Patrick Tay: Time to Review the Employment Act?

There have been many Professionals, Managers and Executives (PMEs) approaching the Labour Movement for help via our various workplace advisory platforms with a variety of issues from unfair dismissals to breaches of provisions in the Employment Act (EA).  However, PMEs with a monthly basic salary of more than $4,500 are not covered under the EA.

Since April 2017, we have the new Employment Claims Tribunal (ECT) as well as the Tripartite Alliance for Disputes Management (TADM) to assist PMEs to a speedier resolution of their disputes. The Employment Claims Tribunal (which came into force on 1 April 2017) has already done away with a salary cap for salary-related claims by employees but the ECT is limited to salary-related claims both contractually and statutorily.

The median gross monthly salaries of workers stand at $4,056 in 2016. For Professionals Managers, Executives & Technicians (PMETs), the gross monthly salaries (P-50: 50th percentile) for residents stand at $5,910 as at June 2016. The proportion of PMEs/PMETs in our workforce has also climbed steadily and is 34% / 54% respectively.

Our Labour Movement have also been challenged with difficult questions concerning various parts of the Employment Act the past few years as it also affects our unions and union members amidst a backdrop of higher number of layoffs (in 2016); unfair dismissals; mergers; acquisitions; outsourcing; volatility; and interesting new vehicles involving the sale and transfer of companies/staff.

NTUC ASG Patrick Tay highlights three focus areas of review to the Employment Act to ensure it remains relevant

NTUC ASG Patrick Tay highlights three focus areas of review to the Employment Act to ensure it remains relevant.

The 3 E’s to Ensure EA Stays Relevant

Based on cases our Labour Movement have encountered the past few years, a changing workforce profile, upward movements of median wages as well as a stronger impetus to ensure our employment laws stay relevant, we hope to see (i) Expansion of the scope of the EA to cover PMEs beyond the current $4,500 limit, (ii) Extension of the Part IV protection to cover non-workman beyond the current $2,500 limit, and (iii) Enhancements to the existing dispute resolution framework.

1. Expansion: Removing the $4,500 Salary Cap

Despite the last round of EA amendments in April 2014, we have still been receiving feedback/queries from PMEs through various channels such as through our unions/union leaders; TADM; my Meet-the-People sessions; our U PME Centres; our NTUC LawWorks Legal Clinics as well as through my social media platforms such as LinkedIn and Facebook; from aggrieved PMEs whom we were unable to assist as they earned more than $4,500 per month.

Despite the amendments to the Industrial Relations Act in April 2015 to allow collective representation of PMEs by all unions, in some of our unionised companies, management have occasionally attempted to use this “$4,500 limit” in the EA as a proxy to suggest that the union cannot expand its scope of representation beyond those earning more than this sum. Fortunately, such cases are not aplenty.

With rising median wages (including that of PMEs) and PMEs gradually forming the majority of the workforce, there is a need to review this $4,500 cap to ensure the EA serves the majority of the working population. While the intent of the cap is to strike a balance between the rights of employees and to allow companies to manage their labour obligations and costs, the changing profile of our workforce requires a regular review of the scope of coverage of the EA to ensure that these policy tensions are adequately balanced. In fact, whether there is in fact a need to have this “PME versus Rank and File” dichotomy is something we need to review whether now or in the near future. I submit therefore we should remove this $4,500 salary cap.

2. Extension: Keeping Pace with Rising Median Wages

Part IV of the EA is important as it involves the “hours of work” and determines the scope of those who are entitled to overtime payments. The two current categories of workers entitled to overtime payments are: (i) employees who are not a workman, but who is covered by the EA and earns a monthly basic salary of not more than $2,500 and (ii) a workman earning a basic monthly salary of not more than $4500.

To keep pace with wage movements, I submit there is a need to review the $2,500 and $4,500 limits accordingly and raise it to keep pace with rising median wages. I much await the Labour Force in Singapore Report to provide a more accurate picture of the wage levels in 2017 to better ascertain and ensure the limits keep pace.

Moving ahead, I also see a need to address whether the dichotomy between ‘workman’ and ‘non-workman’ is still tenable and also whether it is also appropriate to consider extending the scope of Part IV to PMEs. This may well be needed as the dichotomy between ‘Rank and File’ and ‘PME’ workers becomes increasingly blurred but it will require a closer and deeper examination as it will have a significant impact to both workers and employers.

3. Enhancement: Making it Easier to Resolve Disputes

As shared earlier, PMEs earning above $4,500 are not protected via provisions in the EA such as Section 14 on wrongful/unfair dismissals. By the same token, the ECT does not have jurisdiction to hear wrongful/unfair dismissal cases under the EA. Currently, union members in unionised companies can file a case to the Manpower Minister for such unfair/wrongful dismissal cases. However, as we see more cases of workers especially PMEs facing such unfair/wrongful dismissals, it is also imperative that the ECT be expanded to cover unfair/wrongful dismissal cases over and above the current salary related claims.

Another area for enhancement and greater clarity would be the very technical and highly moot provision of Section 18A of the EA. In it, an employer has the right to transfer an employee to another employer if the organisation is being restructured. Section 18A allows for the transfer of employees to a new entity. I suggest we should consider amending Section 18A to provide greater clarity. The other alternative would be to issue tripartite guidelines or an explicit articulation on what transfers/transactions fall within or outside of Section 18A. This is one area that has constantly been tested, challenged and greater clarity would be a boon for unions, employers and legal counsels.


In summary, these three areas are important areas for review to ensure the EA stays relevant and serve the needs of the future workforce, the future of work and the future of workplaces. However, we must bear in mind that the amendments should not compromise the need to preserve effective collective bargaining and bring more workers within the tripartite relationship.  We look forward to work with our unions/union leaders and our tripartite partners closely in the process of review and look forward to positive changes to the labour laws in this direction to better protect workers in Singapore.

This is a post by NTUC Assistant Secretary-General Patrick Tay. Any extracts should be attributed back to the author. 19 January 2018.

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