Friday 15 November 2013

Labour law changes balance needs of workers and firms

Differences remain over payslips and calculation of overtime pay
By Toh Yong Chuan, The Straits Times, 14 Nov 2013

FIRMS and unionists say the latest changes to Singapore's main labour law represent a need to strike a balance between protecting workers and helping businesses cope with rising costs.

But they might find it difficult to bridge their differences in two areas: payslips and overtime pay.

Small businesses welcome the Manpower Ministry's decision to hold off making payslips compulsory.

"We definitely want to comply with the law, but we really need time to adjust," said Madam Chia Sai Im, chairman of the People's Park Traders Association which represents 200 hawkers and shopowners.

She added that most of her association members face mounting cost pressures from rent hikes and labour wages.

But labour MP Zainal Sapari said that he was disappointed with the decision and pledged to continue pushing for early implementation.

"The small and medium-sized enterprises might have exaggerated their difficulties in issuing payslips."

On Tuesday, Parliament updated the Employment Act to give more protection to 450,000 workers.

Some 150,000 more rank-and- file workers will come under the Act after the monthly salary cap is raised to $2,500 from $2,000, while 300,000 professionals earning up to $4,500 monthly will be protected in the areas of unfair dismissal and sick leave benefits, both of which they were not entitled to previously.

Besides payslips, the other concession that firms won is the base for overtime pay calculations. For example, a worker earning $2,500 per month will have his overtime pay calculated from a base of $2,250. Previously, a worker who earned $2,000 monthly would have his overtime pay calculated from his salary.

Said human resource consultant Martin Gabriel: "More workers will now be entitled to overtime pay, but some among them will have their overtime pay capped."

Labour MP Patrick Tay said that unions "pushed very hard" for the differentiation between the calculation base and salary to be removed but settled for a "negotiated outcome". The base will still go up as median salary rises in future, he added.

Trading firm Federal International (2000)'s group human resource manager Tina Ng said her firm discourages working overtime. But if its workers are required to do so, it will still use the lower base for overtime pay calculations and compensate staff through variable payments such as bonuses.

At least one firm said that it will not use the lower base to calculate what its workers earn for overtime work. "It does not feel right," said Mr Low Cheong Kee, managing director of hardware chain Home-Fix.

One worker who will soon come under the Employment Act is Mr Roger Lee, an executive at security firm Soverus.

The 63-year-old earns $2,300 each month and is already receiving benefits such as paid hospitalisation leave that his employer will be required by law to provide from next April.

"I am happy that more workers will come under the law," said Mr Lee, adding: "But what is more important is to have employers who are already giving or willing to do more than what the law says they must do."

Keeping pace with workplace changes
That is the aim of last week's amendments to the Employment Act. How well do they stand up to scrutiny? And what more needs to be done?
By Toh Yong Chuan, The Straits Times, 23 Nov 2013

THERE is a story behind almost every number in the new Employment Act, a story of tough talk and compromise in the search for a right balance between what unionists and employer groups were fighting for on behalf of the workers and businesses they represent.

Take overtime pay.

With the change, white-collar workers earning up to $2,500 a month - up from $2,000 - are assured of overtime pay at a rate of 1.5 times their basic pay.

That extends protection to workers like Ms Pauline Lim, an accounts clerk, whose former employer used to ask her to put in an extra five to six hours a day during crunch times but never once paid her for those extra hours.

Behind closed doors though, during the 19 months of negotiations leading up to the amendments which Parliament passed last week, employers and union leaders fought hard over the numbers $2,500 and 1.5.

Unionists wanted the salary ceiling for workers protected under this law raised to $2,500 from $2,000, as that would bring an additional 150,000 under this law's protective umbrella. But employers wanted to draw the line at $2,250, citing worries over ballooning overtime payments.

In the end, they compromised by setting a ceiling for the salary used to calculate overtime pay at $2,250.

Employers were also keen to knock the overtime rate down from 1.5 to 1.25. Their justification - the lower rate was the norm in countries like Switzerland and Japan. Union leaders refused to budge on that figure. "We told them 'No'. The moment you introduce 1.25, it will be applied throughout. In future we won't smell 1.5 any more," National Trades Union Congress (NTUC) assistant secretary-general Cham Hui Fong, who attended the talks, told Insight.

Insight looks at the compromises and breakthroughs, and whether the Ministry of Manpower (MOM) found the right balance of protecting workers without hurting firms.

More protection

TWO groups of workers will get more protection.

The law extends its coverage to 150,000 more rank-and-file workers by raising the income cap from $2,000 to $2,500 a month.

The Act, which is Singapore's main labour legislation that spells out the minimum standards such as payment of salaries, working hours and leave, was last updated in 2009.

Mr Erman Tan, president of the Singapore Human Resources Institute, says the move to protect 150,000 more workers is "very significant" because it makes labour laws more accessible to a bigger group of workers.

"This shows that the MOM is very serious about protecting workers, yet pragmatic enough to give firms breathing space," he tells Insight. "MOM has to adjust the threshold because median salaries have gone up. Not adjusting means workers may fall out of protection when their salaries rise."

According to MOM salary data, the median gross monthly salary of local workers rose from $2,600 in 2009, when the law was last updated, to $3,000 last year.

One of those who will come under the law is Mr Roger Lee, a junior executive at security firm Soverus who handles the rostering of guards.

The 63-year-old earns $2,300 a month and falls out of the Act's coverage now. But from April next year, his employer will be required by law to provide paid rest days and annual leave, benefits which he already enjoys.

"It is reassuring to know that the law protects us, although it is more important to have good employers who are willing to do more than the minimum in the law," says Mr Lee.

The MOM agrees. "Beyond legislation, employers are encouraged to be progressive and provide better employment terms and conditions," says a spokesman.

Besides rank-and-file workers like Mr Lee, another 300,000 professionals, managers and executives (PMEs) earning up to $4,500 a month can take sick leave and be protected against unfair dismissal. They were not entitled to this previously.

Labour MP Patrick Tay, a member of the NTUC negotiation team, says the move to give more protection to PMEs is "not just mere enhancements but a milestone change". He tells Insight: "PMEs form a growing segment of the workforce. If they are not brought under the Employment Act, it will make the Act less relevant in protecting workers."

About three in 10 local workers now are PMEs, but the proportion is expected to swell to two in three by 2030.

Some changes in the law give more teeth to it. Firms will face heavier punishment for failing to pay salaries, for example. The maximum fines triple to $15,000 for first-timers and $30,000 for repeat offenders. First-timers will be fined a minimum of $3,000 and repeat offenders, $6,000.

But firms get "face" too - in the form of no longer having to grant sick leave or pay consultation fees for workers getting... cosmetic surgery.

Compromises made

HIGHER-PAID workers may be smiling about the changes, but Singapore National Employers Federation (SNEF) executive director Koh Juan Kiat tells Insight that firms fear the impact of the changes. "Every amendment to the Act has the potential to raise costs and introduce rigidity for employers."

But some observers still maintain that the updates do not go far enough, especially in areas where the bar is set too low. Human resource consultant Martin Gabriel of HRMatters21 points out that the law will require firms to give paid sick leave and medical leave to PMEs. "But most firms already provide these to executives, so I wonder what is the point of introducing a minimum standard that is below market practices."

Retrenchment benefits is another area. Mr David Leong, managing director of recruitment firm PeopleWorldwide Consulting, says that although workers can claim retrenchment benefits after working for two years instead of three, firms are not required by law to compensate retrenched workers. "This move is effective only if there are unions to fight for workers or if firms follow the market practice of paying two weeks' salary for each year of service. Most do, but there is no guarantee all will," he adds.

An issue that divides views is the cap on overtime pay. Although white-collar workers earning up to $2,500 are now entitled to overtime pay, the salary used to calculate their overtime pay is capped at $2,250, to help keep down labour costs.

Some workers find it unfair. Mr Francis Cheng, 58, an industrial sales business manager in a local SME, says: "If a worker is productive and contributes by putting in extra hours, he should be paid overtime according to his pay, not a lower figure."

Some MPs also want to see more PMEs covered.

MP Hri Kumar Nair says that the Labour Court - where work grievances are heard - should help more PMEs, not just those earning up to $4,500 each month. "(The alternative of) going to (civil) court is intimidating, the case may take a year to resolve, and the legal costs may be far greater than the compensation you receive." A "simple, inexpensive" channel like the Labour Court, which settles disputes quickly, will give better protection to workers, he says.

Employment law expert Ravi Chandran from the National University of Singapore (NUS) agrees: "I don't think someone earning $5,000 or $6,000 can bargain for himself. Thus, from the employee's viewpoint, the limit should be higher. But, of course, the implications on employers must also be considered."

Non-Constituency MP Gerald Giam of the Workers' Party adds that since most workers cannot negotiate employment contract terms to sufficiently protect their interests, "it is important that the law, and not just a mutually agreed contract, protects them".

Still, higher-earning PMEs do have some recourse. The Industrial Relations Act allows rank-and-file unions to represent executives individually in unionised firms, in areas such as negotiating retrenchment benefits and resolving work-related disputes.

MP Foo Mee Har feels the Act should have been expanded to cover flexible work arrangements to promote better work-life balance. Workers with children aged below 12 should have "the right to request flexi-work arrangements, and to have those requests considered seriously by their employers", she tells Insight.

The MOM would not comment on specific areas where the Act was seen by some to fall short, saying only: "We have carefully considered various suggestions and public feedback, and the amendments are the outcome of extensive tripartite negotiations.

"In making any amendments to the Employment Act, we need to strike a careful balance between better protection for more workers and giving employers flexibility to create good jobs. Or else, we affect the employability of our workers."

Left empty-handed

BUT some omissions trouble those like labour MP Zainal Sapari, who is concerned about society's most vulnerable workers. "There is nothing for low-wage workers in this round of Employment Act changes," he laments.

Unionists wanted issuing pay-slips and the availability of payroll records to be made compulsory, but small and medium-sized enterprises protested. The MOM decided to hold off the move.

It also rejected the idea of making firms pay for the medicine dispensed by government doctors to low-wage workers. Firms continue to pay only for consultation at polyclinics.

"It may just be a few dollars, but it means a lot to low-wage workers," Mr Sapari tells Insight.

But SNEF defended these concessions. "Many countries recognise the practical problems faced by small companies to comply with employment laws. Issuing payslips is one such challenge," says Mr Koh, who claims that issuing payslips is not mandatory in New Zealand and Hong Kong.

And while Mr Sapari says there is little in the changes for low-paid workers, nevertheless the same day the Employment Act was amended, changes were made to the Central Provident Fund (CPF) Act to enhance protection for these workers when it comes to employer CPF contributions.

Employers who default on paying or are late in contributing to their workers' CPF accounts now face stiffer penalties, including, for the first time, a jail term and minimum fines. First-time offenders can be jailed up to six months or fined up to $5,000, or both. The minimum fine will be $1,000.

Repeat offenders may be jailed up to 12 months or fined, or both. A minimum fine of $2,000 will be imposed and the maximum fine stays at $10,000.

Balancing act continues

WITH the changes, the Act will cover about 2.2 million workers, or seven in 10 of the workforce.

Experts say the MOM will continue to walk a tightrope between employers and workers as it redraws the lines of protection for workers. "There has to be a balance. Where exactly this line should be drawn, (it) is difficult to say," says NUS' Mr Chandran.

Acting Manpower Minister Tan Chuan-Jin acknowledges the balancing act. In his Parliament speech peppered with the word "balance" last week, he said: "As we safeguard the interests of workers, we also cannot forget that at the same time, we also need to balance this with employers' needs."

But has the balance tilted too much towards employers, given the various concessions employers won? The views are split.

Employers dismiss the suggestion that things are tilted in their favour. "On the contrary, we think the Act is going the other way and we are losing some flexibility in employing and managing employees," warns SNEF's Mr Koh.

Nominated MP Eugene Tan takes a different view. He says: "I think, for too long, the employers had it good, so good that recalibrating the balance strikes them as being anti-business and pro-employee."

UniSIM's labour economist Randolph Tan says it boils down to poor timing: "The burden on employers has risen significantly in the last year or so. A better timing for the moves would have been when employers had less other restrictions to contend with."

Besides timing, the MOM will have to deal with societal changes. Says NUS' Mr Chandran: "Employees seem to be getting more and more rights as society matures and expectations change."

The MOM has started looking at how the labour law can be further beefed up to protect contract workers and resolve disputes between employers and workers. It says it has received feedback and it will provide updates in due course.

Now, all eyes are on next year when more changes to the law are due, and on how MOM will once more seek to strike a balance between protecting workers and making sure enhancements do not hurt firms' competitiveness.

Laws also help to set norms for employers, signalling to them what society expects of them in terms of fair treatment of workers.

But beyond these legal provisions, what ensures employers treat workers well is a tight labour market where jobs are plentiful. To flourish in such conditions, workers need to arm themselves with the right skills for the jobs being created. That way, employers will do what they must to woo these workers to their side.



Employment Act enacted.


Monthly salary ceiling for workers covered by the Act is raised to $1,600, from $1,500 in 1992 and $1,250 in 1980.FEB 1, 2011

PMEs earning up to $4,500 can turn to the Labour Court for salary claims. The salary cap is raised from $2,500.

FROM APRIL 1, 2014
- Some 150,000 white-collar workers earning between $2,000 and $2,500 a month covered under the Act.
- They will get working hours-related benefits, such as limits on maximum hours of work, and be entitled to overtime pay. But the salary used to calculate overtime pay is capped at $2,250.
- Another 300,000 PMEs earning up to $4,500 a month will be entitled to paid public holidays and paid sick leave, and cannot be sacked unfairly.
- Employers who fail to pay workers their salaries penalised more heavily: Maximum fines tripled to $15,000 for first-timers, and $30,000 for repeat offenders.
JAN 1, 2009
- Some 82,000 workers earning up to $2,000 a month are covered by the Act.
- About 44,000 PMEs who earn at most $2,500 a month are, for the first time, able to turn to the Labour
- Court to pursue their salary claims. Previously, they would have had to pursue costly civil suits if underpaid.
- Those who have worked for a firm for at least three months, instead of six months, qualify for paid sick leave.
- 153,000 "confidential staff" such as secretaries and human resource clerks now included.
- Higher fines for not paying workers: Maximum fine raised to $5,000 from $1,000 for first-timers, and to $10,000 from $2,000 for repeat offenders.
- Part-time employees redefined as those who work less than 35 hours a week, instead of 30 hours.

Overtime pay adds up to treats for parents
By Charissa Yong, The Straits Times, 23 Nov 2013

IN her previous job at a multinational company, when project deadlines rolled around, accounts clerk Pauline Lim would leave her office late, at 11pm.

This worked out to five hours of overtime a day for which she and her colleagues were not paid, though the company provided meals and transport home.

"It was stressful because we had to work longer hours to meet deadlines. Other people were working the same long hours, so I just followed," said the 37-year-old.

"It would have been good (to be paid overtime). At a bigger company, it's hard to get this benefit. You have to go through so many supervisors and red tape."

Ms Lim welcomes the change in law which will soon make it mandatory for workers like her - those who earn up to $2,500 a month - to be paid overtime, up from a previous salary cap of $2,000.

The business administration diploma holder earns $2,200 a month keeping the books of restaurant chain House of Seafood.

Once a week every quarter, she already gets paid between $50 and $100 in total to work overtime. This can go towards buying goodies for her parents, said Ms Lim, who is single. For her friends with families, the overtime pay helps pay for a tin of milk powder costing between $50 and $80, she said.

Making overtime payments compulsory for the higher pay bracket will be "good for those workers whose bosses are not so good" and don't pay their workers, she noted. Indeed, at her previous workplace, her monthly salary was $2,000, within the ambit of the Employment Act - but because no one else there asked for their entitlement, neither did Ms Lim.

Issuing payslips 'a hassle' for small businesses
By Toh Yong Chuan, The Straits Times, 23 Nov 2013

HAWKER Oli Abdul Latiff, 54, frets over the thought of giving payslips to his employees, who are also his family members. His sons, sister and sister-in-law help out at his Geylang thosai stall on an ad hoc basis. The number of hours they work varies from day to day, and Mr Oli pays them at the end of each day depending on how much is made that day.

Because of this, said the father of four, accounting would be a headache. He also has little time to draw up payslips. "Every day I sleep at 11pm and wake up at 3am to prepare food. Very short. It's tiring. I'm a small shop, not a big kopitiam. How to give pay chits?" said Mr Oli. The hawker is an example of a micro-business boss who finds issuing employees payslips cumbersome.

This month, the Government decided not to make the practice compulsory yet, excluding it from the slew of Employment Act changes slated to take effect from April 1 next year.

Unionists and worker advocate groups frowned on the decision. Transient Workers Count Too urged the Manpower Ministry not to delay the move.

Labour MP Zainal Sapari vowed to keep pushing for it, saying that workers suffer when their bosses do not keep proper records of salaries. "How will they know that they have been paid correctly if there is no record?"

The Manpower Ministry tells Insight that its plan to make payslips compulsory has not changed.

"We are taking a phased approach to implementation, in view of the concerns expressed by the smaller retailers and SMEs," said a spokesman, adding that the ministry will monitor how firms cope with the Employment Act changes next year before deciding when to make payslips compulsory.

Without payslips, errant employers find it easy to cover their tracks when they short-change workers. For example, some keep basic pay low and top it up with allowances to reduce overtime pay, as overtime is calculated from basic pay, not allowances.

Another way they abuse the lack of a compulsory pay record is by giving a pay figure which looks reasonable, but then effectively reducing the actual take-home amount by making unexpected deductions for items such as meals, phone usage or loans for uniforms.

As for small businessman Mr Oli, though, while he is glad about the reprieve from the hassle he would face providing payslips, he does add: "I'll be happy to assist. It's better for workers if we can declare these things."

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