inbrief

Employment law in Singapore – an overview

Inside

The law landscape Commencing employment Key minimum employment rights Terminating employment Other important matters inbrief

Introduction The employment law landscape As mentioned above, employees in Singapore Singapore’s rapid economic can be categorised as EA Employees and Non-EA Employment law in Singapore can be described as development since it gained Employees. “employer friendly” and the relationship between independence in 1965 is well the employer and employee is regulated largely In outline, the EA covers every employee documented. This economic success, by the contract of employment between them. (regardless of nationality) who is under a contract combined with the country’s lightly Generally under Singapore law, parties are free to of service with an employer, except: regulated business environment, has contract as they choose and any matters arising • any person employed in a managerial or between them would have to be resolved by long made it a natural “hub” for executive position earning more than S$4,500 looking at the express and/or implied terms of the many multinational employers. This as a basic monthly salary1 contract in question. in-brief provides an overview of some • any seaman of the key aspects of employment law The Employment Act of Singapore (Chapter 91) (“EA”) is the primary statute regulating the • any domestic worker in Singapore. employment relationship. This provides for the • any person employed by a Statutory Board or basic terms and conditions at work for employees Our Hong Kong office was opened the Government to meet a growing demand from covered by the EA. many of our clients for coordinated In terms of employment protection and rights, Managers and executives are employees with employment and immigration/global Singapore divides its workforce into two different executive and supervisory functions. They also mobility support across the Pacific categories - employees who are covered under include professionals with tertiary and the EA (“EA Employees”) and employees who are specialised knowledge or skills whose employment region (including Singapore). not covered under the EA (“Non-EA Employees”). terms are like those of managers or executives This publication provides general The employment terms and conditions of Non- – such as lawyers, accountants, dentists and guidance only; expert advice should EA Employees are principally governed by their doctors. Part IV of the EA, which provides for employment contracts. rest days, hours of work and other conditions of be sought in relation to particular service, applies only to: circumstances. Our Hong Kong office This policy was designed by the government in • workmen earning not more than a basic can source Singaporean law advice the first years after independence to support economic development, by ensuring that monthly of S$4,500 (a workman being through its links with local firms in employment regulation was not so unduly someone whose work mainly involves manual Singapore. restrictive that it impeded the influx of foreign labour); and capital and talent. • non-workmen covered under the EA earning While the employment environment remains not more than a basic monthly salary of 2 lightly regulated to this day by European S$2,500. standards, recent years have seen an increasing flow of laws to address specific issues related to In addition, employees working less than 35 Singapore’s maturing economy and workforce. hours a week, are covered by the Employment Employees now receive more entitlements and (Part-Time Employees) Regulations which protections. This can be seen in new statutory provide certain flexibility for both the employers leave entitlements such as the laws regulating and employees, including the pro-rating of paternity leave, maternity leave, adoption leave employment benefits, encashment of and shared , and the recently and provision of rest days. announced extension of the EA to wider Types of employment categories of employees Contracts can be indefinite or for a fixed term. Unlike in many other Asian countries, there are no Commencing employment restrictions on the use of fixed-term contracts.

Structuring the employment relationship A foreign entity is able to directly engage 1 Please note that this salary cap will be employees in Singapore, although it cannot carry removed in 2019. on business in Singapore without first setting up a 2 Please note that this salary cap will be subsidiary, branch or representative office. increased to $2600 in 2019. inbrief

The of the EA. An employee who has served his/her qualify for this leave, the male employee must be The EA requires all employers to issue key employer for not less than three months shall be legally married to the child’s mother at the time of employment terms (“KETs”) in writing. In outline, entitled to paid annual leave of 7 days in respect conception or becomes lawfully married between employers must issue KETs in writing to all EA of the first year of continuous service with the conception and birth or within 12 months of the Employees who: same employer, and one additional day for every child’s birth. The child must also be a citizen of subsequent year with the same employer, but Singapore. • enter into a contract of service on or after 1 subject to a maximum of 14 days’ annual leave. April 2016; Shared Parental Leave For employees not covered under Part IV of the • are covered by the Employment Act; and EA, their entitlements to annual leave will depend Since 1 July 2017, working fathers are able to share up to four weeks of leave from their wives’ • are employed for 14 days or more. on what has been agreed in the contract of employment. 16 weeks of maternity leave (provided for under KETs must include as a minimum certain specific the CDCA), as long as the mother agrees. This items, covering details of key employment terms applies to working parents of Singapore citizen such as title, working arrangements, salary and children born on or after 1 July 2017. EA employees who have worked for their payments, bonuses, leave entitlement, employer for at least three months are entitled to medical benefits and . The EA does Childcare, Unpaid Infant Care and Adoption paid sick leave of: not contain any provisions relating to probationary Leave periods, but probations of anywhere between one • up to 14 days per year (where hospitalisation Childcare, Unpaid Infant Care and Adoption leave month and six months are common. is not required); and is also available to employees if certain criteria are All employers are also required to make and keep • up to 60 days where hospitalisation is met under the CDCA. employee records and give itemised pay slips to required. employees covered by the EA. and social insurance Maternity Leave There remains no minimum despite a As part of a drive to boost Singapore’s birth rate, continuing debate as to whether or not one Key minimum employment rights all female employees are generally entitled to paid should be implemented. Many employers nonetheless choose to have regard to guidance An employee’s minimum employment rights maternity leave and are protected from provided by the National Wages Council when depend on whether he or she is an EA Employee during maternity leave. setting wages. or a Non-EA employee. Generally, minimum The EA and the Child Development Co-savings Act entitlements apply to EA Employees only. For Non- of Singapore (Chapter 38A) (“CDCA”) provides Singapore has a comprehensive social security EA employees, any employment rights must be maternity protection and benefits in Singapore. system called the Central Provident Fund (“CPF”). agreed and specified in the employment contract. The CDCA provides extended maternity leave It was established to provide financial security to benefits beyond those laid out in the EA, but with employees when they retire, but also provides more stringent eligibility requirements. A CDCA housing, education, medical and death benefits. Only employees covered under Part IV of the EA eligible employee is entitled to a total of 16 weeks Coverage is mandatory for Singaporean citizens have limits on their working time. In general, an of maternity leave whereas an employee who and permanent residents and the employer is employee covered under Part IV of the EA is not derives her maternity leave entitlements from the required to make contributions to its employees’ required to work more than 8 hours (or 9 hours EA is entitled to 12 weeks of maternity leave. CPF accounts. The contribution rates vary if the employee works 5 or less days per week) a depending on factors such as the employee’s age To qualify for paid maternity leave under the day or 44 hours per week. The employee is also and salary. It is common for employers to offer CDCA, the child must be a Singaporean citizen not required to work more than 6 consecutive additional benefits to more senior employees. and the employee must have worked for her hours without a . If the employee works employer for at least three months before the overtime at the request of the employer, the child’s birth. Prior to 1 January 2017, it was a employee shall receive overtime pay at the rate of Terminating employment requirement for the child’s parents to be lawfully not less than one and a half times his/her hourly It is relatively straightforward to terminate married. However, since 1 January 2017, single rate irrespective of the basis on which his rate of employment in Singapore, which has what could mothers can now benefit from the 16-week paid pay is fixed. be described as a US-style “at will” termination maternity leave under the CDCA. regime. An employer is not required to state its Annual leave Paternity Leave reason for terminating employment, so long as An employee covered under Part IV of the EA termination is effected in accordance with the Since 1 January 2017, fathers are entitled to two is eligible for annual leave under section 43(1) contract. weeks of paternity leave under the CDCA. To inbrief

Statutory minimum notice periods apply to EA it does have specific legislation that outlaws Business transfers Employees, ranging from one day to four weeks, certain discrimination, such as age discrimination depending on their length of service. Termination (in the context of by the employer) EA Employees are protected on business or asset notice is generally set out in the contract for Non- and discrimination against pregnant employees transfers and their employment will automatically EA employees. It is possible for an employer to pay (the Employment Act prohibits employers from be transferred to the buyer on the basis of their the employee salary in lieu of notice. serving notice of termination on employees who existing terms of employment. The employment are on maternity leave or on such a day that the of Non-EA Employees on the other hand does There is no form of statutory severance payment notice will expire during their absence). Sexual not transfer automatically. The transfer of Non-EA and it is not common for employers to make such harassment is a criminal offence in Singapore Employees is a matter to be contractually agreed payments. regardless of whether or not it takes place at work. between the existing employer, the buyer and the There is no legislation specifically relating to The national constitution provides generally for Non-EA Employees. collective or individual redundancies although the equal protection of the law, but challenges on Ministry of Manpower (“MoM”), the government constitutional grounds are rare. Employers should labour authority, has produced guidance which also bear in mind guidelines for good employment Data protection employers should follow in such situations. practices issued by the Tripartite Alliance for Fair Under the Personal Data Protection Act 2012 an Employment Practices (part of MoM). Whilst such On 1 April 2017, the Employment Claims Tribunal employer is permitted to collect, use and disclose guidelines have no force of law, they should be (“ECT”) was set up for the purposes of providing an employee’s personal data for managing or adhered to by employers as failure to do so may employees and employers with an accessible and terminating the employment relationship, so long subject an employer to closer scrutiny by MoM. expeditious platform to resolve salary-related as the employee has been notified. disputes. The ECT is a division of the State Courts and replaces the role of the Commissioner for Labour in adjudicating statutory salary-related Protecting the business claims under the EA, CDCA and the Retirement Non-compete, non-solicitation and non-poaching For further information and Re-employment Act of Singapore. Claims restrictions are generally unenforceable, unless they on this subject please contact: in the ECT are heard by legally qualified Tribunal are regarded as reasonably necessary to protect the Magistrates in accordance with the Singapore employer’s legitimate business interests. Kathryn Weaver court processes. The ECT covers all employees Partner (except domestic workers, public servants and T + 852 2972 7133 seafarers) regardless of salary levels. Employee representation [email protected]

In addition to resolving salary-related claims the Employees are not obliged to join unions but jurisdiction of the ECT will be expanded in 2019 to union membership and collective agreements are Catherine Leung Legal Director enable it to determine claims common in certain industries, such as transport T + 852 2972 7188 (which are currently determined by the MoM). and manufacturing. There are some 70 registered [email protected] Employees can also claim for a breach of contract employee unions, most of which are in the civil courts. affiliated with the national federation of trade unions, the National Congress. Louise Le Pla Senior Associate Discrimination T + 852 2972 7138 [email protected] At present, Singapore does not have any overarching discrimination legislation. However,

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