Shielding PMEs from whimsical dismissals

PROTECTING MORE STAFF: Legislative amendments in April now regard PMEs earning not more than $4,500 a month as employees under the Employment Act, though the exclusion from basic floor rights - which include rest days, hours of work, overtime, annual leave and variable payments - under Part IV of the Act remains.


    Dec 03, 2014

    Shielding PMEs from whimsical dismissals

    WHEN Singapore's main employment legislation, the Employment Act, was passed in 1968, it sought to standardise the working conditions of clerks, industrial clerks, shop assistants and workmen to instil discipline, attract foreign investment and create jobs.

    The workforce demographics in Singapore's early days of independence consisted largely of such blue-collar workers. The doyens of the workforce then - managers, executives and confidential employees - represented a small, elite class considered able enough to negotiate bespoke conditions of service for themselves, and thus did not require such legal protection.

    Fast forward 40 years and Singapore's employment landscape has changed quite dramatically, from one of industrial production to one with a growing service sector. Today, workers are much better educated and qualified, and managers and executives are now a significant part of the workforce. This largely overlooked class, numbering about 630,000 (roughly a third of the total resident workforce), has gradually grown its profile; known at first by the catchy acronym PMET (professionals, managers, executives and technicians), they are now simply called PMEs.

    In 2009, Parliament granted limited protection to PMEs under the Employment Act. For the first time, PMEs (loosely called "junior managers", given the $2,500 salary ceiling then) had access to the Labour Court only for salary claims.

    However, they were excluded from the basic floor rights under Part IV of the Employment Act, which covers rest days, hours of work, overtime, annual leave, retrenchment and retirement benefits, annual wage supplement and variable payments.

    As further endorsement of the Government's support of PMEs, legislative amendments in April now regard PMEs earning not more than $4,500 a month as employees under the Act, though the Part IV exclusion remains.

    While the legislation is surprisingly silent on the definition of a manager or executive, the term "professional" is not even mentioned in the Employment Act. Generally, a professional is someone holding a traditional vocation such as dentists, doctors, accountants or lawyers, whose employment terms are comparable or similar to those of managers or executives.

    The practical definition of a manager or executive by the Manpower Ministry (MOM) is someone who has "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".

    The authority need not be direct; so long as he has the power to influence decision-making in those key domain areas, he is regarded as a manager or executive. While we await judicial clarity, MOM's guidelines will probably prevail.

    It is doubtful that PMEs, employers and the industry fully appreciate the effect of the legislative amendments which came into effect on April 1.

    First, PMEs within the $4,500 monthly salary limit are as good as statutory employees and entitled to general Employment Act protection (eschewing Part IV protection).

    PMEs stand to enjoy Part II rights, which regulate the contract of service; this covers proper notice of termination, how it is served, termination without notice, deemed breach of contract by employer and employee, dismissal for misconduct and unfair dismissal, termination without notice by employee threatened by danger, liability of breach of contract and change or transfer of employer.

    Also included are Part III rights, which regulate payment of salary.

    Part IX rights pertain to female employees, concerning maternity protection and benefits and childcare leave, while Part X rights cover aspects such as holiday and sick-leave entitlements.

    Second, PMEs who have worked for an employer for at least 12 months may challenge any dismissal as unfair ("without just cause or excuse") within a month of the dismissal, by making representations in writing to the minister for manpower to be reinstated in their former job.

    The statute defines a dismissal widely; the definition includes the termination of the contract of service, with or without notice and whether on grounds of misconduct or otherwise.

    This means that a PME within the salary range whose contract has been terminated by contractual notice may nevertheless challenge the termination as unjust if he can prove that his employer had capriciously got rid of him because he did not like the way the employee's hair was parted, for example, or for some reason equally whimsical.

    If the minister is satisfied that the employee had been dismissed without just cause or excuse, he may direct the employer to reinstate the employee in his former job (with back pay) or direct the employer to compensate the employee.

    The minister's decision is final and cannot generally be challenged in any court of law. The representation to the minister is an extrajudicial remedy, unlike a civil suit in a court of law.

    Going to court will entail getting legal representation and may be costly and time consuming; turning to the minister is relatively inexpensive and does not require a lawyer to represent the sacked employee.

    Third, an employer must serve notice of termination in writing to a PME employee, or run the risk of the notice being improper and having no legal effect. A verbal firing of a PME employee will thus be an ineffective method of termination.

    Fourth, a female employee who is dismissed (including contractual termination, with or without notice) while pregnant will not be deprived of her paid maternity leave. She is also entitled to challenge her employer on grounds that he had no sufficient cause for dismissing her.

    The procedure is broadly similar to the unjust-dismissal procedure above; the difference is that the female employee is given two months from her confinement to complain to the minister.

    The power of the minister to order reinstatement or compensation in lieu of reinstatement, if he is satisfied the employer did not have sufficient cause to dismiss his employee, is similar to the challenge of unfair dismissal.

    The law's hitherto laissez-faire attitude towards professionals, managers and executives - based on the belief that this class of white-collar workers are generally able to bargain for enlightened conditions of service for themselves - has now been replaced by a more paternalistic attitude; legislation has been used to give this largely forgotten but important class of workers greater protection against unfair or insufficient-cause dismissals.

    Employers would need to put more effort into their recruitment and selection process to pick the right talents for the job. They also need to follow fair-employment practices when terminating or dismissing such employees, and always be ready and able to justify the dismissals on valid grounds.


    The writer is an associate professor in business law at Nanyang Technological University's Nanyang Business School.