EMPLOYMENT (AMENDMENT) BILL

Order for Second Reading read. 3.03 p.m.

The Acting Minister for Labour (Mr Sia Kah Hui): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The Bill seeks principally to amend section 46 of the Employment Act to give effect to the National Wages Council's recommendation that employers be allowed at their discretion to pay an annual wage supplement above the frozen quantum up to a maximum of three months' wages without seeking the prior approval of the Minister for Finance.

Hon. Members may recall that in 1972 the National Wages Council, in the interest of orderly wage increases and reduction of disputes on bonuses, recommended a policy to freeze the amount of annual wage supplements (AWS) that may be payable by employers. As a result, section 46 of the Employment Act was repealed and re-enacted to enable a trade union of employees to negotiate for the payment of either both an annual wage supplement and a bonus or both an annual wage supplement and annual wage increases.

Employers were given a right to make an option between negotiating for the payment of both an annual wage supplement and a bonus or both an annual wage supplement and annual wage increases. An employer who could not afford to pay any of these combinations was allowed to negotiate for the payment of an annual wage supplement or bonus or annual wage increases. The amounts of AWS payable by employers were frozen. Where an employer has paid bonuses of a month's wages or more before 1st July 1972, the annual wage supplement should be the average of the bonuses of the last three years or the last annual bonus whichever was higher but subject to a maximum of three months' wages. However, where employers had not paid bonuses or paid bonuses of less than one month's wages before 1st July 1972, the annual wage supplement should not exceed one month's wages. In December 1975, section 46 was amended to allow an employer who wants to pay above the frozen quantum of AWS to do so after he has sought the prior written permission of the Minister for Finance.

Sir, the present AWS policy has been in operation for a number of years. Circumstances have changed. More employers are now paying wage increases through the implementation of National Wages Council's recommendations, and disputes over payment of annual wage supplement hardly arise. We have also found that most of the applications for additional AWS have been made by the same employers year after year. From 1975 to 1979, there were 512 applications for approval from the Minister for Finance to pay annual wage supplement above the frozen quantum. Of these 512 applications, 464 applications or 91% were approved. In addition, we have also discovered that there is a need to relax it in relation to certain new companies. For example, it is the practice of the petroleum, banking and finance industries to pay annual wage supplements of 2 3/4 to 3 months' wages. New companies in these industries that were set up on or after 1st July 1972 were, however, restricted to paying annual wage supplement of up to one month's wages. A few of these companies have expressed their unhappiness over their inability to pay the same amount of AWS as their rivals in the same industry. They have pointed out that this would create difficulties in their attracting and retaining staff. There is, therefore, a case for allowing such new companies to pay at their discretion similar annual wage supplement as other companies in the same industry. In view of all these considerations, the Government has accepted the NWC recommendation that employers be allowed at their discretion to pay AWS above the frozen quantum up to a maximum of three months' wages without seeking the prior written permission of the Minister for Finance. This NWC proposal is now embodied in the Bill before the House.

The other amendments in the Bill are to remove ambiguities in the present section 46 of the Employment Act.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Sia Kah Hui].

Bill considered in Committee.

[Mr Speaker in the Chair]

Clause 1 ordered to stand part of the Bill.

Clause 2 -

Dr Augustine Tan: Mr Speaker, Sir, on a point of clarification. I am making reference to clause 2 (e), sub-paragraph (14), which says that:

'Nothing in paragraph (c) of subsection (10). or in paragraph (e) of subsection (12), of this section shall be construed as applying to any payments made by an employer to an employee under a productivity incentive scheme.'

Would the Minister clarify how different is the productivity incentive scheme from an annual bonus payment?

Mr Sia Kah Hui: Sir, a productivity incentive scheme is specifically drawn up for that purpose with all kinds of regulations and conditions.

Dr Augustine Tan: If a bonus is set out as a productivity incentive scheme, then it will be all right. It does not come under the ambit of this particular law. Is that the intention of the Bill?

Mr Sia Kah Hui: No, I do not think you can make a general application. It all depends on the structure of the company and how the schemes are varied.

Clause 2 ordered to stand part of the Bill.

Bill reported without amendment: read a Third time and passed.