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Employment Act and Flexiwork Arrangements

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THE INCREASING PREVALANCE OF FLEXI-WORK ARRANGEMENTS

In light of the present-day labour crunch, employers are exploring ways and means to increase manpower. Modern-day employees are also seeking a more pronounced work-life balance. The convergence of these two trends has led to employees seeking, and employers accepting, what is commonly known as flexi-work arrangements. Such arrangements differ from traditional employment structures: employees may work less hours a day, work only on selected days per work, or work partially or even entirely from home. Because of these alternative, and sometimes unorthodox, arrangements that flexi-work schemes encompass, employers may sometimes be misled into thinking that the benefits to be accorded to workers on flexible work arrangements. This may not be correct. This article will explore the obligations of an employer under the Employment Act in particular relation to workers on flexi-work schemes, and recommend guidelines for employers seeking to create or promote flexi-work arrangements at the workplace.

THE EMPLOYMENT ACT MAY APPLY EVEN TO WORKERS ON FLEXI-WORK ARRANGEMENTS

Regardless of whether an employee is under a flexi-work arrangement or otherwise, his employment is governed by the Employment Act (Cap 91, Rev Ed 2009) only if he is a) under a contract of service and b) falls within the definition of an “employee” or “workman” as defined by the Act. In this respect, it should be noted that managers or executives as well as professionals with tertiary education and specialised knowledge/ skills and whose employment terms are comparable to those of managers and executives (e.g. lawyers, accountants, dentists and doctors) would not be covered under the Act. Even if the employee satisfies the two-limb test above, his contract of service will be regulated by the Employment Act only if his contract requires him to work more than 35 hours per week. Otherwise, his contract would be regulated by the Employment (Part-Time Employees) Regulations (Cap 91, Section 66B). In either case, notwithstanding any flexi-work arrangements, the employee would still be entitled to overtime pay and pay for work done on rest days. In conclusion, the law on employment benefits is relatively clear. Flexi-work arrangements do not vary the rights and obligations that employers and employees owe towards one another. Trust and communication are critical to making such arrangements work. In particular, parties have to adopt a more results-based work ethics as compared to one which focuses on the amount of time spent. The Employment Act (Cap 91, Rev Ed 2009) recognises two types of workers, viz the employee and the workman. Be that as it may, they are only entitled to the benefits and protection conferred by the Employment Act only if they are under a contract of service.

Employee

The Employment Act defines an “employee” as a person who has entered into or works under a contract of service with an employer and includes a workman, and any officer or employee of the Government included in a category, class or description of such officers or employees declared by the President to be employees for the purposes of this Act or any provision thereof, but does not include —

(a) any seaman;
(b) any domestic worker;
(c) subject to subsection (2)¹, any person employed in a managerial or an executive position; and
(d) any person belonging to any other class of persons whom the Minister may, from time to time by notification in the Gazette, declare not to be employees for the purposes of this Act.
Workman

The Employment Act defines a “workman” as

(a) any person, skilled or unskilled, who has entered into a contract of service with an employer in pursuance of which he is engaged in manual labour, including any artisan or apprentice, but excluding any seaman or domestic worker;
(b) any person, other than clerical staff, employed in the operation or maintenance of mechanically propelled vehicles used for the transport of passengers for hire or for commercial purposes;
(c) any person employed partly for manual labour and partly for the purpose of supervising in person any workman in and throughout the performance of his work

  1. Provided that when any person is employed by any one employer partly as a workman and partly in some other capacity or capacities, that person shall be deemed to be a workman unless it can be established that the time during which that workman has been required to work as a workman in any one salary period as defined in Part III has on no occasion amounted to or exceeded one-half of the total time during which that person has been required to work in such salary period;
(d) any person specified in the First Schedule;

  1. Cleaners;
  2. Construction workers;
  3. Labourers;
  4. Machine operators and assemblers;
  5. Metal and machinery workers;
  6. Train, bus, lorry and van drivers;
  7. Train and bus inspectors; and
  8. All workmen employed on piece rates at the employer’s premises.
(e) any person whom the Minister may, by notification in the Gazette, declare to be a workman for the purposes of this Act.
Part IV

It is also necessary to point out that Part IV of the Employment Act (which regulates a worker’s rests days, hours of work and other conditions of service) applies only to:

(a) Workmen earning not more than $4,500 basic monthly salaries; and
(b) Other employees (other than workmen) covered under Employment Act earning not more than $2,500 a month (excluding overtime payments, bonus payments, annual wage supplements, productivity incentive payments and any allowance however described) or such other amount as may be prescribed by the Minister².
Managers and Executives

Excluded from Employment Act Part IV of the Employment Act does not cover managers or executives. Managers and executives are employees with executive or supervisory functions. These functions include the authority to influence or make decision on issues such as recruitment, discipline, termination of employment, assessment of performance and reward, or involvement in the formulation of strategies and policies of the enterprise, or the management and running of the business. They also include professionals with tertiary education and specialised knowledge/skills and whose employment terms are comparable to those of managers and executives. Professionals such as lawyers, accountants, dentists and doctors whose nature and terms of employment are comparable to executives would generally be deemed as such, and hence they would not be covered under the Act: http://www.mom.gov.sg/employmentpractices/employment-rightsconditions/employment-act/Pages/default.aspx

Contract of Service

The Employment Act defines a “contract of service” means any agreement, whether in writing or oral, express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve his employer as an employee and includes an apprenticeship contract or agreement”. Cases on this issue are legion. It is not necessary to examine all the authorities on this point. They all agree that no single test or factor is decisive of the issue: Kureoka Enterprise Pte Ltd v Central Provident Fund Board [1992] SGHC 113 [“Kureoka”]. Suffice to say, the law in Singapore is that a person is under a contract of service if his employer is required to make CPF contributions on his behalf: Kureoka.

Full-Time v Part-Time Employees

Even if a worker shows that he is an employee, i.e. a worker under a contract of service, his contract of service will be regulated by the Employment (Part-Time Employees) Regulations (Cap 91, Section 66B) if he is required under his contract of service with an employer to work for less than 35 hours a week: s 66A of the Employment Act.

EMPLOYEE BENEFITS UNDER FLEXI-WORK ARRANGEMENTS

In general, there is nothing under the Employment Act or the Employment (Part-Time Employees) Regulations that prohibit employers from creating flexi-work arrangements. Nonetheless, a brief look at the relationship between flexi-work arrangements and an employee’s pay and rest entitlements will be appropriate.

Working Hours

The issue of working hours is relevant insofar as the employee’s entitlement to overtime pay is concerned. This is especially so under certain flexible work arrangements where employers will not be able to keep a close tab on the number of hours put in reality. As a general guide, employees whose contract of service are regulated under the Employment Act shall not be required under his contract of service to work:

(a) more than 6 consecutive hours without a period of leisure;
(b) more than 8 hours in one day or more than 44 hours in one week. The Employment (Part-Time Employees) Regulations is silent on this issue insofar as part-time employees are concerned. It is submitted that this is a matter to be determined by contract: see s 3 of the Employment (Part-Time Employees) Regulations.
Overtime Pay

Employment Act

For employees whose contract of service are regulated by the Employment Act, overtime allowance is payable if the employee is required by the employer to work above the specified limits of working hours in the Act. An employee is permitted to work up to a limit of 72 hours of overtime in a month, excluding work done within his normal daily working hours on his rest day or public holiday. An employee must be paid at least 1.5 times his hourly basic rate of pay for all work in excess of the normal hours of work. The overtime rate payable for non-workmen is capped at the salary level of $2,250; i.e. nonworkmen earning more than S$2,250 a month will be paid for overtime work at a rate based on a salary of S$2,2503.

Employment (Part-Time Employees) Regulations

A part-time employee who works beyond his normal hours of work shall be paid for such extra work —

(a) at his hourly basic rate of pay for each hour or part thereof which exceeds his normal hours of work but does not exceed the normal hours of work of a similar full-time employee; and
(b) at one and a half times his basic hourly rate for each hour or part thereof which exceeds the normal hours of work of a similar full-time employee.

A “similar full-time employee”, in relation to a part-time employee, means a full-time employee who is employed by the employer of the part-time employee to carry out duties similar to those of the part-time employee.

Where there is no similar full-time employee, it shall be deemed, for the purposes of calculating any entitlement under the Regulations, that the similar full-time employee is required to work 8 hours a day and 44 hours a week.

Working on Rest Days

Employment Act

No employee shall be compelled to work on a rest day unless he is engaged in work which by reason of its nature requires to be carried on continuously by a succession of shifts.

An employee who at his own request works for an employer on a rest day shall be paid for that day —

(a) if the period of work does not exceed half his normal hours of work, a sum at the basic rate of pay for half a day’s work;
(b) if the period of work is more than half but does not exceed his normal hours of work, a sum at the basic rate of pay for one day’s work; or
(c) if the period of work exceeds his normal hours of work for one day —

  1. a sum at the basic rate of pay for one day’s work; and
  2. a sum at the rate of not less than one and a half times his hourly basic rate of pay for each hour or part thereof that the period of work exceeds his normal hours of work for one day.

An employee who at the request of his employer works on a rest day shall be paid for that day —

(a) if the period of work does not exceed half his normal hours of work, a sum at the basic rate of pay for one day’s work;
(b) if the period of work is more than half but does not exceed his normal hours of work, a sum at the basic rate of pay for 2 days’ work; or
(c) if the period of work exceeds his normal hours of work for one day —

  1. a sum at the basic rate of pay for 2 days’ work; and
  2. a sum at the rate of not less than one and a half times his hourly basic rate of pay for each hour or part thereof that the period of work exceeds his normal hours of work for one day.
Employment (Part-Time Employees) Regulations

A part-time employee who at his own request works for an employer on a rest day shall be paid for that day —

(a) if the period of work does not exceed half his normal hours of work for one day, a sum at his basic rate of pay for half a day’s work;
(b) if the period of work exceeds half but does not exceed his normal hours of work for one day, a sum at his basic rate of pay for one day’s work;
(c) if the period of work exceeds his normal hours of work for one day but does not exceed the normal hours of work for one day of a similar full-time employee —

  1. a sum at his basic rate of pay for one day’s work; and
  2. at his hourly basic rate for each hour or part thereof which exceeds his normal hours of work; or
(d) if the period of work exceeds the normal hours of work for one day of a similar full-time employee —

  1. a sum at his basic rate of pay for one day’s work;
  2. at his hourly basic rate for each hour or part thereof which exceeds his normal hours of work but does not exceed the normal hours of work of a similar full-time employee; and
  3. at one and a half times his hourly basic rate of pay for each hour or part thereof which exceeds the normal hours of work of a similar full-time employee.

A part-time employee who, at the request of his employer, works on a rest day shall be paid for that day —

(a) if the period of work does not exceed half his normal hours of work for one day, a sum at his basic rate of pay for one day’s work;
(b) if the period of work exceeds half but does not exceed his normal hours of work for one day, a sum at his basic rate of pay for 2 days’ work;
(c) if the period of work exceeds his normal hours of work for one day but does not exceed the normal hours of work for one day of a similar full-time employee —

  1. a sum at his basic rate of pay for 2 days’ work; and
  2. at his hourly basic rate for each hour or part thereof which exceeds his normal hours of work; or
(d) if the period of work exceeds the normal hours of work for one day of a similar fulltime employee —

  1. a sum at his basic rate of pay for 2 days’ work;
  2. at his hourly basic rate for each hour or part thereof which exceeds his normal hours of work but does not exceed the normal hours of work of a similar full-time employee; and
  3. at one and a half times his hourly basic rate for each hour or part thereof which exceeds the normal hours of work of a similar full-time employee.

ADAPTING TO FLEXI-WORK ARRANGEMENTS: SOME PRACTICAL TIPS

Despite the obvious benefits that flexi-work arrangements can bring to both the employers and employees, it is understandable that employers may harbour a great deal of scepticism concerning its workability. There are several guidelines that they should bear in mind when deciding to implement such a work arrangement:

(a) Out of Sight Does Not Mean Not-At-Work.
Trust and clearly written agreements with set goals and objectives will establish deliverables to help overcome the perception that staff who are not in sight are not at work. Employees must be reachable during specified periods and supervisors have to recognise that even on-site employees are not accessible some of the times.
(b) Results-based Management.
Define the objectives, set clear goals and establish the interim steps and timeline to completion. Work on outcomes and deliverables.
(c) Support and Guidance.
During the initial period of adjustment, regular, but non-intrusive contact through phone, fax or e-mail initiated by managers can help to alleviate any anxieties the telecommuters may feel about being less connected during this period. Including them in more group meetings and encouraging them to spend more time in the office would also be strategies to help them overcome this anxiety.
(d) Periodic Reviews.
To be conducted so that the employee and manager review progress, make adjustments and assess the effectiveness of the arrangement.
(e) In-office Contact.
Encourage interaction with telecommuting employee whenever he or she is in the office. This is because good working relationships are maintained in face-to-face contacts.
(f) Communication Plan.
A communication plan should be established to keep each other informed of what is being done, how and when it is being done, and how successful one is with it.

(adapted from http://www.mom.gov.sg/documents/employmentpractices/successful-flexible-workarrangements.pdf)

CONCLUSION

An employee must be under a contract of service and fall within the definition of an employee or workman under the Employment Act to enjoy the statutory entitlements under the said Act. However if his contract of service requires him to work less than 35 hours per week, his contract will be regulated instead by the Employment (PartTime Employees) Regulations. In either case, the employee is entitled to both overtime pay and pay for work done on rest days. Flexi-work arrangements do not vary the rights and obligations that employers and employees owed to each other. Communication and trust are critical to successful Flexi-work arrangements.

Patrick Tan

Chief Executive Officer
DID: +65 6645 4500
[email protected]