EMPLOYMENT (AMENDMENT) BILL

Order for Second Reading read. 6.31 pm

The Minister for Labour and Second Minister for Law and Home Affairs (Prof. S. Jayakumar): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, the Employment Act, the main legislation governing the terms and conditions of employment in Singapore, was enacted in 1968. At that time, economic conditions were harsh and unemployment was high. The impending British withdrawal threatened to make things worse. However, the Act, particularly with the Industrial Relations Act, created the stable industrial climate necessary to instil confidence and attract foreign investments and to create jobs.

Over the past 16 years, the Act has served us well. Industrial discipline engendered in the workers has helped to foster rapid and robust economic growth so much so that today we enjoy full employment despite adverse economic conditions which have crippled even the more developed economies of the West.

Conditions over the last 1 1/2 decades, however, have changed rapidly. We started off as a mass producer of low cost and low value-added products and services competing successfully against other Third world countries. But with rising wage costs and growing competition from densely populated Third world countries with even cheaper labour cost, it is vital that we shift gear and move our economy upwards to the next plane of development. We need to continually upgrade our economy and produce higher value-added products and services which will not face such intensive competition. To achieve this, we must promote the growth of a more productive workforce in order that we may attract high technology industries and services.

Mr Speaker, Sir, in reviewing the Employment Act so that it can continue to contribute positively to our economic development in the next decade, we were therefore guided by the following objectives:-

First, we sought to raise productivity by providing for flexible work schedules which, while maximizing the use of resources and production facilities, will also benefit workers.

Secondly, we sought to enhance the nexus between employers and employees so that workers will work with motivation and be committed to their jobs and their employers.

Thirdly, we sought to remove obsolete and contentious provisions within the current legislation to minimize disputes and thus foster more harmonious industrial relations.

Sir, raising productivity will serve our long-term national interests. While it is more obviously to the interest of employers, it also works to the benefit of workers. With more viable companies, workers are assured of job security. Further, with more profitable companies, workers are in a better position to negotiate for better wages and welfare benefits.

In amending the Act, Sir, we have examined labour laws and practices of relevant countries in the East and the West to see if there were elements in their legislation which could help us promote good labour management relations, productivity, and enhance economic growth. We have consulted the National Trades Union Congress, the Singapore National Employers' Federation and other major employers' organizations and took their views into account.

Mr Speaker, Sir, I do not propose to go into the technical details of the Bill which are adequately covered in the Explanatory Statement. I shall rather dwell on the major amendments and briefly outline the thinking behind them.

Sir, manpower is our only major economic resource. We have to maximize the use of this resource by deploying it to produce higher value-added services and products. Only then can we assure our people of a growing standard of living. To achieve this, we need to attract high technology industries and services to invest in Singapore. As they are usually capital intensive, investors must operate their plants and facilities round the clock to achieve a viable rate of return. This, therefore, calls for greater flexibility in scheduling of working hours so that workers can be deployed to man these plants and facilities round the clock without suffering any disadvantage in their terms of employment nor any ill-health effects.

The current provisions in the Act governing working hours and related provisions on rest days and work week were drawn up at a time when work round the clock was uncommon and the 8-hour day and 6-day week were the norm. These provisions impose constraints on employers when they want to arrange other work schedules which will mutually benefit employers and employees.

For example, the limit on the hours of work per day in section 38 of the Act makes it impossible to arrange a 44-hour work schedule over a 5-day week. Further, the limit of 44 hours a week in the same section does not permit a work schedule which exceeds 44 hours in one week but less in the following week even though the average hours of work per week over the two weeks is not more than 44 hours. The section also does not allow employers to implement work schedules involving a work day exceeding nine hours up to 12 hours in a non-shift system, although those who operate the shift systems are presently allowed to do so.

Another example, Sir, is the definition of "week" in section 2 of the Act which makes it so inflexible that the weekly rest day of an employee has to be granted on the same day in every week.

Mr Speaker, Sir, the amendments in the Bill will overcome the difficulties and inflexibilities that I have just mentioned. For example:-

First, clause 13 of the Bill will give employers a flexibility to arrange work schedules which involve 40 hours of work over five days in a week followed by 48 hours over six days in the following week.

Secondly, clause 14 of the Bill will enable employers to extend the 12-hour work day, which is currently allowed only for shift work, to non-shift work.

Thirdly, the new definition of "week" in clause 15 will enable rest days to be scheduled up to 12 days apart as opposed to the current six days so that workers can take turns to have a rest on a weekend which is a fairer arrangement. In any case, the requirement that there should be a rest day during each week has to be complied with.

These changes, however, do not affect the maximum number of hours of work a week which remains at " averaged over two or three weeks. Work which exceeds this limit will, therefore, still attract over-time rates of payment.

These changes and the provisions for more flexible scheduling of working hours will help to raise productivity. However, employees also will stand to benefit in a number of ways. First, with more viable and profitable companies, employees will enjoy job security and will be able to negotiate for better wages and fringe benefits, as I have mentioned earlier. Secondly, these work schedules will result in employees being able to enjoy longer rest periods at a stretch. Further, by having to work lesser number of days a week, they save on the cost of transportation to and from work. The longer rest periods will also enable them to spend more time with their families, socializing or recreation.

Employees need not fear losing over-time earnings as employees cannot avoid overtime rates of payment by manipulating working hours and rest day schedules to meet unexpected work loads because work schedules must be rostered in advance. Apart from this, employees' interests are also protected if the work day is extended beyond nine hours up to 12 hours as allowed in clause 14. This clause requires employers operating on a non-shift system to obtain the workers' written consent first. Further, they are also required to explain to their employees the law governing working hours and inform them in advance of their working hours and the weekly rest days involved.

Mr Speaker, Sir, another amendment to the Act to enhance productivity is in clause 21. At present, the salary of a workman must be paid in cash. His written consent is required if his salary is to be paid by cheque or through his bank account. Clause 21 removes this requirement.

Sir, payment by cash is unproductive as it entails employment of staff to count money and to enclose it in pay packets. Security personnel are also necessary to escort large sums of cash in transit from banks to companies. Staff handling large sums of money also risk robberies and bodily injury. Workers themselves face some risk as there have been instances where entire pay packets were stolen on pay days.

It might seem a great imposition on workers to pay them by cheque or through bank accounts just to improve productivity at individual factories. However, with more and more retail banking outlets, particularly automated teller machines being set up, this is not the case. Further, we must look at the issue from the wider national perspective. If every worker has a bank account, he will soon learn to pay his regular bills, such as HDB instalments, PUB bills and other bills, through the Giro computerized system. This will reduce the overall manpower requirements in Singapore and remove the need for people to take time off to queue at payment counters.

Mr Speaker, Sir, another aspect of raising productivity is to strengthen the ties between the employer and the employee. This will make the employee identify with his company and work with greater commitment. While the Bill provides for improved provisions on annual leave and maternity leave, we would rather leave it to the employers to provide for better terms and more attractive benefits over and above those mandated now by law so that employees will see these improved terms and benefits as having come from employers rather than mandated by legislation. It will therefore lead to a more committed workforce, willing to stick by the company through thick and thin and making sacrifices in times of the companies' difficulties because they are assured that their employers will think of their welfare in good times. Such a motivated workforce will, in turn, lead to higher gains for both the employer and employee and ultimately to a more robust economy for Singapore.

The improvement in annual leave in clause 17 is to enable employees to enjoy more leave benefits if they remain with the same employer. New employees tend to move from one employer to another in search of better terms and conditions of employment. This often disrupts skills training. To induce workers to stay longer so that they can acquire skills, clause 17 provides for increasing annual leave entitlement with increasing length of service. Every employee is thus able to enjoy the current seven days' annual leave in his first year of service and an additional one day's leave for every subsequent year of service to a maximum of 14 days' leave in his eighth year of service.

Sir, maternity leave is to encourage female workers to remain in the workforce after childbirth. Presently, a female employee is entitled to maternity leave of four weeks before and four weeks after confinement. This provision is considered to be too rigid, Female employees generally prefer the flexibility of having a shorter pro-confinement and a longer post-confinement leave. Clause 24 of the Bill will make it possible for a female employee, with the agreement of her employer, to take longer leave after confinement so that she will have more time to recuperate and to be with her newborn. The length of maternity leave, however, remains at eight weeks. Clause 24, Sir, will also enable a female employee who has served her employer for 180 days before the day of her confinement to qualify for paid maternity leave. The current provisions require her to work at least 180 days within a period of one year before she gives notice to her employer of the expected date of her confinement. This amendment will make it easier for female employees to qualify for paid maternity leave.

Mr Speaker, Sir, section 50 of the Act provides a formula for calculating payments of salary for annual leave and sick leave and for work on a rest day or a public holiday in the case of monthly-rated employees. However, this was based on the traditional eight-hour day work schedule. It did not take into account work schedules where the normal hours of work per day is more than eight. Clause 19 meets this shortcoming by providing new formulae to replace section 50. These formulae will ensure that payment to employees is more equitable and commensurate with their normal working hours. The new formula will also be applied for the purpose of calculating payment in lieu of a notice of termination and the amount of deduction for one day's absence from work by the employee as provided under clauses 4 and 7 of the Bill.

Mr Speaker, Sir, the amendment Bill also removes obsolete and contentious issues under the Employment Act. Grey areas of the Act are often interpreted by the employer and employee naturally to their respective favour. However, with give and take, these issues can often be resolved without trouble. But where this accommodating spirit is absent, they can lead to disputes and work stoppages resulting in the loss of production. With doubtful issues clarified or deleted, the possible areas of friction between employers and employees will thus be removed leading to more harmonious industrial relations.

Finally Sir, the Bill will also provide for enhanced penalties for various offences under the Act. Clause 37 will raise the fines from $500 to $1,000 and from $1,000 to $2,000.

Sir, I beg to move.

Question proposed. 6.50 pm

Mr Goh Chee Wee (Boon Lay): Mr Speaker, Sir, the proposed amendments to the Employment Act as encompassed in the Bill before the House have some rather significant features. Underlying some of these proposed changes are subtle but important implications for our workers.

Sir, let me comment on some of the main amendments proposed in the Bill. To begin with, I would say that the proposed amendment to the definition of "employee" which will bring watchmen and security guards within the scope of the Act is a welcome move. It is a known fact that this category of workers sometimes work long and odd hours. It is only reasonable and equitable that they be afforded with adequate protection and be provided with the basic benefits of employment as governed by the Act.

The proposed amendment to section 21 allows for overtime payment to be made not later than 14 days after the last day of the salary period. The original provision was that payment must be made within seven days. The reason for the amendment, I believe, is that employers have found it difficult to pay salary for overtime within seven days as the overtime payment cannot be computed in advance. But I would imagine that with computerization and improved payment systems, the employers should be able to compute overtime payments rather expeditiously. I hope the employer would not cite this new provision as an excuse to unduly delay overtime payment to workers. The proposed amendments to section 25 and section 63 seek to allow employers to pay their workers' salaries by cheque or into their bank account without their written consent. Sir, no one can refute the fact that manual cash payment is "unproductive and risky". This perhaps explains why, even before the proposed amendment is mooted, many workers have not only been receptive to the idea of payment through bank accounts but have accepted it.

In companies where the new mode of payment was introduced without much difficulties, this was usually achieved through proper and clear explanations to the workers of the advantages of such a scheme. Employers must also help to allay the fear of the workers in operating a bank account.

I would suggest that employers contemplating convening to payment through bank accounts should learn from the experience of those who have implemented the scheme to the satisfaction of their employees. I believe if employers consult the union and adopt the encouragement and soft-sell approach rather than maintain an authoritative stand towards the whole matter, they would have the cooperation of their employees.

I need not emphasize here again the importance of adequate banking facilities towards the successful operation of such a scheme. Employers should see to it that such banking facilities are available for the convenience of their workers. They may wish to consider staggered pay days or earlier pay days for their workers. This will greatly reduce the need for their workers to join the long queue which is a regular feature at most banks and teller machines during the end of the month.

The proposed amendment to section 29 provides for deduction of the employee's salary for damages or loss of goods caused by negligence to a maximum of one-quarter of the worker's one month's salary. Presently, the maximum deduction is one-quarter of the wages or $50, whichever is the less. Sir, it is indeed unfortunate that even inflation has caught up with this particular provision of the Act.

Employees of any company are assigned different duties and responsibilities. For some, their jobs entail handling cash; for others, they may be entrusted with the delivery and transportation of goods. Such jobs incur some degree of risk. And the workers are liable for loss or damage. It is therefore not surprising that jobs of such nature which incur such risk are shunned by many.

I would suggest that the employers should always explore ways and means of improving their systems and methods of handling goods and cash. There may not be foolproof methods in all instances. But it makes better sense to try to introduce control to prevent losses from occurring rather than to try to attribute the blame on the workers.

The proposed amendments to section 38 and section 40 allow greater flexibility for employers in scheduling the working days and working hours. One would perhaps understand the flexibility afforded to employers, as set out in the proposed amendments, in the light of our drive towards a high-technology and high value-added economy characterized by extensive automation and mechanization. The proposed provisions will enable those employers who have automated to a high level to be in a position to better organize their manpower resources so as to derive optimal performance and returns.

But I must stress that employers should not be allowed to abuse the provisions of the Act by changing the work pattern arbitrarily just to avoid paying overtime when the need for overtime work arises.

The amendments to the Act allow employers to implement a 12-hour shift. The most common arguments put forward in support of a 12-hour shift system is the need to optimize and maximize the utilization of expensive plant and equipment. But this shift system is still a fairly new work arrangement and its validity in increasing productivity and work motivation has not yet been fully established.

One common physiological effect arising from long hours of work is fatigue. Research has shown that a sudden increase in working hours could result either in a perceptible reduction in productivity or a significant increase in symptoms of fatigue.

I would urge companies which intend to introduce the 12-hour shift to study their nature of operations and to obtain the views of the workers. If the work is strenuous and intensive and if working conditions are adverse, such as extreme hot or cold, high levels of noise, vibration and dust, the 12-hour rotating shift system can cause serious detriment to the health of the workers. On the other hand, the 12-hour shift system may be more suitable for light work or for tasks having numerous rest pauses and waiting time arising from the nature of the operations. I must stress that higher productivity must not be achieved at the expense of workers' health and safety.

The proposed amendment relating to the progressive increase in the annual leave entitlement with the length of service is in line with the policy of encouraging the workers to stay with their employer. This is worthy of support. I also fully support the proposed amendment to section 76 which allows a female employee to take less than four weeks pre-confinement leave so she could have longer post-confinement leave. Apart from allowing the female to exercise their preference, the flexibility of a longer post-confinement leave will also give the female employees more time to work out their child-care arrangement.

Sir, the amendment Bill confers upon the employers several management prerogatives, including flexibility in devising the work schedule and in paying salaries by cheque or through the bank account, etc. All these were proposed in the name of productivity, efficiency and optimum utilization of plant and machinery. We can convince and mobilize our workers to support measures to improve productivity and efficiency. This is good for our economy and our nation. But at the end of the day, we have to ask ourselves the question: Have the workers benefitted from the productivity improvement and have they been given a fair share of the fruits of success?

I therefore hope that the employers in Singapore would view the amendments to the Employment Act in the right perspective. They should exercise their prerogative and discretion in the right spirit and in the right manner. Management should adopt a consultative rather than an autocratic approach before introducing any changes. And most important of all, the employers must have the interest of the workers at head and be prepared to share with the employees whatever gains or benefits derived from higher productivity and better utilization of capital, equipment and manpower resources. 7.00 pm

Encik Othman bin Haron Eusofe (Geylang Serai): Mr Speaker, Sir, I would like to look at the amendments to the Employment Act in a positive way, in that they will, provided certain safeguards are taken in the implementation, enable higher productivity to be achieved and this will benefit our workers who will be able to enjoy a better quality of life.

First, I would like to comment on the provisions in clauses 13 and 14. They will give greater flexibility to employers to schedule the working days in a week as well as working hours in a day. A flexible work system will allow the high technology plant and equipment in our factories to be operated at an optimum level each day. It will help justify the high capital investment and, as such, will encourage employers to invest in capital intensive industries. The benefit to workers will be that better jobs will be created and there will be more opportunities for them to upgrade their skills and knowledge. In the process they will be able to earn higher salaries and enjoy greater job satisfaction.

However, I would like to stress that there must be effective consultations between the employers and their employees before such flexible work systems are introduced. While the employers want to achieve higher operational efficiency, they must never neglect their employees' well-being which deserves their priority consideration. They must show genuine concern for their employees' health and safety. The employers must satisfy themselves that longer work shifts, like the 12-hour shift, will not bring harmful effect to their employees. Their employees' mental and physical health must not be adversely affected by the flexible work system. The employers must also realize that the longer shifts can also adversely affect the workers' family and social life. In short, we must always maintain a balance between the drive for operational efficiency and the crucial need to safeguard the workers welfare and well-being. As we gear ourselves to promote greater economic progress and development, sufficient care must also be taken to ensure that the families of the workers will not suffer. The Government will have to check that the employers will not abuse these provisions and must take them to task if they do so. Effective consultations between the employers and employees will see to it that the workers' welfare and well-being will not be neglected in the pursuit of greater operational efficiency and higher productivity.

The employers must be continuously reminded that in the effort to raise productivity their employees must be happy and comfortable. They will only be motivated to work to the best of their ability if they know that their employers genuinely care for their welfare. It is the objective of the amendments to the Employment Act to bring about greater labour-management cooperation and to enhance company loyalty. The employers must understand this. Lack of care and concern for their workers' welfare in the implementation of these provisions will strain the relationship.

Clause 21 will enable employers to pay salaries of their employees by cheque or into their banking account without having to obtain their employees' written consent. I would like to again ask the Minister to see that there will be adequate safeguards to ensure that employers do not take advantage of this and implement new salary payment system which may create difficulties for their employees, particularly when they are not given sufficient time to adjust to the new system. We have among our workforce workers who may not be familiar or accustomed to the banking system. For all these years they have been paid in cash, and if they are paid through the banking system now, they will find difficulty to adjust, at least in the initial stages. They should therefore be given the necessary help to prepare them to be paid through the banking system before such payment system is implemented.

Payment of salaries into the employees' banking account or by cheque can bring about cost-savings for the employers, and I think it is only fair that some of this cost-savings is shared with their employees as well. Sir, I support the Bill and I would like to ask the Minister to give the assurance that serious consideration will be given to safeguard the workers' welfare and well-being in the implementation of the above provisions in the Bill.