Legal update: Revised employer advisory on salary and leave arrangements post-Circuit Breaker

Following Singapore's exit from the Circuit Breaker on 2 June, the tripartite partners have issued an updated advisory on salary and leave arrangements, in guiding employers and employees through the post-Circuit Breaker period.

Among the top-level highlights - employers must continue to inform MOM of specified cost-saving measures, foreign employees who work full-time must be paid their prevailing salaries, and employers should allow local employees to take on a second job to make up for any loss of income.

Details of the advisory are as follows:

Guide on salary and leave arrangements

The Jobs Support Scheme (JSS) announced by the Government is meant to support employers to retain and continue to pay their local employees, even during periods of reduced business activity. The JSS has been extended to cover August 2020 wages and the level of support has also been enhanced for more severely affected sectors.

For employers that cannot resume business operations, the Government will continue to provide wage support at 75% until August 2020, or when they are allowed to re-open, whichever is earlier.

Employers could continue to implement cost-saving measures

Employers who have been severely affected by COVID-19 would have worked out cost-saving measures with their unions and employees to save jobs, taking into consideration the JSS. They may, for example, seek employees’ consent to take a few days of no-pay leave each month. Such cost-saving measures that have been agreed ON should continue as necessary.

Employers whose businesses are operating are encouraged to plan long-term

Local employees who continue to work fully must be paid their prevailing salaries including the employers’ contributions to CPF, the advisory stated. 

Some businesses may also take time to resume operations fully, or may need to scale down their operations resulting in excess manpower. As such, the tripartite partners strongly encourage employers to take a long-term view of their manpower needs and responsibly implement the cost-saving measures outlined in the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment.

Employers that cannot resume operations should pay local staff a baseline monthly salary

Employers that cannot resume operations in Phase One will continue to receive enhanced JSS support of 75%. They should pay local employees a baseline monthly salary, including the employers’ contributions to CPF, as recommended in the following table:

Once the above have been implemented, if the local employee’s salary is still below their prevailing monthly salary, the employer should, as far as possible, consider the following measures to top up the shortfall:

• Send the employee for relevant or suitable training courses approved for Absentee Payroll Funding so that the overall salary paid to the employee during the training period would be mostly supported by the Government;
• Apply for Flexible Work Schedule (FWS) which allows “time-banking” of additional salary payments to offset overtime payments in the future;
• Allow the employee to consume his existing leave entitlements; or
• Grant additional paid leave to the employee.

Where possible, employers should also allow and support their local employees to take on a second job (e.g. part-time or temporary job with another employer) in companies or public agencies that are operating to make up for their loss of income.

Employers can refer to this guide for more information on second job arrangements.

Employers may also wish to encourage the affected employees to consider suitable job opportunities under the SGUnited Jobs Initiative, the advisory added.

In some instances, an employer may not be able to adhere to the recommendations outlined above, and may instead need to use the enhanced JSS payouts to cover some fixed overheads to keep the business going. Notwithstanding this, employers "should not act unilaterally and put their local employees on prolonged no-pay leave without any baseline salary."

They should make it a point to discuss with their unions and employees and come to an agreement on how the JSS payouts are to be used, to ensure their business survival as well as provide some salary support to their employees.

If there is no mutual agreement, either party can contractually terminate the employment with notice as required under the employment contract or Employment Act. In working out such arrangements, employers should give special consideration to their lower-wage employees (e.g. employees who qualify for Workfare Income Supplement) and provide more support to them.

Employers should continue to keep foreign employees in mind

Employers should ensure that they continue to take care of the well-being of all their foreign employees in Singapore. For work permit holders, there is a legal obligation on employers to provide upkeep and maintenance while they are in Singapore.

As with local employees, foreign employees who work full-time must be paid their prevailing salaries. In some cases, a foreign employee may not able to resume full-time work in Singapore because their employers are only allowed to resume operations partially or face poor business prospects. In responses, the tripartite partners encourage these employers to continue to paying them their prevailing salaries by considering the following:

• Allow them to consume their existing leave entitlements;
• Redeploy the affected to another role within the company;
• Provide them with relevant training and upskilling to get ready for the full resumption of business activities; or
• Apply for FWS which allows “time-banking” of salary payments for unworked hours to offset overtime payments in the future.

The advisory noted: "If it is not possible for employers to pay prevailing salaries because of the need to reduce wage costs after considering non-wage cost reductions, employers should engage and mutually agree with their unions and foreign employees on the appropriate salary and leave arrangements during this period.

"If a foreign employee were to be placed on no-pay leave for an extended duration, the employer must obtain his consent in writing. If there is no mutual agreement, either party can contractually terminate the employment with notice as required under the employment contract or Employment Act."

Apart from the above, the Government will extend the Foreign Worker Levy (FWL) waiver and rebate for up to two months, for the following:

• Businesses that are not in the Ministry of Trade and Industry's permitted list to resume full operations on-site; and
• All businesses in the construction, marine shipyard, and process sectors.

This will help these firms manage their costs and improve their cash flow until they are able to resume business activities., the advisory stated. The FWL waiver and rebate that eligible employers will receive per qualifying work permit or S Pass holder are:

• June 2020: 100% waiver of May levies due in June and a $750 FWL rebate; and
  July 2020: 50% waiver of June levies due in July and a $375 FWL rebate.

Lastly, employers are reminded that they should continue notifying the Ministry of Manpower if their cost-saving measures (post-Circuit Breaker) result in more than 25% reduction in the monthly salaries of their employees, and the employer has at least 10 employees.

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