What are the implications of the Employment Amendment Bill for energy companies in Singapore?

Singapore is one of the world’s largest energy trading and refinement hubs in South-East Asia and is also a market leader in offshore construction projects. Recent news coming from some of its largest manufacturers, such as rig builders Keppel and Sembcorp Marine, suggest that confidence in the region is high.

Brent oil is approximately $65 per barrel at the time of writing, while both Keppel and Sembcorp Marine have reported higher revenue for 2018. Keppel is doing especially well when considering year-on-year revenue; in 2018 Keppel secured S$1.7 billion in new contracts, markedly higher than the S$1.2 billion earned in 2017.

Could the changes the Government has made to the Employment Act (EA) shake that confidence, though? Sweeping changes to the act were initially announced in March 2018 and have since come into effect from 1st April this year through the Government’s Employment Amendment Bill (EAB).

What you need to know about Singapore’s Employment Amendment Bill

Probably the most significant change is that the existing Employment Act has been amended to now cover all employees working under a contract of service, including professional, managerial and executive employees (PMEs), regardless of salary, where it only used to cover employees earning a monthly salary of S$4,500 or less.

That uniformity makes it almost certain that all senior managers and CEOs at energy companies currently operating in (or looking to move into) Singapore will need to invest significant resources into HR to rewrite their policies and employment processes to comply with the EAB.

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Here are three of the most important changes to the Employment Act that you need to know about:

1: Unfair dismissal/reinstatement

Significantly, the Employment Claims Tribunal (ECT) has taken over responsibility for unfair dismissal claims from the Ministry of Manpower. All employees covered by the EA will be able to make an unfair dismissal claim to the ECT if they feel they’ve been dismissed “without just cause or excuse” and can seek reinstatement to their employment with backpay or compensation.

Interestingly though, there still isn’t a definition of “without just cause or excuse” in the EAB, though new ‘Tripartite Guidelines on Wrongful Dismissal’ are expected to be issued in the future to illustrate what is considered wrongful dismissal and provide further guidance on this issue. What we do know, though, is there will be an onus on employers to demonstrate there was “just cause” for termination.

2: Greater protection for workers

Alongside the right for more workers to challenge an unfair dismissal with a new body, workers themselves are also set for greater overall protection.

Part IV of the Employment Act, which governs rest days, hours of work and entitlement to overtime pay, among others, has been extended to protect non-workmen earning a monthly salary of no more than S$2,600.

Further, employees’ overtime benefits have also increased under the EAB insofar that such employees are protected by Part IV – under the EAB, an employee’s overtime rate is calculated based on the employee’s monthly salary or a cap of S$2,600/- (whichever is the lower), up from the cap of S$2,250/- previously.

Over and above the foregoing, while employers are free to make deductions from employee’s salary in certain prescribed situations with said employee’s consent, the employee is free to withdraw consent to such deduction at any time without any penalty.

3: Guaranteed worker benefits

Workers will now be guaranteed by law to have more personal benefits due to the changes in the EAB. All employees covered by the EA will now be entitled to statutory annual leave and paid statutory public holidays. Employees working on public holidays and not given a day off-in-lieu will be entitled to an extra day’s salary.

Sick leave policies have also changed with any medical practitioner able to certify an ill employee off from work or hospital leave, where previously, employers were only required to recognise medical certificates issued by Government and company-appointed doctors.

To summarise, Singapore’s legal landscape is changing. Energy companies that are able to respond quickly to changes like this – not just in Singapore but across other key strategic areas, too – will be better placed to protect themselves against legal and workforce challenges that could affect the smooth running of their projects around the world, as well as their brand and reputation.

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Visit the GETI site to download the report

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This post was written by Charles Pfauwadel, Regional Director – South East Asia at Airswift

This article is not intended to be legal advice and should not be construed as such. Should you require any advice on the Employment Act, please consult a lawyer.