Singapore passes two new bills to help businesses and workers

Singapore, on Tuesday (3 November), passed two new bills to aid businesses, and in turn workers, during these uncertain times - the Insolvency, Restructuring and Dissolution (Amendment) Bill, and the COVID-19 (Temporary Measures) Amendment No.3 Bill. 

The Insolvency, Restructuring and Dissolution (Amendment) Bill will establish a simplified insolvency programme which provides for a simplified process for eligible companies that require support, to:

• Restructure their debts to rehabilitate the business.
  • This focuses on assisting small companies by providing simpler, faster, and lower-cost proceedings for eligible companies by requiring one court application (instead of two) for simplified debt restructuring.
• Wind up the company as the business has ceased to be viable.
  • This process is based on the voluntary winding up process, instead of a court-ordered winding up, removing the necessity of a court application to place the company into winding up.

Whereas the COVID-19 (Temporary Measures) Amendment No.3 Bill provides for contracts already entered into, to be renegotiated amidst these unprecedented and uncertain times. 

In a speech at the second reading of the bills, NTUC Assistant Secretary-General Patrick Tay expressed his support for both bills, while pointing out areas of improvement. 

Patrick Tay: Provide more direct assistance for workers who seek to recover their unpaid wages, salaries or benefits

The simplified proceedings the Insolvency, Restructuring and Dissolution (Amendment) Bill provides for may help to reduce the time and costs involved in conventional insolvency processes, which may help to somewhat increase the overall pool of assets and monies to be eventually used to satisfy a company’s debts.

This may help certain businesses rehabilitate and survive this economic downturn, which in turn may help to preserve jobs, Tay said. 

However, given that the key intent of the programme is to assist troubled companies, it does not significantly improve the position of workers with owed salaries or retrenchment benefits as these remain unsecured debts. For instance: 

• In the event that a company has to wind up.
  • Even though there is a priority of debts provided in the Act, workers’ outstanding wages and salaries remain unsecured debts, which may result in a situation where there are little assets left to pay these workers’ salaries and benefits, including those provided in their collective agreements, after all the company’s secured debts have been satisfied.
• If the company survives and continues its operations.
  • An unpaid worker may still need to go through a protracted enforcement process against the company to recover unpaid salaries and retrenchment benefits where provided and applicable. However, that does not guarantee that all outstanding salary, retrenchment benefits, or benefits can be recovered. This is further exacerbated during recent times when companies undergo insolvency or other related proceedings such as judicial management and receivership.

"In any event, there is little or no recourse for both workers and unions as a moratorium of sorts prohibits the enforcement of rights under a collective agreement or any other due process. Although a leave of court could be obtained, this has to be done through legal processes which may be too onerous, involve costs, and sometimes beyond the reach of workers and unions," Tay said.

Moving forward, he is in the view that more direct assistance should be provided to support workers who seek to recover their unpaid wages, salaries or benefits by simplifying and expediting enforcement of recovery proceedings, especially when companies are experiencing financial difficulties and have limited assets to satisfy all creditors.

In the same vein, he hopes to see some form of protection accorded to vendors that have business with the company as well as consumers.

Tread carefully to ensure that the fundamental principle of contractual sanctity is not undermined

Contract renegotiation provided by the COVID-19 (Temporary Measures) Amendment No.3 Bill would aid businesses to survive the brunt of this downturn, as many of them had entered into contracts when the outlook was very different. This would help many SMEs and Micro-SMEs that would otherwise face difficulties staying in business. 

"The survivability of companies and businesses also has ramifications to jobs and workers. As such, this ability to re-negotiate will go some way to help many of these SMEs and Micro-SMEs stay in business and re-balance themselves," Tay said.

However, he noted that it is necessary to tread carefully and limit the scope of renegotiation to ensure that the fundamental principle of contractual sanctity is upheld and not undermined.

To this, he hopes the Ministry of Law would consider outlining certain set parameters for renegotiation, which can help as many of these businesses as possible.

At the same time, Tay raised the issue of the decisions of assessors which is provided in the Act, asking for a recourse which can be taken in the event where a decision is manifestly prejudicial against a non-offending or innocent party. 

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