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Amendments To the Employment Act: What It Means For Your Business

March 16, 2016

Post updated April 13th 2016.

Employers in Singapore have three new requirements under the Employment Act. Effective 1 April 2016, you are required to:

  1. Issue key employment terms (KETs) in writing to employees covered under the Employment Act.
  2. Issue itemised payslips to employees covered under the Employment Act.
  3. Maintain detailed employment records of employees covered under the Employment Act.

1. Key Employment Terms (KETs) in an employment contract

Why key employment terms?
KETs are aimed at helping employees to better understand their employment terms and benefits.

Who is it for?
Employers must issue KETs in writing to all employees who:

  • Enter into a contract of service on or after 1 April 2016,
  • Are covered by the Employment Act; or
  • Are employed for 14 days or more.

When should I issue key employment terms to employees?
You must issue KETs to employees within 14 days from the start of employment.

What should I include in the key employment terms?
KETs must include the items below:

  1. Full name of employer
  2. Full name of employee
  3. Job title, main duties and responsibilities
  4. Start date of employment
  5. Duration of employment (if employee is on fixed-term contract)
  6. Working arrangements, such as:
    1. Daily working hours (e.g. 8.30am – 6pm)
    2. Number of working days per week (e.g. six)
    3. Rest day (e.g. Saturday)
  7. Salary period
  8. Basic salary. For hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay (e.g. $X per hour, day or piece)
  9. Fixed allowances
  10. Fixed deductions
  11. Overtime payment period (if different from item 7 salary period)
  12. Overtime rate of pay
  13. Other salary-related components, such as:
    1. Bonuses
    2. Incentives
  14. Type of leave, such as:
    1. Annual leave
    2. Outpatient sick leave
    3. Hospitalisation leave
    4. Maternity leave
    5. Childcare leave
  15. Other medical benefits, such as:
    1. Insurance
    2. Medical benefits
    3. Dental benefits
  16. Probation period
  17. Notice period

Exceptions:
You may leave out any terms that are inapplicable. For example, if the employee is a PME and overtime pay does not apply, the KETs issued do not need to include items 11 to 12.

Source: Ministry of Manpower

How can I issue key employment terms to employees?
You can issue key employment terms in either soft or hard copy. Handwritten copies are also accepted. Common KETs (e.g. leave policy and medical benefits) can be provided in employee handbook or via the company intranet.

All required key employment terms are present in Dragon Law’s employment contracts.

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2. Itemised payslips

Why itemised payslips?
Itemised payslips will help employees better understand how their salary is calculated.

Who is it for?
You must issue itemised payslips to all employees covered under the Employment Act.

When should I issue payslips?
You should issue payslips to employees at least once a month, together with salary payment. Should this be impossible for whatsoever reason, you must issue the payslip within three working days of salary payment.

In the case of termination or dismissal, you must provide the payslip together with any outstanding salary payment.

What should an itemised payslip include?
An itemised payslip must include the items below:

  1. Full name of employer
  2. Full name of employee
  3. Date of payment (or dates, if the payslips consolidates multiple payments)
  4. Basic salary. For hourly, daily or piece-rated workers, indicate all of the following:
    1. Basic rate of pay, e.g. $X per hour
    2. Total number of hours or days worked or pieces produced.
  5. Start and end date of salary period
  6. Allowances paid for salary period, such as:
    1. All fixed allowances, e.g. transport
    2. All ad-hoc allowances, e.g. one-off uniform allowance
  7. Any other additional payment for each salary period, such as:
    1. Bonuses
    2. Rest day pay
    3. Public holiday pay
  8. Deductions made for each salary period, such as:
    1. All fixed deductions (e.g. employee’s CPF contribution)
    2. All ad-hoc deductions (e.g. deductions for no-pay leave, absence from work)
  9. Overtime hours worked
  10. Overtime pay
  11. Start and end date of overtime payment period (if different from item 5 start and end date of salary period)
  12. Net salary paid in total

Exceptions:
You may leave out any terms that are inapplicable. For example, if overtime pay does not apply to an employee, his/her payslip need not include items 9 to 11.

You may consolidate payslips if you make payments more than once a month. The consolidated payslip must contain details of all payments made since the last payslip.

Source: Ministry of Manpower

How should the itemised payslips be delivered?
You may deliver itemised payslips in soft or hard copy. Handwritten copies are also accepted.

Remain compliant without all the administrative hassle:

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3. Keeping records

What is it?
You must maintain records for all employees covered by the Employment Act.

For whom should I keep records for, and for how long?

  • For the last two years for current employees
  • Records should continue to be kept for one year after the employee leaves employment

How should the employee records be kept?
Employee records can be kept in soft or hard copy. Handwritten copies are also excepted.

What should I record?
The records are in two categories:

  • Employee records
  • Salary records

Employment records

  1. Address
  2. NRIC number (for non-citizens, work pass number and expiry date)
  3. Date of birth
  4. Gender
  5. Date of starting employment
  6. Date of leaving employment
  7. Working hours, including duration of meals and tea breaks
  8. Dates and other details of public holidays and leave taken

Source: Ministry of Manpower Singapore

Salary records
See table above.

With Dragon Law, all your documents are stored and synced in one place. Try it for free:

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Failure to comply

Failure to comply with the requirements on written KETs, itemised payslips and employment records will be penalised a “civil breach” and attract administrative penalties.

Penalties for civil breaches can result in MOM issuing an order to the employer to rectify the breach or in financial penalties of $100 to $200 per employee or occurrence, depending on the type of breach. A failure to comply with MOM’s order will constitute a criminal offence, which attracts more severe penalties of fines up to S$5,000 and/or imprisonment of up to 6 months.

 

Dragon Law’s technology helps companies in Singapore and Hong Kong build legal documents they need at every stage of the business. Its intuitive platform allows users to create, customise and store legal documents in the cloud for sharing and signing online.

 

Find out how Dragon Law can help you:

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