Update on tightened rules for work permit applications and significant Employment Act changes - SBA 22 April 2016 Birgitta von Dresky Luther LLP ...
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Update on tightened rules
for work permit applications
and significant Employment
Act changes.
SBA
22 April 2016
Birgitta von Dresky
Luther LLP
Legal and Tax Advice | www.luther-lawfirm.com
Agenda. Luther law firm and Luther Corporate Services Entitlement to Work in Singapore Fair Consideration Framework and its recent reform Changes to Employment Act
Luther in Asia. Luther. 3
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Entitlement to work in Singapore
Singapore Permanent Resident:
no further work permit required
Employment Pass holder:
Employment Pass entitles to employment with employer only;
No additional work allowed!
Dependent Pass holder:
Dependent Pass alone does not entitle to work in Singapore;
In addition, Letter of Consent is required; or
Dependent Pass holder obtains own employment permit
Long Term Visit Pass (LTVP) holder:
LTVP alone does not entitle to work in Singapore;
In addition, Letter of Consent is required (possible only for LTVP holder married to
Singaporean or PR); or
LTVP holder obtains own employment permit
7
EntrePass
Eligibility → stringent requirements:
Private Limited Company with minimum paid-up capital of SGD
50,000 incorporated less than 6 months before application or not
incorporated yet
Detailed business plan
Minimum business spending of SGD 100,000 and creation of at
least 2 local jobs within the 1st year (requirement for renewal)
Enhanced criteria since 1 September 2013
8
EntrePass
Enhanced criteria since 1 September 2013 → businesses must
meet at least one of these requirements:
Receives funding/investment from government-accredited Venture Capitalist (VC) or
business angel (e.g. EDB, SPRING, NRF); or
Holds Intellectual Property (IP) that is registered with a recognised national IP institution
(e.g. IPOS); or
Has ongoing research collaboration with A*STAR or recognised research institution or
institute of higher learning in Singapore (e.g. NUS, Nanyang Technological University);
or
Is an incubatee at a Singapore government-supported incubator.
Completed EntrePass form and supporting documents must be
submitted to Ministry of Manpower (MoM) via SingPost counter
9
Fair Consideration Framework and its recent reform
EP related Employer’s obligations under Fair Consideration Framework
(FCF) since August 2014:
Consider Singaporeans fairly for employment opportunities
Comply with Tripartite Guidelines on Fair Employment Practices (Tripartite
Guidelines) and have fair employment practices that are open, merit-based
and non-discriminatory
Before submission of EP applications, job must be advertised on „Jobs
Bank“
Jobs Bank: Governmental job portal facilitating job-matching opportunities
between employers and local job seekers.
Note: MOM views non-compliance of Job Ads with Tripartite Guidelines
seriously. Non compliance can lead to being barred from making EP
applications!Fair Consideration Framework and its recent reform
Requirements for Jobs Bank advertisement :
Register with Jobs Bank: To register with Jobs Bank, you will need an EASY account from IRAS
Ad must be placed for at least 14 days before applying for an EP
Ad must comply with Tripartite Guidelines on Fair Employment and shall not contain preferences
for candidates as to nationality, age, race, language, gender or religion (unless justification given
by job requirement). Avoid:
„Native English speaker“, „Swiss preferred“, „youthful working environment“
Ad should include following information:
Job title, closing date, skills, qualifications, experience, salary range
From 1 October 2015: Must indicate a salary range for all open positions listed on the Jobs BankFair Consideration Framework and its recent reform
If EP application is needed:
Period between „closing date“ in Ad and EP application should not be more than 3 months
Job Posting ID (from the Jobs Bank) must be stated in EP application and advertised job must be
the same for which EP application is made
EP candidate should meet qualifying criteria based on salary and qualifications
Since October 2015:
More stringent check of EP applications from employers who, compared to others in same
field, employ fewer Singaporean professionals, managers and executives (PME’s)
More stringent assessment of foreign PME’s seeking EP’s
Information in EP application on number of applications submitted by Singaporeans, whether
Singaporeans were interviewed and employer’s current share of Singaporean in PME
positionsFair Consideration Framework and its recent reform
Stricter Scrutiny:
MOM may request for additional information including:
Organisation charts with nationality information
Recruitment processes
Staff grievance handling procedures
Framework for staff progression
Plans to develop local internal staff to take on higher roles, reduce reliance on EP holders
To do:
Respective documentation should be established and maintained
Efforts to increase local workforce also on PME level should be increased
Utilise support given: PIC for training expenses, Career Support Programe
Note: Companies found to have nationality-based or other discriminatory HR practices will face
scrutiny from MOM and may have the work pass privileges curtailed!Fair Consideration Framework and its recent reform Manpower Minister Lim Swee Say announced on 8. April 2016 to even further tighten rules for EP applications! Following 3 company-related factors to become more relevant in assessment of EP applications: 1. proportion of Singaporeans working in the company compared to the industry average 2. company’s commitment to hiring and developing Singaporeans, and 3. company’s relevance to the Singapore economy. Companies to be found weak in all 3 factors will be put on watch list and work pass privileges (applications for EP and applications for renewal of EP) could be suspended Tripartite Alliance for Fair and Progressive Employment Practices (Tafep) will be given bigger role to investigate and recommend to MOM employers who should be put on a black-sheep watch list
Fair Consideration Framework and its recent reform
MOM may request for additional information/documents (employment
agreement, bank statements, tax assessments, invoices) while processing
EP application
In case of rejection of application Appeal possible
Processing time 2 – 6 weeks, such time should be considered in
planning as well as time required for placing Job Ad before EP
application can be submitted
Documents that MOM may ask for should be readily available for
possible appeal procedureFair Consideration Framework and its recent reform
In short, employers should:
Give fair consideration to Singaporeans
Document their recruiting process as well as possible
Be ready to substantiate that efforts are taken to hire and develop
Singaporeans
Be able to substantiate the relevance of the company to the Singapore
economyFair Consideration Framework and its recent reform
Exempted from advertising requirement:
Work permits and S Passes (regulated through levies and quotas)
Employers who employ fewer than 25 employees
Positions with a salary of SGD 12,000 and above a month
Intra-corporate transferees: persons holding senior positions in organisations or have
advanced level of expertise
Job required for short-term contingencies, employment term of not more than 1 month
Even in case of exemption:
Employers are strongly encouraged to advertise job openings on Jobs Bank
Obligation to have fair employment practices that are open, merit-based and non-
discriminatory remainsFair Consideration Framework and its recent reform
Sanctions in case of non compliance:
MOM may request for significant number of documents to enable stricter
review
Possibility to apply for EPs can be suspended (e.g. for 2 years)
Companies can be prohibited from applying for EPs
In August 2015: out of 150 firms MOM called in for talks over past year, 38
have been identified for closer scrutiny as they are not doing enough to hire
and groom Singaporeans
About 100 firms are currently on “black-sheep watch list”Fair Consideration Framework and its recent reform
Career Support Program (“CSP”) to create incentives for employers to hire older
Singaporean PMEs
Initial CSP program from October 2015 to October 2017
Employment of older PMEs is subsidised if:
Employee is Singapore citizen aged 40 years and above
The PME sought mid-level positions for at least 6 months, and
The monthly salary is minimum SGD 4000
Employment of eligible PME job seeker for permanent job or employment contract term of at least
1 year
Employer provides PME with approved structured on-the-job training or external WDA-
approved training (funding of courses/course fee support available)Fair Consideration Framework and its recent reform Under the CSP the wages are subsidised for one year as follows:
Changes to Employment Act
Amendments apply to all employees covered by the Employment Act
Since 1. April 2016 employers shall:
Issue itemised payslips to employees
Make and keep employees records, and
Provide written key employment terms to employees
Goal:
Enable employees to better understand their salary components and benefits, and
to check whether salary calculation is correct
Disputes between employers and employees shall be avoided.Changes to Employment Act
Who is covered by Employment Act ?
All employees (local and foreign) working for an employer in Singapore,
except:
Employees in a managerial or executive position with a basic monthly
salary exceeding 4,500
Seafarers, domestic workers, statutory board employee or a civil
servant
Note: Part IV of Employment Act (rest days, hours of work, overtime and
compensation for overtime, etc) only applicable to workman with salary
up to 4,500 and to other employees with salary up to 2,500 !Changes to Employment Act
In force since 1 April 2016 !
MOM indicated to give - especially SME - employers “grace
period” up to end of March 2017, with a “light-touch”
enforcement approach, but obligation to comply and penalty
provisions still apply!
Review HR documentation, such as employee handbooks,
agreement templates, payslip format and if not in line with
new requirements: adjust!
Proper documentation also helps in regard to FCF
requirementsChanges to Employment Act Itemised payslips Payslips must be provided at least once a month If employees are paid weekly or fortnightly, employer may consolidate payments into one monthly payslip Payslip to be given together with salary payment, latest within 3 working days of payment Itemised payslips must adopt prescribed form
Changes to Employment Act
Payslips shall be provided in hard (handwritten possible) or soft copy and shall include the
following where applicable:
Full name of employer and employee
Date(s) of payment(s)
Basic salary for each salary period – for hourly, daily or piece- rated workers, payslip must contain:
Basic rate of pay; and
Total number of hours or days worked, or pieces produced within each salary period
Start and end date of each salary period
Allowances paid for each salary period, including both fixed and ad-hoc allowances
Any other additional payments, such as bonuses, rest day pay or public holiday pay
Deductions made for each salary period, such as CPF deductions, deductions for no-pay leave etc.
Overtime hours worked (if any)
Overtime pay for each overtime payment period (if any) and start and end dates of each overtime
period worked
Net salary paid in the monthChanges to Employment Act
Employee‘s records
Employers must maintain and keep detailed employment records of employees covered
under Employment Act including:
Employee records:
Address
NRIC number or work pass number and expiry date
Date of birth
Gender
Date of starting employment and/or date of leaving employment
Working hours, including duration of meals and tea breaks; and
Dates and other details of public holidays and leave taken
Salary records: Records relevant for items on payslip (e.g. employment agreement, leave or overtime records)
Required to keep hard (including handwritten) or soft copy of :
Records for latest 2 year period in respect of current employees
Records of last 2 years of employment of ex-employees to be kept for 1 year after employment termination date
(general recommendation for record keeping: 6 years )Changes to Employment Act
Provision of Key Employment Terms
Employers must provide Key Employment Terms (KETs) in written form (hard or soft copy)
KETs that apply to group of employees can be provided
in employee handbook
on the company’s intranet
Applies to employees who are:
Newly employed on or after 1 April 2016
covered by Employment Act
employed for a continuous period of at least 14 daysChanges to Employment Act Key Employment Terms include (where applicable): Full name of employer and employee Job title, main duties and responsibilities Date of start of employment Duration of employment (for fixed-term contracts) Working arrangements, including daily working hours, number of working days per week and rest days Salary period Basic salary, including basic rate of pay for hourly, daily or piece-rated workers Fixed allowances and/or deductions Overtime payment (if any) Other salary-related components, such as bonuses or incentives Leave entitlements Other medical benefits Probation period Notice period
Changes to Employment Act
Termination of employment
Since 1 April 2014: Appeal to MOM within 1 month from termination possible by employees
covered under Employment Act who feel termination was unfair. Appeal possible in cases of
termination with contractual notice or payment in lieu of notice given
termination without notice on grounds of misconduct
Managers and executives must have been employed for at least 12 months before they can appeal against dismissal
where contractual notice/in lieu payment was given.
If Minister is satisfied that employee was unfairly dismissed, he may do one of the following:
Order reinstatement to former job, or
Order a sum of money as compensation
Note: Employers still do not have to state grounds for termination when terminating an
employment with notice or payment in lieu of notice. Employers should however be
prepared to show to MOM that termination was not unfair in case termination is challenged
by employeeChanges to Employment Act Our Recommendation: Comply with Employment Act requirements even if not legally obliged ! Avoids disputes and in case of disputes: records help to settle dispute Records can be useful also for EP applications Proper records, especially employment agreement and handbook, provide better protection, eg. treatment of confidential data, IP rights Proper records help to comply with employer‘s legal requirements, eg data protection, fraud, corruption. Proper records (including track record of breaches, warnings, requests for improvement) can help in case of appeal against dismissal
Changes to Employment Act
Consequences of breach?
The following less severe breaches are treated as civil contraventions
Failure to issue itemised payslips
Failure to issue KET’s
Failure to maintain employment records
Provision of inaccurate information without fraudulent intent to authorities
Initial penalties for the contraventions range from $100 to $200 per employee or occurrence
The employer may also be requested to rectify the breach
In case of non-compliance, breach becomes criminal offence with fines up to S$ 10,000,
and/or imprisonment for a term not exceeding 12 months.Changes to Employment Act
Currently: Limited options to litigate and settle employment related disputes
Employers covered by Employment Act: Labour court administered by MOM, complain/appeal to MOM, or file claims with civil
courts
PMEs not covered by the Employment Act (with an income of SGD 4,500 or more) could only file claim with civil court or seek
alternative dispute resolution like mediation and arbitration, all in all risk of lengthy and costly process!
Soon: Creation of Employment Claims Tribunal (ECT) in 2016 with following expected key features
Only for salary related disputes
Open to ALL employees, with few exceptions (public servants, domestic worker, seafearer)
Open also for claims by employers against employees, such as for unpaid salary in lieu of notice
ECT shall be part of Singapore court system and shall replace labour court
Claims capped at S$ 20,000 or 30,000
Claims to be filed within certain time limit, 12 months of dispute arising or 6 months following termination
Fees are expected to be quite low
With ECT, increase in employment related litigation expected, for which employers should be prepared.Helpful Webpages
www.tafep.sg/publication/tripartite-guidelines-fair-employment-practices
www.jobsbank.gov.sg
www.mom.gov.sg
http://mytax.iras.gov.sg/easy
www.skillsconnect.gov.sg
www.wda.gov.sg
33Your contacts
Your contact
Birgitta von Dresky
Partner
Attorney-at-Law (Germany)
Luther LLP
4 Battery Road / Bank of China Building #25-01
Singapore 049908
Tel +65 6408 8000
Birgitta.von.dresky@luther-lawfirm.com
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