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This report was printed from Parliament website.

Parliament No: 8 Session No: 2 Volume No: 65 Sitting No: 1 Sitting Date: 01 -11 -1995 Section Name: BILLS Title: EMPLOYMENT (AMENDMENT) BILL MPs Speaking: Dr (Minister for Labour); Encik Othman Bin Haron Eusofe; Mr ; Mr Chin Harn Tong; Mr ; Mr Stephen Lee Ching Yen; Mr Tan Soo Khoon (Mr Speaker);

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EMPLOYMENT (AMENDMENT) BILL

Order for Second Reading read. 1.48 pm

The Minister for Labour (Dr Lee Boon Yang): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Employment (Amendment) Bill before the House today seeks to amend the Employment Act with consequential amendments to the Industrial Relations Act.

Sir, last year, a Tripartite Review Committee comprising representatives from the Singapore National Employers Federation (SNEF), the National Trades Union Congress (NTUC) and the Goverment was set up to review the Employment Act. The Committee was chaired by the then Minister of State for Labour, Mr Goh Chee Wee. The Committee adopted the following terms of reference:

(a) Review the provisions in the Employment Act which have become irrelevant and not kept pace with the changing needs of employers, workers and the economy;

(b) Review the provisions in the Employment Act which cause rigidities in the labour market and hinder company restructuring; and

(c) Recommend changes to the Employment Act to address the issues reviewed.

After some six months of careful study and thorough discussion, the Tripartite Committee was able to make extensive recommendations to modify and improve the existing Employment Act.

Subsequently, Government accepted the recommendations made by the Committee. This Employment (Amendment) Bill has incorporated the Committee's recommendations with some refinements added since the Committee completed its deliberations. The refinements are the result of the extensive feedback received by my Ministry from both employers and unions representing workers regarding the implementation of

Column: 41 some of the proposed amendments. Consequential amendments to the Industrial Relations Act will also be needed to bring it in line with the amendments to the Employment Act.

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The proposed amendments in this Bill will bring the provisions of the employment and industrial relations laws up-to-date. By passing this Bill, you will help to make our employment laws more responsive to the changing economic and business conditions and better suited to future developments.

The House will note that this Bill covers many areas. Since the technical and minor details of the Bill have already been covered in the Explanatory Statement to the Bill, I propose to address only the key issues.

New definitions and applications of rate of pay

First, let me deal with the new definitions and applications of rate of pay. Clause 2 of the Bill introduces two new definitions - "basic rate of pay" and "gross rate of pay" to replace the existing "rate of pay" and "ordinary rate of pay" used in the current Employment Act for the purpose of computing statutory payments. This arose from the Tripartite Committee's recommendation to rationalise the basis for computing statutory payments to employees.

The two new definitions of "basic rate of pay" and "gross rate of pay" will provide a clear and unambiguous basis for payment for overtime work, work on rest day or public holiday and payment for approved leave. This amendment will prevent unnecessary disputes between employers and employees on the types of allowances which should be included for the purpose of computing the various statutory payments.

Sir, under the proposed amendment, "basic rate of pay" refers to the total remuneration excluding all allowances, overtime payment, bonus, annual wage supplement, reimbursement of special expenses and productivity incentive payments. The "basic rate of pay" shall be used to calculate payment for overtime

Column: 42 work under clause 13, work on a rest day under clause 12, and for payment on a public holiday under clause 15. The rationale for paying only the basic rate of pay for these occasions is that, under the current law, employees are already entitled to a higher rate of compensation for overtime work and work on rest day or public holiday. For example, an employer is required to pay an employee a minimum of 1.5 times the hourly rate of pay for overtime work and 2 days' pay for work on a rest day.

The second new definition "gross rate of pay" refers to the total remuneration including allowances except for overtime payments, bonus payments, annual wage supplement, travelling, food and housing allowances, reimbursement of special expenses and productivity incentive payments. It shall be used as a basis for computing payment in lieu of notice of termination under clause 3, salary deduction for absence from work under clause 8, payment for public holidays under clause 15, annual leave under clause 16, sick leave with hospitalisation under clause 17, and maternity leave under clause 27. The rationale for including allowances for these payments is that employees should not suffer a cut in their normal expected income as these are benefits earned in the course of their employment and their absence from work had been sanctioned or approved by their employers.

Sick leave where hospitalisation is not necessary

Sir, in the case of outpatient sick leave, the Tripartite Review Committee originally proposed that allowances should also be paid. However, employers have expressed concern that granting shift allowance to workers who are on outpatient sick leave would defeat the purpose of this allowance which is to motivate them to come to work on unpopular shifts. This is particularly so in the case of

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process industries which pay a sizeable shift allowance to ensure that their employees do not absent themselves from work when they are scheduled to work on unpopular shifts. While going on sick

Column: 43 leave is a valid reason for an employee to stay away from work, there is concern that if this becomes rampant and workers stay away at the slightest feeling of discomfort, it would cause severe disruption to the shift work schedule. It would also be unfair if such workers continue to receive their shift allowance while their more responsible colleagues have to cover their duties in their absence. Replacements may also be necessary and the employer may have difficulty in getting relief workers at the last minute, apart from having to incur additional cost.

Sir, to address such concern, clause 17 will allow shift allowance to be excluded as a statutory payment for workers on outpatient sick leave. Notwithstanding this, employers and employees or their unions could work out mutually agreeable rules under which the workers could still be paid their shift allowance when they are on outpatient sick leave. My Ministry, together with NTUC and SNEF, has formulated a set of tripartite guidelines regarding the circumstances under which employees should be paid their shift allowance while on outpatient sick leave. For example, an employee who is diagnosed to have contracted an infectious disease would have to stay away from work and therefore should not be penalised for taking outpatient sick leave. The guidelines will be issued by my Ministry after the Bill has been passed.

Recovery of compensation for unfair dismissal

Sir, clause 4 introduces a new subsection 7A to section 14 to enable the Court to recover compensation due to an employee whose employer has been found guilty of failing to comply with a Ministerial Order. This means that a worker who had been wrongfully dismissed would still be able to recover his compensation even if the employer defaults on the Ministerial Order.

Transfer of employees

Sir, I now come to the matter of transfer of employees. Clause 6 of the Bill

Column: 44 concerns the transfer of employees. In a fast changing business environment, companies may need to restructure their operations to remain competitive. Restructuring could involve the redeployment or transfer of employees to an associated company, a subsidiary or a new company. Currently, the Employment Act allows employers to redeploy their employees within the same company. However, it is silent on the rights and obligations of the employers and employees in the transfer of employees to another company, including an associated company or a subsidiary. The common law viewpoint is that the consent of the affected employees must be sought to effect the transfer as this involves a change of employer which is a different legal entity. This could lead to protracted negotiations between the employers and employees or their union, causing damaging delays to a company's genuine restructuring exercise which could in fact have enhanced the employees' long-term job prospects.

Sir, I would like to cite three examples where due to the absence of a clear legal framework on the rights and obligations of employers and employees in a transfer of employees to a different legal entity, protracted negotiations had taken place and company restructuring had been unnecessarily delayed or hindered.

The first involved a fairly sizable local group of companies. As part of its business strategy to be more competitive, it decided to restructure its operations and set up a subsidiary to operate part of its supporting services. The restructuring involved the hiving -off of a major supporting service division

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and resulted in about 3,000 employees having to be transferred to the new subsidiary. However, disputes arose between the employer and the employees and their union on the need to obtain individual employees' consent to be transferred to a separate legal entity within the group. Bear in mind that about 3,000 employees were involved in such a transfer. There were also differences on whether there was redundancy in such a situation and whether compensation should be paid. No agreement could be reached between the

Column: 45 company and the union on the transfer despite many rounds of negotiations. Come the actual date of the commencement of the new subsidiary, instead of carrying out a transfer, the company had to second the affected employees to the new subsidiary en bloc. And it was almost two years later that a new collective agreement package could be worked out between the company and the union representing the 3,000-odd employees who were transferred. The seconded employees were finally absorbed as the direct employees of the subsidiary.

A second example was that of an electronics firm which sold one of its operating divisions to another company. The union of the workers involved objected to the transfer on the ground that the company had no right to sell the business together with the employees without getting their consent. The employees were unhappy that they would be relocated to work at another place which was some distance away from their usual workplace. After much negotiations and considerable delay, the workers finally agreed to the transfer with payment of a relocation incentive.

A third example involved the acquisition of a company by a larger company. Following the acquisition, the new owner embarked on an exercise to streamline its operations. However, it encountered difficulties in transferring the employees among its various subsidiaries in the group. The group went through much negotiations with the union before a settlement was reached where payments were made to the affected employees in exchange for the right to transfer them to different companies within the group.

Sir, from these three examples, Members can see that there is a need to address the legal position on the transfer of employees so that companies which need to restructure to cope with changes in the business conditions and retain their competitiveness could do so expeditiously.

Clause 6 hence introduces a new legal framework whereby the employment contracts of the employees of the transferor,

Column: 46 ie, the original employer, are transferred together with the transferor's business so that the transferee, ie, the new employer, taking over the business is now legally recognised as the new employer. The transferee shall take on all the rights and liabilities in respect of the employment contracts of the affected employees.

Clause 6 also creates a duty for the transferor to notify affected employees of the transfer as soon as possible. The transferor is also required to state the reasons and the implications of the transfer, as well as the measures which may be adopted in relation to the transfer of employees. To allow time for negotiation between an employer and employees or their union representing these workers to take place, adequate notice of an impending transfer should be given.

Sir, while agreeing that the law should permit employees affected by company restructuring to be transferred to another company, we must also protect workers from being deprived of retrenchment benefits under the guise of restructuring. It would be unjust if workers give up their claims for retrenchment benefits only to be transferred to a company which lacks the means to meet its obligations as their new employer. We have therefore provided safeguards to protect workers'

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interests and to prevent abuse by employers. Firstly, continuity of employment of the affected employees must be preserved. Secondly, their existing terms and conditions of employment remain unchanged. Thirdly, the Commissioner for Labour is empowered under clause 6 to stop or delay the transfer of employees involved or to order the transfer to be on such terms as the Commissioner considers fair. This will effectively provide an avenue for workers or their unions to seek protection from an employer who tries to take advantage of the restructuring provision at workers' expense.

As a transfer may involve unionised employees, the Industrial Relations Act will also have to be amended to allow an industrial dispute arising out of a transfer to be resolved through the existing dispute settlement machinery provided in

Column: 47 the Industrial Relations Act. This is provided for under clause 44. As in any industrial matter, a dispute relating to the transfer may be referred for conciliation by the Ministry of Labour and if conciliation fails, for arbitration in the Industrial Arbitration Court (IAC). The IAC may also stop, delay or impose certain terms for the transfer in order to safeguard the interest of the employees.

Sir, on the issue of union recognition after a transfer, clause 6 of the Bill also provides that where a trade union involved has majority representation of the employees of the transferee after the transfer, the transferee would have to recognise the union for the purpose of representing all the employees.

Work on rest day and public holiday

Next, I come to work on rest day and public holiday. Under the present Employment Act, every employee is entitled to a rest day in each week. What is not explicit is whether a rest day is a paid day. However, a study of the interpretation of "ordinary rate of pay" in the existing section 51 will show that a rest day is in fact not a paid day. This has been confirmed by a High Court decision. Clause 11 of the Bill therefore makes it clear and unambiguous that a rest day is a day without pay.

Clause 12 provides for the amount that is to be paid in respect of work done on a rest day. Presently, section 37 of the Employment Act requires an employer to pay two days' salary to an employee who is asked to work on a rest day. This means that the employer has to pay two days' salary regardless of whether the employee works less than his normal daily working hours on his rest day. This is not in line with the principle that remuneration should be commensurate with actual work done. An alternative would be to pay the employee based on the actual number of hours worked at twice the hourly rate of pay. However, this could also be unfair to some employees if they are required to work for only a few short hours but have to incur costs such as

Column: 48 travelling and food expenses, apart from the inconvenience of having to give up a rest day. As recommended by the Tripartite Review Committee, clause 12 provides that the payment for work on a rest day done at the request of the employer shall be:

one day's salary for work up to half the normal daily working hours; or

two days' salary for work exceeding half and up to the normal daily working hours.

This amendment removes excessive payment for work done on a rest day and, at the same time, favours those employees who are presently paid only at double their actual hours worked.

Restriction of 12 working hours a day

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Next, on clause 14. Clause 14 of the Bill seeks to empower the Minister to exempt an employee or any class of employees from the provision in the Act relating to the maximum number of hours that an employee may work in a day. Under the existing section 38(8), an employee is not permitted to work more than 12 hours in a day, including overtime work, except in circumstances like accidents, or work which is essential to the life of the community or for the purpose of national defence.

While the law aims to safeguard the employees' welfare, it is too restrictive and does not take into account the different nature of work of employees and the technological advances that have taken place over the years. For example, in the airline industry, the introduction of long-haul international flights exceeding 12 hours means that the cabin crew may on occasions have to work beyond the 12- hour limit as a matter of operational requirement. Under such circumstances, it is therefore not appropriate to apply this 12-hour limit strictly and rigidly to such employees. Clause 14 of the Bill thus empowers the Minister to exempt certain categories of employees from this provision. To safeguard the interests of workers, their health and safety will be considered before any such exemption is granted. Furthermore, appropriate rest breaks will be provided so that exempted workers need not work 12 hours at a stretch.

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Qualifying period for sick and annual leave entitlements

Sir, clauses 16 and 17 make amendments to the qualifying period for annual and sick leave entitlements. Presently, the law provides that an employee is entitled to pro-rated annual leave after the completion of his first month of service. In other words, after one month of service with a new employer, the employee is eligible for pro-rated annual leave. The Tripartite Review Committee was of the view that a new employee needs to undergo a period of probation for the purpose of training and learning, and that annual leave should be granted only after the probationary period. Clause 16 of the Bill therefore proposes that an employee must serve an employer for a period of three months before he is eligible for paid annual leave. After the three months' service, the employee will be entitled to pro-rated annual leave calculated from the day he has commenced work with the employer.

On the other hand, the Tripartite Review Committee had also recommended that the law should be updated to regularise an existing practice of employers to grant paid medical leave to employees upon their confirmation on the job which is usually between three and six months. Clause 17 of the Bill hence shortens the qualifying period for paid sick leave from 12 months to six months' service. In halving the qualifying period, the benefit to the employees is enhanced. Reducing the qualifying period for sick leave benefit to six months will also bring it in line with the six-month qualifying period for maternity benefit.

Provisions to govern part -time employment

Sir, I now come to the provisions dealing with part-time employment. Clause 21 deals with part- time employment. The law currently makes no distinction between full-time and part-time employees. This means that part-time employees are, in law, entitled to similar benefits enjoyed by full-time employees under the Employment Act. Employing part-timers will therefore be more costly

Column: 50 and this could well have deterred employers from employing them, thus reducing the opportunities for the economically inactive to re-enter the job market as part-time workers.

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In the proposed amendment, a "part -time employee" is defined as one who works less than 30 hours a week or such other number of hours as the Minister may prescribe. Most countries do not have a clear statutory definition of "part-time workers", but for the purpose of their national labour force surveys, part-time workers are commonly defined as those who work less than 30 hours a week. My Ministry also uses this 30-hour criterion in its Labour Force Surveys to identify part-time workers. The aim of clause 21 is therefore to facilitate part-time employment so that more employment opportunities could be created for housewives and retirees who wish to rejoin the workforce. Currently, part-time workers in Singapore only constitute some 3% of the total workforce which shows that there is still much room for improvement in this area. And we need to encourage employers to create more part-time jobs.

Since 1990, the Ministry has set out guidelines on part-time employment. These guidelines were drawn up after consultations with the National Trades Union Congress and the Singapore National Employers Federation. Statutory benefits such as annual leave, public holidays and maternity leave are prescribed in the guidelines based on the principle of pro-rating, taking into account a part-time employee's total contractual working hours compared to that of a full-time employee. The guidelines therefore take into consideration the need to safeguard the basic benefits of part-time workers while providing employers the flexibility to make greater use of part-time employment schemes. Employers are also allowed to encash certain benefits such as annual leave and public holiday entitlements. The tripartite guidelines have been implemented smoothly since 1990. Both employers and employees have no difficulties accepting the guidelines as they are based on equitable principles.

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Clause 21 thus empowers the Minister to make regulations pertaining to part-time employment. Upon enactment, the Ministry's intention is to have the 1990 guidelines legislated as regulations to govern part-time employment.

Employment of children in industrial undertakings

Next, I turn to employment of children in industrial undertakings. Clauses 24 to 26 amend the Employment Act pertaining to the employment of children. Presently, under section 69 of the Employment Act, no children below the age of 14 is allowed to be employed in any industrial undertaking which the Minister declares to be an industrial undertaking in which no child shall be employed. This would mean that apart from the industrial undertakings which have been explicitly prohibited from employing such children, other industrial undertakings can employ them. To safeguard the interests of children, the Employment of Children and Young Persons Regulations under the Employment Act disallow them from being employed in any industrial undertaking without the written permission of the Commissioner for Labour. A related provision in the law also allows exceptions to be made to children working under apprenticeship schemes approved and supervised by the Institute of Technical Education (ITE).

Several Members of this House have pointed out on previous occasions that such provisions are no longer relevant as children below the age of 14 years are now either pursuing their studies in schools or undergoing vocational training in the Institute of Technical Education. The Commissioner has also never approved applications for children to work in any industrial undertaking. In fact, the number of such applications had dropped from 12 in 1990 to six in 1992 and only three in 1994. None of these applications had been approved. Currently, trainees under the Institute of Technical Education's apprenticeship programmes are also all above the age of 14. The Government has

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therefore decided to remove the power of the Commissioner for Labour to grant such exemptions. By doing so, the employment of children below the age of 14 years to work in industrial undertakings will be completely prohibited and will serve as a clear signal that Singapore does not tolerate or condone child labour.

Commissioner's power to inquire into disputes

Sir, clause 38 removes the restriction on the Commissioners's jurisdiction to inquire into disputes only in respect of employees earning a monthly salary not exceeding $1,600. The Tripartite Review Committee was of the view that there is an anomaly in the existing Act in that while an employee who is earning a monthly salary of more than $1,600 is covered by the Act, he could not have his dispute adjudicated by the Commissioner for Labour. Currently, the Ministry could only help these employees to conciliate their disputes with their employers. However, if conciliation fails, the only recourse open to the aggrieved party is to take the case up in the civil courts on their own. This is costly and may be beyond the means of many employees. The amendment, therefore, will allow employees who earn more than $1,600 per month and are covered by the Act to pursue claims on their contractual terms and conditions of employment through the Commissioner's adjudication.

Finally, Sir, the Bill also proposes amendments in other areas. I will only briefly mention them. To rationalise the computation of salary payable to an employee for an incomplete month of work, clause 7 inserts a new formula for such calculations. Next, to extend maternity protection, clause 28 sets out the procedure for an employee, who considers herself unfairly dismissed within three months before her confinement, to appeal to the Minister. It also empowers the Minister to reinstate such an employee or to award compensation as he considers just and equitable to the wrongfully dismissed employee. A penalty clause for non-compliance of the Minister's direction under the section is also provided.

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The amendments also seek to facilitate investigation procedures so as to enable the Ministry's officials to enforce the provisions of the Employment Act more effectively. The powers of the Commissioner and inspecting officers are to be expanded. For example, clause 34 provides that statements made to the Commissioner or investigating officers may be recorded in writing and signed by the person making the statements and clause 39 makes amendment to allow inspecting officers to exercise their powers of investigation.

In conclusion, Mr Speaker, Sir, the amendments proposed in the Bill will ensure that the provisions of the Employment Act will continue to be relevant and meet the changing needs of employers, workers and the economy. The amendments will also remove the rigidities in the law and enable the growth of a more efficient labour market. As the amendments are mainly based on the recommendations of the Tripartite Review Committee and the results of in-depth consultations with employers and trade unions, I am confident that they can be implemented smoothly with support from both employers, employees and workers' unions.

Sir, I beg to move.

Question proposed.

Encik Othman bin Haron Eusofe (Marine Parade GRC): Mr Speaker, Sir, the Labour GPC supports the Bill.

Sir, as one of the Deputy Secretary-Generals of the National Trades Union Congress (NTUC), I was a member of the Tripartite Committee together with my Parliamentary colleague, Dr John ,

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Assistant Secretary -General of NTUC, Mr John De Payva, the Secretary -General of the Singapore Manual and Mercantile Workers' Union and a Nominated Member, and Mr Cyrille Tan, General Secretary of the United Workers of the Electronics and Electrical Industries. This Committee, as the Minister has stated, reviewed the Employment Act. The union team held many consultations and dialogue sessions with leaders and members of the unions and obtained

Column: 54 valuable feedback and proposals which were reflected in the discussions at the Committee. Workers' concerns and interests were therefore carefully and comprehensively examined by the Tripartite Committee. There were difficult issues to resolve in amending the provisions of the Act. We raised workers' concerns on issues of employment, job security, wages, terms and conditions of service and health and safety issues. There was a frank exchange on these issues in the deliberation of the Committee.

Sir, the union representatives stood firm when it was felt that workers' concerns were not fairly or adequately safeguarded. The Tripartite Committee was able to reach consensus on the proposed changes in a spirit of tripartite understanding and trust.

Sir, we understand that with increasing global competition, our companies will have to be restructured to remain viable and competitive. The present law does not spell out clearly the rights and obligations of the employers and their employees in a company restructuring exercise where workers are transferred from one employer to another. Without a proper and fair framework to allow the changes to be made quickly so as to maintain or even enhance our competitive position, there will be industrial disputes which will have severe repercussions on us. At stake will be the jobs of our workers. We are glad that the changes introduced in clause 6 of the Bill to introduce the new section 18A of the Act will provide a legal framework which can help address workers' concerns equitably, to see that their terms and conditions of service are adequately safeguarded.

Sir, the amendments will require the employer to give the following information when there is a transfer of the business and employees:

(a) The reasons for the transfer and when it will take place;

(b) How the transfer will affect the employees and what plans the employer has for them; and

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(c) What plans the new employer buying over the employer's business has for the employees. The new employer will have to provide information to enable the existing employer to fulfil his obligation to the employees.

Sir, as the Minister has stated, in case of dispute there is provision for either party, ie, the employer or the worker or the union which represents the worker, to refer the case to the Ministry of Labour. If the dispute remains unresolved, reference can be made to the Industrial Arbitration Court.

Sir, as regards the basis on which pay is to be calculated, the present definition of "rate of pay" and "ordinary rate of pay" is unclear, and has given rise to interpretation problems. With the establishment of the two new bases of calculation for the rate of pay, I think the position will be clearer and disputes can be avoided.

On part-time employment, we were covered by the guidelines on part-time employment issued in 1990. These guidelines have worked well and therefore including them in the Employment Act is

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welcomed as it will now make the guidelines legally enforceable.

Sir, on the amendments to sections 68 and 72 of the Act to prohibit the employment of children in an industrial or non-industrial undertaking, the need to amend the law on child labour was taken up by my colleagues in the NTUC for several years. I am glad that the Ministry has now agreed to amend the law to provide that a child may not be employed in an industrial or non-industrial undertaking except in the circumstances specified in the amended section 68.

Sir, I think the Bill will improve the Act and on this note, I support the Bill. 2.28 pm

Mr Chin Harn Tong (Aljunied GRC): Mr Speaker, Sir, I rise to comment on the Employment (Amendment) Bill, which is of interest to many Singaporeans besides the employers and the workers who are

Column: 56 affected by it. The standards or principles enshrined in the Bill may be benchmarks for employment contracts outside the scope of the Employment Act.

Sir, clause 6 of the Employment (Amendment) Bill dealing with the transfer of employment is, I think, good news for the workers as it brings along with it an overdue change of wind. The existing section 18 of the Employment Act was originally lifted out of context from some British legislation in 1968. Since then, the original British legislation has changed beyond recognition while our section 18 remains uncorrupted and undefiled by changes.

Nonetheless, during these past 27 years, this section 18 does serve to some extent the purpose it must have been intended for. Section 18 is, if I may say so, a rather puzzling provision. It holds a lot of promise of protection for workers, but it falls short when it comes to actual delivery.

Clause 6 of the Bill introduces a new section 18A which, in a manner of speaking, fits the formerly toothless section 18 with a brand new set of dentures. I should think these dentures will give workers a better bite on their terms of service during a transfer of employment , unless they meet with a very tough nut of an employer.

I am very much concerned with the probable effect of the proposed subsection 12 of the new section 18A, which enables a new employer and a transferred worker or his trade union to agree to "different" terms of service. In this context, if I am not mistaken, "different" can mean either "more favourable" or "less favourable" than the terms of service enjoyed by the worker before the transfer.

It may seem reasonable to let market forces prevail as the employer and the worker or his union should know what terms of service are best in their own mutual interest. One problem is that a transferred worker may be particularly vulnerable at the time of transfer of employment . Even with full employment, a worker in his 40s or 50s and having skills

Column: 57 or experience no longer in demand in other places of work will definitely not be mobile enough to be able to bargain. Faced with the prospect of premature retirement when he has many years of active working life left in him, a worker may have to knuckle down to the new employer's offer of inferior terms of service.

True, no one physically compels the worker to accept the unfavourable terms of service, except the impersonal coercion of market forces. I am very much concerned that the new section 18A(12) may serve as a backdoor for an employer wanting to cut his workers' pay and other benefits. The

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employer only has to transfer his business from one company to another company. It is a ploy that has been used, is being used, and will continue to be used. It would be preferable if the new section 18A(12) has been couched in a more positive form, as in clause 19 of the Bill, where the amended section 53(3) provides for employers and workers to agree to more favourable terms of service relating to leave.

It is one of the few negative features in an otherwise commendable Bill. One other negative feature I will touch upon is the splitting of the "rate of pay" into "basic rate of pay" and "gross rate of pay". Granted that the expressions "rate of pay" and "ordinary rate of pay" have given rise to rather unbreakable bones of contention between employers and trade unions, the underlying cause of the disputes may not lie in the expressions themselves. The attitude of the parties to the disputes may be also a factor.

Whatever the reasons for the disputes, I think the introduction of a basic rate and a gross rate may serve to muddy further the water of industrial relations. The difference between the two rates seems to be that the gross rate includes all allowances other than travelling, food or housing allowances while the basic rate excludes all allowances.

I should have thought the expression "rate of pay" is meant to be an objective definition for the guidance of persons

Column: 58 affected by the Employment Act. Sir, in the same way, a "speed limit" is meant as a guidance for road users. Just imagine the utter confusion on the road if there is a basic speed limit for economy cars and a gross speed limit for petrol-guzzlers.

Of course, the comparison is not quite appropriate. My point is that the Ministry of Labour may be tackling the problem from the wrong end. As I see it, the problem of deciding which of the allowances to be included in the rate of pay for work at different times or days cannot be settled through friendly negotiations. This is understandable, as even spouses cannot always see eye to eye. Therefore, legislation has to be invoked to cut through the tangle.

I should have thought it would have been more logical to spell out the circumstances when and what allowances are payable, without changing the "rate of pay". As clause 43 of the Bill enables allowances to continue to be paid, if they have been so negotiated, even if contrary to the Bill, an anomalous situation may arise in future. Two workers doing identically the same kind of work in the same kind of circumstances may have different rates of pay. One may enjoy a statutory rate and another a negotiated rate.

Instead of a single "rate of pay", we now have a "basic rate of pay", a "gross rate of pay" and a "negotiated rate of pay". It will be difficult, if not impossible, to talk about the rate of pay in a particular company or industry because the Employment Act in future will not even define "rate of pay" without qualification.

However, other than the two negative features I have pointed out, I think the Employment (Amendment) Bill is a timely piece of legislation.

Mr Low Thia Khiang (In Mandarin ): Mr Speaker, Sir, clause 28 of this Amendment Bill empowers the Minister to order the employer to re-employ those female workers who were unreasonably dismissed just before they were due to deliver their babies. This is a protection for the married career women. However, the Bill also stipulates that the Minister's decision on such matter shall be final,

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and the female workers who were unreasonably dismissed will not have legal recourse against their employers irrespective of how much hardship they have suffered.

Clause 28(5) even went to the extent of stating that so long as the Minister ruled that the female worker had been unreasonably dismissed and ordered that the employer should take her back, it would amount to depriving the said worker of her right to sue the employer for damages in court. I really do not know whether this provision is meant to protect the employee or the employer! More seriously, this provision deprives the female worker who has been unreasonably dismissed of her legal rights. I am against this provision.

Clause 12 of the Bill states that if an employee volunteers to work on a rest day and if the number of hours worked is not more than half the number of working hours in a normal working day, then the employer needs to pay only half a day's basic salary to the worker. If he works more than half the number of working hours in a normal working day, then the employer will pay one full day's basic salary.

Although there is a similar provision in the existing Employment Act, I understand that the practice is such that when a worker works on a rest day, he is paid double that of the normal rate of pay. Why should we make provision in this Amendment Bill that in certain circumstances, the employee cannot enjoy double pay when working on his rest day?

I would like to ask the Minister when this provision will apply whereby an employee who works on a rest day is not entitled to double pay. Will this be abused by employers to exploit the employees and is it really necessary to have such a provision?

Mr Speaker, Sir, although this amendment has raised the salary ceiling of coverage from $1,250 to $1,600, a worker whose salary exceeds $1,600 will have no avenue of recourse if he is unreasonably

Column: 60 dismissed, or is dismissed without appropriate compensation under the Employment Act. Although he can instruct a lawyer to sue his employer in court, the legal cost may well exceed what he can claim from his employer. As such, he will have to settle the matter by leaving it unsettled. So for those people whose salary is neither too high nor too low, it is very unfair.

I would suggest that the Government consider setting up an Employment Arbitration Court to deal with matters which are now left to the discretion of the Minister and the Commissioner for Labour, and allow individual workers to refer their complaints to the Employment Arbitration Court. At the same time, the parties shall not be allowed to engage lawyers for the arbitration proceedings.

Although some provisions are made in this Amendment Bill to clarify the existing Employment Act, a number of provisions in this Bill can actually do more harm than good. I do not support the Bill.

Mr Stephen Lee Ching Yen (Nominated Member): Mr Speaker, Sir, the amendment before the House today is to update the Employment Act and to remove provisions in the Act that give rise to rigidities in the labour market.

I rise to support the amendments as they will help to ensure that Singapore keeps pace with the changing needs of the employers, employees and the economy. In particular, I would like to comment on two key areas of review, namely, the provisions for company restructuring and part- time employment.

Firstly, company restructuring. The business environment today is characterised by rapid product

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changes, customer -driven environment and intense global competition. Enterprise needs to be nimble and agile to respond to the challenges of the market. It is especially true for a small and open economy like ours. Employers should be free to restructure and to determine the appropriate organisational structure and the size of the workforce needed for the enterprise. The interest and welfare of employees should at the same time be

Column: 61 protected in the process of corporate restructuring. Setting up of a legal framework to regulate the transfer of employees in a company restructuring helps to achieve these objectives.

The rights and obligations of employers and unions have been spelt out more clearly under the amendment to the legislation. An important principle of the amendment is to preserve the continuity of the period of employment of the transferred employees. The amendment also requires the transferor to inform and share relevant information which could affect the employee. It is important that unions and employees be properly informed of the rationale and features of corporate restructuring as soon as possible. This will help to allay any possible fears and ensure that the process of corporate restructuring is smooth and not long drawn.

Secondly, let me turn to the guidelines on part-time employment. The Ministry of Labour in its attempt to encourage part-time employment had in August 1989 introduced guidelines on part-time employment. These guidelines provide the flexibility to pro-rate certain benefits and the encashment of annual leave and public holidays in the form of higher wages. Employers have found these guidelines to be helpful and practical. However, since these are administrative guidelines, they cannot be enforced by the Ministry of Labour. I therefore welcome this move to have the guidelines formalised as regulations under the Employment Act. This would help to spell out clearly the rights and obligations of employers and employees to facilitate part-time employment. I hope that this would encourage more employers to recruit more part-time workers to address their labour shortage problems.

Mr Speaker, Sir, I support the amendments to the Employment Act. I believe they will help to remove rigidities and ambiguities and keep the Act relevant in the changing environment of the labour market.

In concluding, let me commend the Ministry of Labour for setting up the

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Tripartite Review Committee which led to the formulation of the amendments before the House today. They therefore reflect the consensual view of the tripartite partners. 2.47 pm

Mr Charles Chong (Eunos GRC): Mr Speaker, Sir, thank you for allowing me to join in the debate.

Sir, I support the amendments moved by the Minister. But I would like to seek clarification on the provisions relating to the transfer of employees. Sir, I suspect that one of the three cases quoted by the Minister during his Second Reading speech may be applicable to the company I work for. If this is indeed the case, then I would like to declare my special interest.

Sir, I would like to ask the Minister for Labour to clarify that the legal framework introduced by the new section 18A applies only when a business or part of it is sold as a going concern, or where there is a merger or restructuring of a business; the new law does not cover the following situations: (1) transfers among existing companies, whether within or outside the group, where no sale of business is involved; (2) where only assets but not the business of the company is sold; or (3) in

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situations of transfers to companies outside Singapore which would mean a change in the contract of employment, and that in all these cases, the employees' consent and agreement will continue to be required.

Sir, I would be grateful to hear the Minister's clarification on these issues.

Dr Lee Boon Yang: Mr Speaker, Sir, first, I would like to thank the Members who spoke in support of this amendment. I would also like to take this opportunity to thank Mr Othman Haron Eusofe who led the trade union delegation on the Tripartite Committee to review the Employment Act and also Mr Stephen Lee who led the employers' delegation. I think both Mr Othman and Mr Stephen Lee, together with their respective members on the Committee, demonstrated a strong commitment to strengthening the spirit of mutual understanding and cooperation

Column: 63 between employers and employees in Singapore. Their ideas and contributions made it possible for these wide-ranging amendments to the Employment Act which will reinforce the fabric of our industrial relations climate in Singapore. And, here, I must add that this is an important aspect of our attractiveness as a global business centre to have this non-confrontational harmonious industrial relations climate. And anything that we can do to further strengthen it will be an added advantage to our overall economic competitiveness.

May I now turn to some of the concerns raised by Members? Mr Chin Harn Tong commented on clause 6 which introduces a new section 18A to provide a legal framework for the transfer of employees. His concern is that the new section 18A(12) may result in some employees being disadvantaged, particularly the older employees who are in the age group of 40 to 50 years may not be able to drive a good bargain with the transferee, that is, the new company that is going to take over the employment.

Let me reassure Mr Chin that the new section 18A(12) is, in fact, intended to allow negotiations between the transferee and the employees or the union to proceed whereby they may be able to arrive at a mutually agreeable new set of terms. I would imagine that it would be very difficult to get a trade union or a group of employees to agree to accept disadvantageous terms in view of a transfer when they know full well that if they have any disagreement, they can go to the Ministry of Labour and seek the assistance of the Commissioner for Labour to conciliate and adjudicate on their behalf to ensure that their interests in the transfer will not be overlooked and that they will not suffer as a result of the transfer. So, in fact, the new section 18A(12) only creates flexibility for both parties, the employees and the transferee, to come to an agreement when there is a reason for varying the terms and conditions of the employment contract which is being transferred, or of the collective agreement which will now take effect in

Column: 64 the new company. I would imagine that such flexibility is necessary because we cannot predict entirely what would happen in the future in terms of the economic conditions under which transfers will take place.

The law should, therefore, not be so rigid as to say that no variation is permitted. We should, in fact, allow employees and their representatives to negotiate with the transferee and, where appropriate, obtain a better set of conditions, failing which their existing terms of employment will continue to prevail. That is provided for in the new section 18A where workers will be transferred over to the new company on the same terms and conditions of employment as they were under their old employer. So I think the new subsection (12) is a positive and not negative feature, as Mr Chin has pointed out. I think it is a positive feature for employees, whether they are young or old, and it allows them flexibility to negotiate for better terms with the new employer.

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Mr Chin also commented on the new definitions of "basic rate of pay" and "gross rate of pay". He asked whether it is necessary to have these two new definitions. Let me clarify. There have always been two different definitions. One is the "rate of pay" and the other is "ordinary rate of pay". Under the existing Act, the "rate of pay" is defined as the total amount of money, including allowances, which an employee is entitled under a contract of service, but excluding overtime payment, travelling, food and housing allowances, bonus and annual wage supplement and any other reimbursement for expenses incurred in the course of work. And it has always been used to compute payment for overtime work. Whereas the existing "ordinary rate of pay" is defined as the total amount of money, including cash allowances, in respect of work done under a contract of service. It has the same list of exclusions. It is used for computing payment for public holidays, annual leave, sick leave, maternity leave, work on rest day and public holiday and payment in lieu of notice of termination and salary deduction

Column: 65 for absence from work. So there have always been two rates of pay in the Employment Act.

The Tripartite Committee recognised that the present definitions are sometimes confusing and they have given rise to disputes between employers and employees over which allowances ought to be included and which should be left out. We should also bear in mind that when the Employment Act was enacted in 1968, only a few types of allowances, such as meal allowances, housing and transport allowances, were common in those days. Whereas over the years, there has been a proliferation of allowances provided by employers in order to be able to recruit employees from a tight labour market and also to retain and motivate their employees.

A survey conducted by my Ministry showed that there are about 72 types of allowances paid by employers either to compensate employees for hardship and inconveniences or to motivate them to continue to work at a high level of productivity. These allowances have been introduced to meet specific circumstances within the company, whether it is to recruit or retain the employees. The employers had pointed out that it was never intended that allowances should be included for payment for overtime work, work on rest day and public holiday. Hence, the Tripartite Committee recommended that we adopt a clearer definition and so we adopt two new terms, "basic rate of pay" and "gross rate of pay", which should be clear in themselves and would put a stop to future disputes between employees and employers over what allowances should be included for calculation of statutory payment. And I believe that the Tripartite Committee's recommendation is sensible. We have included it in this amendment because it will help to clarify the situation for both employees and employers. I think it would certainly prevent disputes in the future.

Let me now turn to Mr Low Thia Khiang who said that he did not support the Bill. But all he could point out were two features which he was unable to support.

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He did say that there were other provisions in the Bill that he did not support but he did not touch on them. The two points that he brought up concern maternity benefits. He was concerned that, under clause 28, when the Minister had given a direction in a case where a person had been dismissed without sufficient cause, the Minister's decision under the new section 84 shall be final and shall not be challenged in Court. He asked why it shall not be challenged in Court. It has been a feature and a cornerstone of our industrial relations law that we try to achieve conciliation or adjudication to settle disputes between employers and employees with minimal confrontation. As a result, disputes that are being heard in a Labour Court are heard in the absence of lawyers to minimise the amount of confrontation and to make the procedure much simpler for the laymen, namely, the workers themselves, to understand what is going on and to ensure that their interests will be given a full airing and they will be protected.

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It is for this reason that we have a provision whereby the Minister's ruling on cases of dismissal shall not be subject to future challenge so that the matter can end once it has been referred to the Ministry for conciliation and adjudication. Otherwise, we would have a case where employees would go to the Ministry to seek assistance and if they were not satisfied, they would carry on the process of confronting their employers or trying to seek remedy in the Court and continue the dispute with their employers. And I think this is not desirable, in the interest of trying to preserve a harmonious industrial relations climate, to have such a dispute dragged over a long period in the courts. What we have provided is a mechanism whereby employees can go to an independent party, in this case the Ministry of Labour, and he will get a fair hearing. If he has any dispute, we will assist him to resolve it with his employer. In exchange, he forgoes the right to take up the same issue in the Civil Court. But of course, if he has no faith or confidence in the Ministry to safeguard his interest, there is nothing in law that will stop him from taking up his case directly to the court in the first

Column: 67 instance to sue the employer if he so chooses to, or if he thinks that he can seek a better remedy or get a better compensation, he should proceed. But if he comes to the Ministry of Labour where he does not have to incur any cost and he can expect an expeditious settlement, then he must submit himself to the condition that he will allow the Ministry to make the final decision and not pursue the matter further. And in the process, this would help to build up a harmonious industrial relations climate by minimising all kinds of disputes.

I think this is an entirely workable approach. We have had this in the legislation for many years, and we should continue to abide by it, because it will help us to strengthen the relationship between employers and employees.

Mr Low also suggested the setting up of an employment arbitration court to handle disputes. In fact, as I explained a moment ago, we do have such a system for all employees who are covered by the Employment Act. And the effect of this amendment is that white collar workers who are earning salaries above $1,600 will also be able to seek conciliation and adjudication at the Ministry of Labour over disputes with their employers on the contractual provisions in their terms of employment. So we have now made it possible for them to seek conciliation. Whereas in the past, workers who were earning salaries below $1,600 were not able to seek such adjudication by the Commissioner for Labour. In effect, we have already provided a system whereby employees who are covered by the Employment Act will be able to seek expeditious settlement of their disputes with their employers. And I do not think there is a need to set up an employment arbitration court.

Of course, where disputes concern unionised employees, then apart from applying for conciliation at the Ministry of Labour and for adjudication in the Labour Court, they could also take their disputes to the Industrial Arbitration Court which will deal with them at a higher level.

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Mr Charles Chong asked whether under the new section 18A which provides the legal framework for the transfer of employees, it will cover a case where there is actually no sale of business and employees are just being sent over to a new company, or where the so-called restructuring only involves the sale of certain assets to a new company, or a company is intending to transfer part of its operations outside Singapore. Let me assure Mr Chong that in such cases where there is no sale of business but only a transfer of assets is involved and where the transfer of business concerns a company outside Singapore, then employees cannot just be transferred under the provisions of the new section 18A. What we have said here is that there must be a genuine business restructuring. There must be actual sale of the business or part of the business as a going concern and that the

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transferee, the new employer, will be taking over both the business and the employees. Under such circumstances, we can foresee that for the employees, there will not be any disruption in employment. They will just move over to work for the new employer. Therefore, there is no risk of them being jobless for a period of time. Hence the question of retrenchment and retrenchment benefit should not arise. That is why we have provided for a legal framework to enable a business which is undergoing restructuring to do so expeditiously. I hope that settles the Member's concern in this matter.

Sir, I believe I have responded to the queries.

Mr Low Thia Khiang: Sir, I need to seek clarification from the Minister. The Minister has not replied to my query on clause 12 which amends section 37. He says that under the new section 37(3), an employee who at the request of his employer works on a rest day shall be paid for that day only a sum at the basic rate of pay for one day's work. Why is it necessary to have this and under what circumstances would this section apply?

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Second clarification. Why is it necessary to have clause 28 which amends section 84? The new section 8(5) says:

'Any direction of the Minister under subsection (3) shall operate as a bar to any action for damages by the employee in any court in respect of the dismissal without sufficient cause ...'

Does this not deprive an employee's right to seek redress in a court?

As regards employees who earn $1,600 but who are not covered under the Act, it would be difficult for them to seek redress if they have disputes with their employers and they have to engage lawyers. Would the Minister also consider a certain framework for these workers, say, in the salary range of $2,000 as it would be difficult for them to engage lawyers?

Dr Lee Boon Yang: I am sorry, Mr Speaker, I forgot this point about work on rest day. This matter was extensively discussed at the Tripartite Review Committee. Both the employers and the trade union representatives agreed that in the case of an employee who has been asked to work on a rest day, the present formula of paying two days' pay for work regardless of how long the employee is expected to work is not quite consistent with the concept that payment of wages or salary should be commensurate with the work done. At the same time, both employers and trade union representatives also recognise that, as I explained in my Second Reading speech, there will be occasions where an employee is asked to come to work on a rest day, and all the employer needs him is for a very short period, maybe 2-3 hours or even less. In the meantime, the employee would have incurred travelling expenses and he may have to have a meal and will suffer the inconvenience of having to work on a rest day. Therefore, to pay on an hourly rate, which some employers in fact today pay on an hourly rate, is also not fair.

So both employers and trade union representatives on the Tripartite Review Committee agreed to adopt a cut-off point. If an employee has been asked to come to work and he works for less than half a day, then he should be paid one day's pay. Because, as I said, a rest day is not a paid day. But if he works for more than half a

Column: 70 day, then he should be paid the existing rate of two days' pay. This was agreed between the employers and employees. They have discussed this thoroughly. I think it is an entirely reasonable

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solution to balance the interest of both employees and employers.

The Member also referred to clause 28, ie, the new section 84(5) which says, "Any direction of the Minister ... shall operate as a bar ...". The reason for this, as I have explained earlier on, is that if an employee wants to take his or her dispute to the Ministry of Labour for expeditious settlement, there are certain conditions. And the conditions are that he or she abides by the decisions of the Minister and that there is a finality to the dispute. This is not to prevent an employee, a worker or a citizen from exercising his legal right. But it is a choice. It is an option open to them. If an employee wants to take this route of settlement where we will assure him of an independent and fair assessment, then he must abide by the rules, which is that at the end of the day when the Ministry makes a decision, he has to consider the case as settled and closed and he does not proceed with further litigations or any other court cases or suits. If we do not have such a provision, then everybody will take their case to the Labour Ministry and those who are not satisfied will carry on in the civil court. I think it is undesirable for us to have such a stream of litigations being dragged over a long period. It will sour up the relationship between employers and employees. The whole objective of conciliation and adjudication in a Labour Court is to settle disputes expeditiously and with a minimal of confrontation and also to try to avoid serious damage to the industrial relations climate.

Sir, I thought I made it quite clear in my Second Reading speech that clause 28 removes the restriction on the Commissioner to inquire into disputes brought to the Ministry of Labour by employees whose salaries exceed $1,600. In fact, the Tripartite Review Committee also studied this problem that the Member mentioned, ie, whether employees earning more than $1,600 can avail themselves of the low cost and expeditious dispute settlement

Column: 71 procedures available at the Ministry of Labour. The current law does not allow it. But with this amendment, we will be able to help employees who are earning more than $1,600 and are covered by the Employment Act. There are certain categories of employees in Singapore who are not covered by the Employment Act. For instance, managerial and executive staff are not covered by the Employment Act, regardless of their salary. Managers carrying out managerial responsibilities will not be covered. But with this amendment, any other employees who are covered by the Act and who earn more than $1,600 will in effect be able to take their disputes to the Ministry of Labour and ask the Commissioner for Labour to help them to resolve their disputes. I believe that the Member's concern has been addressed here.

Mr Low Thia Khiang: Sir, a further clarification. Does the Minister agree that with this amendment, it is actually less favourable for an employee to work on a rest day as compared to the existing Act. Because the existing Act says that any work done at the request of his employer, he shall be paid one day's salary for one day's work. This is under section 37(2). The amendment says, "An employee who at his own request works ... if the period of work does not exceed half his normal hours of work," he will be paid only half a day's pay of the basic rate, which is less favourable than the existing Act. Why is this so?

Dr Lee Boon Yang: Mr Speaker, Sir, this refers to clause 12. As I explained earlier on, this matter of pay for work on rest day has been extensively discussed by the Tripartite Committee to review the Employment Act. The Committee concluded that the present arrangement is not entirely fair. The Member said that it is not advantageous for the workers. But as I pointed out earlier on, in some cases, workers who are asked to come to work on their rest day for a very short period are being paid by their employers on the basis of twice the daily rate of pay on an hourly basis. That is even more unfair. This practice exists and in the context of the

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Tripartite Committee, the members have discussed this and they felt that we should address this issue

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clearly and provide amendments that will prevent any dispute arising from employers asking their workers to work on their rest day. I think the proposed formula whereby an employee who is required to work for less than half a day will be paid a full day's pay and twice the rate for a normal full-day's work is an entirely fair arrangement both from the workers' and the employers' point of view. I think we should abide by this recommendation of the Committee.

Mr Low Thia Khiang: Clarification, Sir.

Mr Speaker: Mr Low, we cannot allow you to keep on seeking clarification. I will allow you one last clarification.

Mr Low Thia Khiang: Under the existing Act, it states that an employee who at his own request works for an employer on a rest day shall be paid for that day at not less than the ordinary rate for one day's work. That was the minimum that the Act specified. I am not aware of hourly payment. If they did it in the past, I think it is illegal, is it not, under the Act? So why did the Minister regularise this less favourable arrangement on overtime work under the amendment and say that he will be paid for only half-day's work rather than one day's work even on the same conditions under the existing Act.

Dr Lee Boon Yang: Sir, if in fact such a matter had been brought to the attention of my Ministry, we would have advised the employer and the employee on what would be the correct way to interpret payment for work on rest day. What I am saying is that we know that the practice does exist and unless it is brought to our attention which particular employer is adopting this approach, we would not be able to pursue it. But if, in fact, any employer had come to us for advice, we would have advised according to the law and if any employee had a dispute with the employer, we would have advised or adjudicated according to the law. But in the review of the Employment Act, this matter came up because it deserves some attention. The question is whether we want to have a new framework which will

Column: 73 equitably pay employees who are required by the employer to work on their rest day. The Committee had discussed this at great length. I am prepared to accept the recommendation of the Committee to adopt this new framework and I think it is a fair recommendation which we should abide by it.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Lee Boon Yang].

Bill considered in Committee; reported without amendment; read a Third time and passed.

Mr Speaker: Order. I suspend the Sitting and will take the Chair again at 3.45 pm.

Sitting accordingly suspended at 3.20 pm until 3.45 pm.

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