Stiffer Penalties for Non-compliance among Employment Act Amendments

16 December 2013

Employers need to brace themselves for several amendments to the Employment Act (EA) that will improve employment standards for workers with effect from 1 April 2014. While the amendments grant employers flexibility in certain employment practices to cope with some of these changes, they also include stiffer penalties for non-compliance with the EA.

Among the amendments is an increase in the salary threshold for non-workmen to be covered under the working hours-related provisions of the EA from a basic monthly salary of $2,000 to $2,500.

In addition, professionals, managers and executives (PMEs) earning a basic monthly salary of up to $4,500 will be covered under the general provisions of the EA. This includes areas such as redress for unfair dismissal, paid public holidays, paid sick leave and hospitalisation leave.

Employers are not allowed to deduct more than 25% of an employee’s salary for accommodation, amenities and services. This will be within the current 50% cap of an employee’s salary for authorised deductions.

Regarding flexibility for employers, the overtime rate payable for non-workmen will be capped at the salary level of $2,250 to help employers manage costs.

PMEs earning up to $4,500 must have served the same employer for at least 12 months to be eligible for redress against unfair dismissal where notice is given.

Employers have the additional option to grant time off in lieu for these PMEs who work on public holidays.

Another amendment is a reduction of the non-eligibility period for retrenchment benefits from three to two years starting 1 April 2015.

To tighten enforcement, the amendments introduce stiffer penalties for failure to pay salaries in accordance with the EA. These are shown in Table 1 below:

The maximum composition fine will also be increased from $1,000 to $5,000.

To find out how we can support you in staying compliant with the latest employment regulations, please feel free to contact us.

To read the full Ministry of Manpower announcement, click here.