comply with
an MOM order will constitute a criminal (c) Deductions
offence, which attracts more severe penalties
of fines up to S$5,000 and/or imprisonment of Employers may deduct salary only for reasons
up to 6 months. allowed under the EA, or if ordered by the
Court. Such authorised deductions include that
It should be noted that the administrative for absence from work, income tax payment
penalty framework does not supersede the and CPF contributions.
relevant criminal offences applicable to other
breaches of EA provisions safeguarding The maximum deductible amount in respect for
employment standards. any one salary period is 50% of the employee’s
total salary. This excludes deductions for ab-
3. Salary sence from work, payment of income tax, re-
covery of loans and payments made with the
(a) Payment consent of the employee. Within the 50% cap,
deductions for accommodation, amenities and
Under the EA, an employee must be paid at services also may not exceed 25% of the em-
least once a month. In general, an employer is ployee’s total salary.
required to pay his employees within seven
days after the end of the salary period. (d) Non-compliance
Salary must be paid on a working day and A first-time offence by any employer in failing
during working hours at the place of work, or at to pay salary will result in a fine of between
any other place agreed to between the $3,000 and $15,000 and/or 6 months' imprison-
employer and the employee. It may also be ment. A subsequent offence will result in a fine
paid into an employee's personal/joint bank of between $6,000 and $30,000 and/or 12
account. months' imprisonment. The maximum composi-
tion fine is $5,000.
PAGE 5
(b) Payslips
Failure to comply with the requirement to issue
From 1 April 2016, all employers are required to itemised payslips in accordance to the EA will
issue itemised payslips to employees covered attract an administrative penalty, as outlined in
under the EA at least once a month. A record Section 2 above.
of all payslips issued must be kept by the
employers for at least 2 years. Under the EA, individual officers and directors
are accountable for the offences committed
Itemised payslips can be in soft or hardcopy, by the company. In particular, officers who are
and has no prescribed format, but must con- primarily responsible for the non-compliance
tain the following items (unless not applicable): will be presumed to be negligent and held
accountable unless proven otherwise.
S/N Item
Employment inspectors have the power to
1. Full name of employer. arrest, without warrant, any person whom he
reasonably believes is guilty of the failure to
2. Full name of employee.
pay salary, and to enter any workplace to
3. Date of payment(s). conduct checks. The MOM has clarified that
the powers of inspecting officers are to better
4. Net salary for that salary period. facilitate the enforcement of the EA provisions,
with the arrest powers only to be exercised in
5. Basic salary for that salary period. relation to the minority of employers who are
persistently uncooperative or who wilfully refuse
Start and end date of that salary to comply with orders to attend investigation
6.
period. sessions.
All allowances paid for that salary
7. 4. Overtime Entitlements
period (fixed and ad-hoc).
Any other additional payment(s) for
8. (a) Entitlement
that salary period (e.g. bonus).
Any deduction(s) made for that salary Part IV of the EA, which provides for rest days,
9.
period (e.g. CPF contribution). hours of work and other conditions of service,
10. Number of overtime hours worked. applies only to:
workmen earning not more than a basic 5. Leave Entitlements
monthly salary of $4,500; and
Annual Leave
non-workmen employees earning not more
than a basic monthly salary of $2,500. (a) Eligibility
Generally, an employee covered under Part IV An employee covered under Part IV of the EA is
of the EA is not required to work more than 8 eligible for annual leave under section 43(1) of
hours in a day or 44 hours in a week. He is also the EA.
not required to work more than 6 consecutive
hours without a break. The duration of the For employees not covered under Part IV of the
break should not be less than 45 minutes. EA, their entitlements to annual leave will de-
pend on contractual provisions, both express
Overtime allowance is payable if the employee and implied.
is required by the employer to work above the
specified limits of working hours in the EA. An (b) Entitlement/duration
employee is permitted to work up to a limit of
72 hours of overtime in a month, excluding Under section 43(1) of the EA, an employee
work done within his normal daily working hours who has served his employer for not less than
on his rest day or public holiday. three months shall be entitled to paid annual
leave of 7 days in respect of the first year of
(b) Computation of Overtime Pay continuous service with the same employer,
and one additional day for every subsequent
An employee covered by the EA must be paid year with the same employer, but subject to a
at least 1.5 times his hourly basic rate of pay for maximum of 14 days’ annual leave.
all work in excess of the normal hours of work.
Annual leave is in addition to rest days, public
The overtime rate payable for non-workmen is holidays, sick leave and child care leave.
capped at the salary level of $2,250 (i.e. non-
workmen earning more than $2,250 a month Annual leave has to be taken not later than 12
will be paid for overtime work at a rate based months after the end of every 12 months of
on a salary of $2,250). continuous service and any employee who fails
PAGE 6
to take that leave by the end of such period
(c) Payment of Overtime Entitlements shall cease to be entitled to the leave. If the
employee chooses not to take leave he will not
Payment for overtime work must be made be able to claim any compensation in lieu of
within 14 days after the last day of the salary such leave not taken.
period.
(c) Non-compliance
(e) Work done during Public Holidays
Breach of section 43(1) results in the commis-
Employees under the EA are entitled to one sion of an offence. A first-time conviction under
extra day’s salary on top of the day’s salary if this section will result in a fine not exceeding
they are required to work on a Public Holiday $5,000, and a second or subsequent offence
(or the day after a Public Holiday if the Public will result in a fine not exceeding $10,000 or
Holiday falls on a rest day). Alternatively, the imprisonment for a term not exceeding 12
employer may, by arrangement with the months or to both.
employee, substitute the holiday with any other
day. Sick Leave
In addition, employees under the EA employed (a) Entitlement
in a managerial or executive position, are
permitted, in lieu of the extra day’s salary or a An employee covered by the EA is entitled to
substituted day, any part of a day off on a paid sick leave if:
working day comprising such number of hours
as may be agreed between the employee and the employee has served the employer for
employer, in lieu of the extra day’s salary or a at least three months;
substituted day, or if there is no such agree-
ment, either 4 hours off if the employee worked the employee has informed or attempted
4 hours or less on the Public Holiday or the to inform the employer of his/her absence
entire day if he worked more than 4 hours. within 48 hours; and the sick leave is certified by the company's charges, the employer is obliged to bear such
doctor, or by a government doctor costs to the extent that medical benefits are
(including doctors from approved public provided for in the employee's employment
medical institutions) if a company doctor is contract, or in the collective agreement signed
not readily available (such as when com- between the employer and the union.
pany doctors are closed or very inconven-
iently located), or during emergency situa- (d) Salary of employees on sick leave
tions.
If an employee is on paid hospitalisation leave,
This does not apply to any medical treatment his employer has to pay him at his gross rate of
which is for cosmetic purposes. pay. If an employee is on paid outpatient sick
leave, his employer has to pay him at his gross
If the employee fails to duly notify or attempt to rate of pay, excluding any allowance payable
notify the employer, or if the sick leave is not in respect of shift work.
duly certified, the employee will be deemed to
be absent from work without permission or rea- (e) Sick leave on rest days, public holidays etc.
sonable excuse.
An employee is not entitled to paid sick leave
The number of days of paid sick leave a on the following occasions, even if he is given
new employee is entitled to depends on his medical leave by the doctor:
service period:
rest days;
No of months Paid Aggregate
of service Outpatient Paid public holidays;
completed of Sick Leave Sick Leave
a new Entitlement Entitlement non-working days;
employee per year per year
where hospi- where hospi- during annual leave; or
talisation is talisation is
during no-pay leave.
not required required*
(days) (days) However, he is entitled to claim for the medical
PAGE 7
3 months 5 15 examination fee. His entitlement to claim for
other medical expenses would depend on the
4 months 5+3=8 15 + 15 = 30 medical benefits provided in his employment
5 months 8 + 3 = 11 30 + 15 = 45 contract or the collective agreement signed
between the employer and the employee’s
6 months 11 + 3 = 14 45 + 15 = 60 union.
Thereafter 14 60
Maternity Leave
*An employee is deemed to be hospitalised if
(a) Eligibility
he/she is certified by a doctor to be in need of
hospitalisation. He does not necessarily have to
Part IX of the EA and Part III of the CDCSA pro-
be warded in a hospital.
vide Government-paid maternity benefits and
protection for eligible employees.
(b) Limit
The CDCSA covers all parents of Singapore citi-
The amount of paid outpatient and hospitalisa-
zens, including managerial, executive or confi-
tion sick leave that an employee can take is
dential staff. Under the CDCSA, a female em-
capped at his sick leave entitlement (as
ployee is generally entitled to maternity leave
indicated in the right-most column of the table
benefits if:-
above).
(c) Reimbursement of medical expenses the child is a Singapore citizen;
If an employee has worked for at least three the child's parents are lawfully married;
months, his employer is generally legally and
obliged to bear the medical consultation fee,
except where the medical consultation is for the employee has worked for the em-
cosmetic purposes. For other medical costs, ployer for at least three months before
such as medication, treatment or ward the child's birth.On 12 April 2016, Minister for Social and Family to 4 weeks’ worth of working days) to be
Development (MSF) Mr. Tan Chuan-Jin taken flexibly anytime over the 12 month
announced that the government will be period following the child's birth.
extending the full 16-week maternity leave to
unwed mothers. These amendments will be (c) Salary
effective in early 2017.
If the employee qualifies for Government-paid
For female employees not covered under maternity leave under the CDCSA, she will be
CDCSA, they may be entitled to maternity paid by the employer during the entire 16
leave benefits if they fall within the scope of weeks of maternity leave, regardless of the
the EA. birth order of the child. The employer is entitled
to reimbursement from the Government for the
(b) Entitlement/duration last eight weeks for the first and second
confinements and all 16 weeks for the third or
A CDCSA eligible employee is entitled to subsequent confinements.
absent herself from work for a total of 16 weeks
of maternity leave that may be taken in one of If the employee does not qualify for maternity
the following manner: leave under the CDCSA but qualifies for
maternity leave under the EA, the employer is
a continuous period of 4 weeks immedi- required to continue paying an employee her
ately before and a subsequent continuous usual salary (i.e. monthly gross rate of pay,
period of 12 weeks immediately after including allowances) for the first eight weeks
confinement; or of maternity leave if:
by agreement with her employer, a the employee has been employed for at
continuous period of 16 weeks, beginning least 90 days before the date of delivery;
any time within 28 days prior to her confine-
ment till the date of the confinement; or the employee has less than two children of
her own at the time of delivery. In the case
by agreement with her employer, a of multiple births (e.g. twins, triplets etc.)
continuous period of 8 weeks, beginning during the first pregnancy, the employer is
still required to pay the next eight weeks of
PAGE 8
any time within 28 days prior to her confine-
ment till the date of her confinement, and maternity leave; and
such further period(s) of an aggregate
duration no shorter than the prescribed the employee has given her employer at
period under the CDCSA (equivalent to 8 least one week's notice before going on
weeks’ worth of working days) to be taken maternity leave, and informed her
flexibly anytime, over the 12 month period employer as soon as practicable of her
following the child's birth. delivery. Otherwise, the employee is only
entitled to half the payment during the
Under Part IX of the EA, employees covered by maternity leave, unless she can show suffi-
the EA, but not under the CDCSA, are entitled cient cause that prevented her from giving
to a total of 12 weeks of maternity leave that such notice to the employer.
may be taken in one of the following manner:
For maternity leave under the EA, payment by
a continuous period of 4 weeks immedi- the employer beyond the first eight weeks is
ately before and a subsequent continuous voluntary and subject to contractual agree-
period of 8 weeks immediately after the ment.
confinement; or
(d) Employer’s obligations
by agreement with her employer, a
continuous period of 12 weeks of maternity Employers are prohibited from dismissing an
leave commencing no earlier than 28 days employee who is on maternity leave. An
prior to the confinement; or employer who does so is liable to a fine and/or
imprisonment.
by agreement with her employer, a con-
tinuous period of 8 weeks of leave begin- If a notice of dismissal is given without sufficient
ning any time within 28 days prior to her cause at any time of the employee’s preg-
confinement till the date of the confine- nancy (as certified by a medical practitioner
ment and such further period(s) of an before the notice of dismissal is given), the em-
aggregate duration no shorter than the ployer must pay her the maternity benefits she
prescribed period under the EA (equivalent is otherwise eligible for.If the employee is retrenched within three Childcare Leave
months of her confinement, the employer must
pay her the maternity benefits she is otherwise (a) Eligibility
be eligible for. This payment is in addition to
any retrenchment benefit which the employee Under the CDCSA, male and female employ-
is entitled to. ees are entitled to childcare leave benefits if:-
An employer cannot employ an employee at the child is a Singapore citizen;
any time during the four weeks immediately
following her confinement. An employer can- the child's parents are lawfully married; and
not contract out of their obligation to provide
the maternity benefits. the employee has worked for the employer
for at least three months before the child's
Paternity Leave birth.
(a) Eligibility For employees not covered under CDCSA, they
may be entitled to childcare leave benefits if
Under the CDCSA, a male employee is entitled they fall within the scope of the EA.
to paternity leave benefits if:-
(b) Entitlement/duration
the child is a Singapore citizen;
Regardless of the number of children he/she
the child's parents are or had been lawfully may have, a CDCSA eligible employee is enti-
married at the time the child is conceived tled to:
or become married as such before the
child’s birth or within the period of 12 If he/she has a child below 7 years of age
months commencing on the date of the at any time during the relevant period: 6
birth of the child; and days of paid childcare leave per year;
the employee has worked for the employer If he/she has a child between the ages of 7
for at least three months before the child's and 12 at any time during the relevant pe-
birth.
PAGE 9
riod: 2 days of paid childcare leave per
year.
(b) Entitlement/duration
An employee with children in both age groups
A CDCSA-eligible employee is currently entitled will have a total childcare leave entitlement of
to 7 days of paid paternity leave as follows: 6 days per year.
1 continuous week within 16 weeks after For an employee not covered under CDCSA
the birth of the child; or but covered under the EA, he/she is entitled to
2 days of childcare leave if he/she has a child
If there is mutual agreement between the below 7 years of age during the relevant pe-
employer and the employee, flexibly within riod.
12 months after the birth of the child.
(c) Salary
On 13 April 2016, it was announced by Senior
Minister of State Ms. Josephine Teo in Parlia- If the employee qualifies for childcare leave
ment during the debate on spending plans of under the CDCSA, the employee will be paid
the Prime Minister’s Office for the new financial by the employer for the first 3 days of childcare
year, that the all fathers of Singapore citizen leave, with the remaining 3 days paid by the
children born on or after 1 January 2017 will get Government. Payments are capped at S$500
2 weeks of paternity leave, to enable young per day (inclusive of CPF contributions – see
fathers to be more involved with raising their section 16 of this guide).
children.
If the employee does not qualify for childcare
(c) Salary leave under the CDCSA but qualifies for child-
care leave under the EA, the employee will be
The paternity leave entitlement is funded by paid by the employer for the 2 days of child-
the Government and capped at S $2,500 care leave.
(inclusive of CPF contributions – see section 16
of this guide).National Service leave (a) Termination without notice
All male Singaporean citizens and second- Where the EA applies, either party may termi-
generation permanent residents who have nate an employment contract without giving a
reached the age of 18 are required to render reason, and without notice, if the other party
National Service. The employer is obliged to wilfully breaches a condition of the contract. In
allow the male employees to render National addition, under the EA, an employer is entitled
Service. No employer shall dismiss an employee (after due inquiry) to dismiss an employee with-
solely or mainly by reason of any duty or liability out notice on the grounds of misconduct. For
which that person is, or may become, liable to instance, absence from work continuously for
perform or discharged by reason of his being more than 2 days (a) without prior leave of the
liable to be, called up for National Service. employer or without reasonable excuse; or (b)
without informing or attempting to inform the
When a person performs such a service, in so employer of the excuse for the absence, is
far as his civilian remuneration is reduced, that deemed to be a repudiatory breach by the
person may claim a reimbursement in respect employee. Misconduct inconsistent with the
of that reduction from the designated author- fulfilment of express or implied conditions of his
ity, less any service remuneration which he may service may be another ground for dismissing
get in respect of that service. If, instead of re- an employee without notice (after due
ducing the civilian remuneration, the employer enquiry).
continues to pay the employee during the pe-
riod of service, the employer can in turn claim (b) Termination by payment of salary in lieu of
reimbursement from the designated authority notice
provided certain conditions are satisfied.
A given contract may expressly provide that
employment may be terminated by payment
6. Termination of employment contracts
of salary in lieu of notice. However, even if not
and notice
expressly provided for, each party is entitled to
terminate the contract without notice by giving
The provisions relating to termination are set out
payment in lieu of notice. Additionally, an em-
in Part II of the EA. Where the EA does not ap-
ployer is entitled to terminate by notice refer-
ply, the terms of the employment contract will
PAGE 10
able to part of the total notice period together
govern whether it can be terminated without
with salary in lieu of notice referable to the rest
cause and the required period of notice. If
of the notice period.
there is no express term specifying the amount
of notice required, a reasonable period of no-
It is important to note that the right to terminate
tice will be implied.
without notice is subject to Part II (Contracts of
Service) of the EA.
The manner in which an employment contract
may be validly terminated will depend on the
(c) Termination with notice (otherwise than for
form of employment contract (which may be
misconduct)
oral, written or partly oral and partly written)
and its terms, which may be implied (by cus-
If there is a notice period specified in the em-
tom or by statute) or express (which may be
ployment contract, then notice is to be given in
incorporated by reference, e.g. in the case of
accordance with it. Where the EA applies, no-
an employee handbook and the terms of a
tice must be in writing and the day on which it
collective agreement, if any). An employment
is given must be included in the period of the
contract may come to an end by expiry
notice. Payment of all outstanding salary and
(where the specified term has elapsed or the
any sum due is to be made on the termination
specified task or project is completed) or by
date or, if not possible, then within 3 days of it.
termination.
In the absence of any notice period specified
Finally, termination agreements setting out
in the employment contract and where the EA
agreed terms of the termination are common,
applies, the following statutory minimum period
particularly with executive staff. Provisions typi-
of notice is required:-
cally set out termination payments
(entitlements and negotiated payout Period of service Minimum notice
amounts), confidentiality/non-disclosure agree- period
ment and (where applicable) restrictive cove-
26 weeks 1 day
nants.
>26 weeks, 1 weekWhere the contract is silent on the notice pe- missal make representations in writing to the
riod and the EA does not apply, in a contract Minister to be reinstated. The Minister may in-
for an unspecified term, a reasonable period of quire into the reasons for the dismissal. The Min-
notice will be implied. In a contract for a fixed ister may direct the employer to:
term or a specified purpose, no such period of
notice will be implied – these contracts cannot reinstate the employee and pay back
be terminated on this basis. wages referable to the time between ter-
mination and reinstatement; or
A party may waive his right to notice under the
EA. pay, as compensation, an amount of
wages determined by the Minister instead
Generally, there is no obligation on the em- of ordering reinstatement.
ployer to provide work to the employee during
the notice period save for certain rare excep- It would be prudent for an employer to an-
tions, such as where an employee's position ticipate this by ensuring that reasons are
might be deemed specific and unique, where well documented and evidenced in line
his skills require frequent exercise to preserve with modern HR practices for continuing
and enhance them, and where barring the employee appraisal.
employee from working would be inconsistent
with the express term of the contract. Where The above applies to all EA employees not em-
the general rule applies or if specifically pro- ployed in a managerial or an executive posi-
vided for in the employment contract, it is open tion and to managers or executives earning not
to the employer to put the employee on more than S$4,500 who have been working for
“gardening leave” during that time, effectively that employer for at least 12 months in any po-
preventing the employee from having contact sition.
with clients.
Where the EA does not apply, the terms of the
(d) Payment of accrued but unpaid salary up to employment contract will determine whether it
termination date, accrued and unused an- can be terminated without reason. If there is no
nual leave and salary in lieu of notice and contractual term permitting this, then the em-
timing of payment on termination. ployer can terminate the contract without no-
PAGE 11
tice or salary in lieu of notice provided the rea-
Amounts for each of these (if applicable) son is an act of the employee which amounts
should be paid on termination and specified in to a repudiation of the contract. If the em-
the termination agreement if there is one. ployer terminates the contract without such a
Where the EA applies, payment of all out- reason, the employee may have an action for
standing salary and any sum due to an em- unfair dismissal.
ployee is to be made on the termination date
or if this is not possible then within three days of (g) Special considerations for terminating a
it. director
(e) Benefits Under section 152 of the Companies Act (Cap.
50) (“CA”), a public company may by ordinary
Depending on the terms of the employment resolution remove a director before the expira-
contract, an employee may have an entitle- tion of his period of office, notwithstanding any-
ment to payment on termination in relation to a thing in the constitution of the company or any
variety of benefits, including an incentive agreement between the company and the
scheme or annual cash bonus plan or execu- director.
tive share option scheme (“ESOS”).
However, in the case of a director appointed
The terms of the contact may include payment to represent the interests of any particular class
of health insurance, school fees and housing of shareholders or debenture holders, the reso-
costs. The exact terms need to be checked lution to remove him is ineffective until a suc-
and payments or negotiated arrangements in cessor has been appointed.
relation to relevant items dealt with in the termi-
nation agreement. Special notice must be given of a resolution to
remove a director or to appoint a replacement
(f) Unfair dismissal by employer director at the meeting at which he is re-
moved. At the meeting to remove him, the di-
Where the EA applies, if an employee considers rector is entitled to be heard on the resolution.
he has been dismissed without just cause or A listed public company must give the SGX-ST
excuse, he may within one month of the dis- (i.e. the relevant listing authority) notice of re-ceipt of a resolution to remove a director. of service of the transferred employees will be
the same as those enjoyed by them immedi-
Since the implementation of the Companies ately prior to the transfer. The transferor also has
(Amendment) Act 2014 (“CAA”), subject to any an obligation to inform and consult employees
provision to the contrary in its constitution, a and/or trade union of employees affected by
private company may also by ordinary resolu- the business transfer as soon as it is reasonable
tion remove a director before the expiration of and before the business transfer takes place,
his period of office notwithstanding anything in such as through a notice to the affected em-
any agreement between the private company ployees.
and the director.
For employees falling outside the scope of the
The resignation or removal of a director EA, the effect that a merger, amalgamation or
(whether pursuant to the termination of his em- sale of business will have on their employment
ployment in the case of an executive director contracts will depend on whether there is a sale
or otherwise) will be deemed to be invalid un- or transfer of shares or assets. A sale or transfer
der section 145(5) of the CA unless at least one of shares will have no effect on the employees’
director ordinarily resident in Singapore (who contracts. Where a sale or transfer of assets is
may be the sole director) will remain on the involved, the effect on the employment will de-
board. pend on the particular circumstances of the
case. Generally, if the business is sold or trans-
The removal of a director must be notified to ferred in its entirety such that the transferor or
ACRA through Bizfile within 14 days from the seller ceases to continue business, the employ-
date of his ceasing to hold the office. ment will be terminated. The transferee or the
purchaser can offer new employment to such
In relation to payments to directors for loss of employees on terms agreed by the transferee
office or retirement, section 168 of the CA re- and the affected employees. However, the said
quires such payments to be approved by employee is not under any obligation to accept
shareholders in a general meeting. Since 1 July the offer and work for the new employer.
2015, companies have been exempted from
the requirement to obtain shareholders’ ap- (b) Retrenchment Benefits
proval for payments made to a director hold-
PAGE 12
ing a salaried employment or office in the com- Legislation does not provide an employee with
pany by way of compensation for termination any right to retrenchment benefits on termina-
of employment under an existing legal obliga- tion for redundancy or reorganisation of the
tion arising from an agreement between the employer’s business. In fact, where an em-
company and the director if the amount of ployee falls under Part IV of the EA (i.e. to a
payment does not exceed the director’s total workman on a salary of $4,500 or less per
emoluments paid for the year immediately pre- month or a non-workman employee whose
ceding his termination of employment and the salary is not greater than $2,500 per month), if
particulars of the proposed payment (including the employee has been employed for less than
the amount) have been disclosed to the share- 2 years (reduced from 3 years with effect from
holders upon or prior to the payment. 1 April 2015) continuously, the right to retrench-
ment benefits is specifically excluded under
7. Restructuring and Retrenchment section 45 of the EA. Even where an employee
has been continuously employed for 2 years or
(a) Effect on employment in event of mergers, more, pursuant to Singapore case law, that
amalgamations and sale of business employee still does not enjoy an automatic
right to retrenchment benefits as an employer
Under the EA, employees are statutorily pro- in Singapore has no legal obligation to provide
tected in the event of a business transfer, in- retrenchment benefits in such cases. Irrespec-
cluding a disposition of a business as a going tive of whether the EA applies, an employee
concern or a transfer effected by sale, amalga- has no right to retrenchment benefits unless his
mation, merger, reconstruction or operation of or her employment contract or an applicable
law. Under section 18A of the EA, amongst collective agreement so provides.
other things, if an undertaking or part thereof is
transferring from one person to another, the (c) Ex-gratia payments
transfer shall not operate to terminate the con-
tract of service of any person employed by the In cases of termination for redundancy, an em-
transferor in the undertaking or part transferred. ployer may make an ex-gratia payment to an
Instead, there will be an automatic transfer the employee. However, under Singapore com-
contract of service, with no break in the conti- mon law an employer is not bound to make
nuity of employment, and terms and conditions such a payment on the basis of its past prac-tice of doing so. order to maintain a strong Singaporean core,
the MOM has indicated that it may cut the
(d) Length of notice of termination work pass privileges of employers who unfairly
retrench Singaporeans.
Under the EA, there are no special require-
ments in relation to the length of notice to be 8. Retirement
provided in cases of termination for
redundancy or reorganisation. The relevant (a) Age
notice period specified in the contract or, in its
absence, the minimum notice provisions appli- The RRA covers all employees who are Singa-
cable under the EA, will apply (as discussed in 6 pore citizens and permanent residents, includ-
(c)above). However, in cases of retrenchment, ing those in managerial, professional and ex-
the MOM encourages employers as far as ecutive positions, and makes it an offence for
possible to inform affected employees of the an employer to dismiss an employee below the
impending retrenchment before notice of prescribed age on the grounds of age, notwith-
retrenchment is given. standing anything in any other written law, con-
tract of service or collective agreement.
(e) Union intervention
The current minimum age of retirement is 62
In cases where an employee is a trade union years. An employee can be retired the day
member, no trade union intervention/collective before his/her 62nd birthday. However, if the
bargaining is permitted in relation to termina- retirement age is not specified in the employ-
tion for redundancy or reorganisation or in rela- ment contract, the employer should give the
tion to the criteria for such termination, per sec- employee advance notice as stipulated in the
tion 18(2)(d) of the IRA. contract. Employers are required to offer re-
employment contracts of at least one year,
(f) Tripartite Guidelines on Managing Excess renewable up to age 65 (to be raised to 67
Manpower and Responsible Retrenchment (the with effect from 1 July 2017). MOM, in its guide-
“MEMRR Guidelines”) lines, has also advised employers to offer a
three year re-employment contract until age
The tripartite partners, the MOM, National 65 at one stretch.
PAGE 13
Trades Union Congress (“NTUC”) and Singapore
National Employers Federation (“SNEF”) have The RRA does not legislate compulsory retire-
formulated the MEMRR Guidelines for imple- ment; neither does it prohibit an employee
mentation. The MEMRR Guidelines suggest that from continuing employment beyond the statu-
as businesses adjust, they should consider alter- tory retirement age. However, employees
native ways to manage their excess manpower above the age 62 are not covered by the RRA,
- such as upskilling and redesigning jobs. How- regardless of whether they are employed on a
ever, if retrenchment is inevitable, companies contract or tenure basis. Thus, any extensions in
should do so in a responsible and sensitive an employee's employment beyond age 62 will
manner. In order to achieve responsible re- be based on mutual agreement between the
trenchment, key areas that the MEMRR Guide- employer and employee.
lines have identified include using objective
criteria when evaluating employees for re- (b) Benefits
trenchment, giving early notice to affected
employees, provision of retrenchment benefits Irrespective of whether the EA applies, an em-
and re-employment facilitation. The MEMRR ployee has no right to retrenchment benefits
Guidelines state that employer companies unless his or her employment contract or an
should notify the MOM of impending retrench- applicable collective agreement so provides.
ments as soon as possible if a decision to this
effect has been made and that as far as possi- (c) Dismissal
ble employing companies should inform af-
fected workers of their impending retrench- The RRA stipulates that employees who are be-
ment before notices of retrenchment are low the prescribed retirement age cannot be
given. dismissed by their employers because of their
age. An employee will be deemed to be dis-
Note that the guidelines are not mandatory but missed by the employer if:
amount to strong recommendations to employ-
ers. Employers are encouraged to follow the the contract under which he/she is em-
guidelines set out in the relevant paragraphs to ployed is terminated by the employer,
the extent it is practical to do so taking ac- regardless of whether or not notice is given;
count of the requirements of their business. In the employer retires the employee; or and/or termination agreements in an attempt
to further exercise control over an employee’s
the employer requires or causes the em- actions or obligations following the termination
ployee to retire or resign because of his/her of his employment, to protect itself from unfair
age. competition and to maintain a stable work-
force. Where such restrictive covenants are
9. Maintaining detailed employment re- sought to be introduced only upon or after the
cords termination of an employee’s employment, it
should be noted that the employee is not
From 1 April 2016, all employers are required to obliged to agree to such non-compete, non-
maintain detailed employment records of em- solicitation covenants and/or a confidentiality
ployees covered under the EA. For current em- undertaking. If he does so, it is likely to be after
ployees, the records for the latest two years negotiation on the basis that a payment
have to be kept and for ex-employees, the amount, over and above what he is otherwise
records for the last two years of employment contractually entitled to, will be paid at a level
have to be kept for one year after the em- compensating him for the detriment he incurs
ployee leaves employment. The employment in doing so.
records must be in soft or hard copy, and in-
(a) Validity of a restrictive covenant
cludes the employee records and salary re-
cords.
A restrictive covenant is not valid and will be
void unless it is reasonable as a matter of both
S/N Item private and public interests. There must be a
legitimate proprietary interest that the em-
1. Address. ployer seeks to protect in imposing a restrictive
covenant. Moreover, the restriction must not be
NRIC number (for citizens / PRs); or wider than is reasonably necessary to protect
2. Work pass number and expiry date (for the interest.
non-citizens).
Reasonableness of a restrictive covenant is as-
3. Date of birth. sessed on two grounds:
PAGE 14
4. Gender. its reasonableness between the contract-
ing parties (private interests); and
5. Date of starting employment.
its reasonableness in so far as the public
6. Date of leaving employment.
interest is concerned (public interests).
Working hours, including duration of Note that the courts place the burden of proof
7.
meals and tea breaks. on the employer to show that the covenant is
reasonable between the parties, whereas the
Dates and other details of public holi- burden lies on the employee to show that the
8.
days and leave taken. covenant is against the interests of the public.
Specifically, when considering the above test
the courts look to reconcile the following core
The employee records must contain the follow-
interests:
ing employee details:
the expectation of the employer that the
The requirements for salary records are the
knowledge and skills which have been im-
same as that for itemised pay slips.
parted to or acquired by its employee dur-
ing the course of its employment are not
Failure to maintain detailed employment re-
subsequently used by that employee to the
cords in accordance with the EA will attract
employer's detriment following termination;
administrative penalties.
10. Restrictive covenants: Non-competition the right of a former employee to use and
exploit the skill, experience and knowledge
and non-solicitation
acquired by him during the term of
employment to make a living and to ad-
Employers are increasingly inserting non-
vance his chosen trade or profession; and
competition and non-solicitation (referred to
broadly as “restrictive covenants” or “restraint
the public interest in securing an environ-
of trade clauses”) into employment contracts
ment in which freedom of trade and
competition can flourish.A specific and contested clause must pass There must also be a connection between
both hurdles. Thus, while the courts may find customers and the defined area.
that a given restraint of trade provision is
reasonable as between the parties, they may The restrictions must be to countries or ar-
nevertheless invalidate it on the ground that it is eas in which the employee had actual and
against public policy and hold the clause in significant customer contact.
question to be unenforceable.
(c) Scope of activities prohibited:
Between the parties
A restraint in trade clause is not considered
There are two main points that the employers reasonable unless it is confined to protect-
must keep in mind in determining whether the ing the legitimate interest of the employer.
agreement is reasonable vis-à-vis the contract-
ing parties. It is worth noting that express acceptance by
the employee that the clause is reasonable
First, there must always be a legitimate proprie- does not prevent the court from holding that
tary interest to protect that would warrant the the clause is unreasonable and thus unenforce-
Court's protection. One of the more important able. Moreover, restrictive covenants will not
interests in the Court’s eyes is the need for be upheld in the event of a repudiation of the
employers to maintain a stable workforce. contract by the employer. For example, where
Another interest relates to the confidential an employee is wrongfully dismissed, the em-
information and trade secrets of the employer. ployee may treat the contract at an end and
not be bound by the obligations in the restric-
Second, the agreement must not be wider tive covenants. Thus, a term in the contract of
than is necessary to protect the interest employment stating that the restrictive cove-
concerned. To ascertain whether the clause as nant will be enforceable even if the employee
drafted is no wider that is reasonably necessary is wrongfully dismissed will be invalid.
to protect the legitimate interest of the
employer, the following factors are important: Public policy
(a) Period of restraint: There is one broad question: is it in the interests
PAGE 15
of the community that this restraint should, as
To be reasonable, the period of the between the parties, be held reasonable and
restraint should not exceed the period that enforceable? This standard has hitherto primar-
is necessary for the protection of the legiti- ily referred to anti-competitiveness. In one semi-
mate interests of the employer. nal case, for instance, the court held that a
given clause would be detrimental to the com-
The duration must not be longer than munity at large since it created a virtual mo-
necessary for the protection of the nopoly of a certain type of work in Singapore
employer’s interest; enough time to start a on the part of the employer.
new employee at the task and for the new
employee to have a reasonable opportu- It should be noted that while the courts have
nity to demonstrate his effectiveness to increasingly upheld restrictive covenants in
customers. various commercial contexts, the same trend
does not extend to restrictive covenants in em-
The employee’s seniority, degree of ployee contracts. In CLAAS Medical Centre
influence on the clients and access to Pte. Ltd. v. Ng Boon Ching, the Court con-
confidential information are relevant con- trasted the liberal approach adopted in re-
siderations in judging whether the period of spect of restrictive covenants in the context of
restraint is reasonable. a sale of business with that adopted in the con-
text of an employee contract, and asserted
(b) Geographical area: that the disparity in bargaining power de-
mands a stricter approach in the context of
The rule with regard to the geographical restrictive covenants in contracts of employ-
area / territory of a restrictive clause is that ment.
the area should be co-extensive with the
protection of the legitimate interests of the (b) Severance
employer.
Where the clause is considered too wide to be
Thus, a restriction without geographical enforceable, it may be possible to sever the
limit is generally not valid; an area must be clause if the part so enforceable is clearly sev-
clearly defined. erable, and even so, only in cases where theexcess is of trivial importance or merely techni- mation is confidential or secret and is not
cal and not part of the main substance of the already in the public domain;
clause. Furthermore, in such a case, the two
clauses must be intended to be two separate the employer’s belief above must be rea-
and independent obligations so that the part sonable;
severed does not change the meaning of the
part remaining. the information must be judged in the light
of the usage and the practices of the par-
(c) Remedies for breach ticular industry; and
The two primary remedies available to an the employer must limit the dissemination
employer who has suffered loss by reason of a of the information and not encourage its
former employee’s breach are: widespread publication.
injunction against said employee; and/or (b) Duration of a non-disclosure or confidential-
ity obligation
damages to compensate for the injury or
loss suffered. Note that as an alternative to There is no specified legal limit to the duration
damages, the remedy of an account of of a confidentiality obligation binding on an
profits may in some instance be available. employee after termination of employment. On
an application for an injunction restraining the
11. Confidentiality and non-disclosure: Pro- breach of a non-disclosure or confidentiality
tection of Employer’s proprietary interests obligation, if the court's view was that the pro-
after termination of employment tected information had lost its quality of confi-
dence with the passing of time or it was al-
(a) Confidential information ready in the public domain, then it would not
grant an injunction restraining disclosure.
An employee has a duty of good faith during
the course of employment. This includes an If the court took the view that the information
implied duty not to disclose confidential infor- ought to continue to be protected but for a
mation to persons who are not entitled to re- limited time, then it could grant an injunction to
PAGE 16
ceive it and not to make unauthorised use of prohibit disclosure for a specified further period,
trade secrets or confidential information for his based on what it considered reasonable in the
own benefit. particular circumstances. A confidentiality or
non-disclosure clause would not be void if it
This obligation of non-disclosure or confidential- was for an indefinite period or for a period the
ity continues after the employee has left the court considered excessive, but it would be
employment of the employer. However the enforced only for the period the court held was
obligation is limited in scope after termination reasonable. In certain circumstances restraint
of employment. Only in so far as the informa- for an indefinite period may be reasonable.
tion is a trade secret or is highly confidential in
nature so as to amount to a trade secret can 12. Dispute Resolution
the employee who has left the employment be
restrained from disclosing or using it. (a) Mediation and Conciliation
An employee’s employment contract and/or a Aside from the usual dispute resolution avenues
termination agreement may provide that the (e.g. through litigation or arbitration), MOM also
duty of non-disclosure or confidentiality in rela- offers mediation or conciliation services for em-
tion to the employer’s confidential information ployment disputes.
survives the term of the employment. A clear
definition of confidential information should be In addition, the Industrial Relations Act (“IRA”)
included. offers employee-initiated tripartite mediation
conducted by a conciliation officer appointed
For contractual restrictions on disclosure of an by the Commissioner for Labour as a dispute
employer’s confidential information to be resolution mechanism to professionals, manag-
enforceable: ers, and executive employees earning not more
than $4,500 a month and who are members of
the information must be of such a nature a trade union which has not been recognised
that the employer believes would be injuri- by the employer (i.e. who do not enjoy collec-
ous to him if it were released; tive bargaining or limited representation rights).
An employer who fails to take part in the me-
the employer must believe that the infor- diation could be fined up to $5,000.(b) Labour Court (i.e. excludes other non-salary related work-
place grievances).
In individual cases, a Singapore employment
dispute which cannot be resolved amicably Compulsory mediation, pre-ECT: compul-
through conciliation could be referred to the sory mediation conducted by MOM or
Commissioner for Labour (Ministry of Manpower) MOM-approved mediators before claim-
(also known as the Labour Court, which func- ants cases are heard by ECT.
tions like a tribunal) for adjudication provided
the prescribed fee is paid and the claim satisfies Limit on claims amount: $20,000 per claim
the following criteria: ordinarily, but $30,000 per claim for claim-
ants who go through the Tripartite Media-
the employee is covered by the EA; tion Framework or MOM conciliation pre-
scribed under the IRA.
the claim must relate to matters arising
within 1 year from the date of lodging the Time limit to file claim: within 1 year from
claim; and date on which claim arises, or if employ-
ment has ceased, within 6 months of end of
if the employee has left the employment, employment.
the claim must be lodged within 6 months
of leaving the employment. 13. Industrial relations
Awards made by the Commissioner for Labour, (a) Industrial relations legislation
for successful salary claims, will be capped at
$20,000. An appeal can be made to the High Industrial relations are relatively stable in Singa-
Court, within 14 days of the decision or order of pore - the country has been virtually strike-free
the Commissioner for Labour. Professionals and for decades. A key feature of Singapore indus-
executives wishing to claim higher amounts will trial relations is the concept of ‘tripartism’,
still have to pursue their claims in the civil courts which refers to workers (through unions), em-
through normal litigation. ployers (through employer organisations) and
the government, through the MOM, working
(c) Proposed establishment of the Employment together as collaborative partners.
PAGE 17
Claims Tribunal (“ECT”)
Freedom of association and representation is
It has been proposed that an employment guaranteed to all employees in the private sec-
claims tribunal be established to adjudicate tor by law. The main statutes are the Trade Un-
salary-related claims for all employees, includ- ions Act, which provides the formalities for the
ing professionals, managers and executives establishment of a trade union, and the IRA,
(“PMEs”) earning a basic monthly salary of more which sets out specific procedures for the ne-
than $4,500 whom the current EA does not gotiation of collective agreements and the
cover. Currently, these PMEs would have to go conciliation and arbitration of trade disputes.
to the civil courts to adjudicate their claims.
(b) Role of trade unions
The proposed ECT would be a tribunal under
the State Courts, similar to the Small Claims Tri- The major function of trade unions in Singapore
bunal, and is proposed to replace the Labour is to carry out collective bargaining, negotiate
Court’s role in adjudicating salary-related terms for collective agreements and to repre-
claims. The proposed key features of the ECT sent members in resolving industrial disputes.
are as follows: Under the Trade Unions Act, trade unions must
register with the Registrar of Trade Unions. Any
Who the ECT covers: ECT will handle salary- person above the age of 16 may be a member
related claims for all employees (including of a registered trade union (with the exception
rank-and-file workers and PMEs) who have of certain groups of government employees).
an employment contract with their employ-
ers, regardless of their salary level. Public (c) Collective agreements
servants, domestic workers and seafarers
will be excluded, although this may change Under the IRA, collective agreements have to
once ECT operations have stabilised. be certified by the Industrial Arbitration Court
(“IAC”). In this case, they are binding on the
Types of claims covered: Statutory claims employer (or its successor) and the relevant
provided for in employment legislations and trade union and its members. The term of the
salary-related claims expressly provided in collective agreement cannot be less than two
monetary terms in employment contracts years and not more than three years. In theYou can also read
