The Need for Flexi-work Schedules
1. With the rapidly changing market demands and volatile business cycles, companies would need to have greater flexibility to schedule work patterns to optimise their manpower resources.
2. While most companies have no difficulty scheduling their work patterns based on the provisions in the Employment Act on overtime, public holiday and rest day work, some companies which face uneven demands due to their nature of operations or seasonal or business cycles, may need to deviate from these provisions to optimise their manpower resources. A flexible schedule would enable the companies to more effectively deploy their manpower to cope with the fluctuating demands during the peak and lull periods. By so doing, the companies would enhance their productivity and competitiveness and avoid having to retrench workers when the demand falls.
Amendments to the Employment Act
3. The Employment Act was amended on 1 October 2004 to allow the Commissioner for Labour to exempt companies, whose nature of operations and business patterns justify the exemption, from the statutory provisions on overtime, rest day and public holiday work.
Tripartite Guidelines on Flexible Work Schedules
4. To help the Commissioner for Labour in granting exemption, the Tripartite Work Group, with members from SBF/SNEF, NTUC and MOM, has formulated and issued a set of guidelines 1 which include conditions for companies to seek exemption and requirements for employers to ensure that the interests of the employees are safeguarded and that the implementation of the flexible work schedules would benefit both the companies and the employees.
Qualifying conditions for exemption
5. Companies may be exempted from the provisions in the Employment Act on working hours, rates of pay for overtime work and work on rest days and public holidays, if they fulfill the following conditions:
(a) Companies should have a compelling need to operate flexibly to cope with uneven and fluctuating business cycles. The exemption is to allow these companies to implement flexible work schedule to meet fluctuating demands.
(b) Companies should continue to pay the monthly basic salary of their employees during lull periods if they worked less hours. This is to ensure income stability for the workers.
(c) Companies must ensure that the safety and health of the employees is not compromised and that the employees should not be subjected to hazardous work environment and conditions as the result of the implementation of the flexible work schedules scheme.
(d) Companies must have an incentive scheme to share the gains derived from the efficient use of manpower resources with their employees.
Please refer to Annex A for background information on the formulation of the Tripartite Guidelines on Flexible Work Schedules.
(e) Consent must be obtained from the majority of the employees or from the union, in the case of a unionised company, for the implementation of flexible work arrangements.
(f) The scheme will be subjected to regular reviews to ensure that it has achieved its objective.
Application Procedures
6. Applications for exemption from the relevant sections of the Employment Act must contain the following information:
(a) nature of the company's business
(b) evidence that the company's operations are subjected to fluctuating demands and volatile business cycles
(c) description of the duties of the employees affected by the flexi-work scheme
7. Applications must be submitted in writing, at least two months before the implementation of the scheme, to:
Commissioner for Labour
Labour Relations Department
Ministry of Manpower
18 Havelock Road # 04-02
Singapore 059764
8 The Tripartite Guidelines are attached at Annex B and are also available on MOM website at http://www.mom.gov.sg .
For media queries, please contact:
Ms Koh Li Peng
Manager, Corporate Communications
Ministry of Manpower
Tel: 6317 1958
Email: koh_li_peng@mom.gov.sg
ANNEX A
Background to the formulation of the
Tripartite Guidelines on Flexible Work Schedules
The Economic Review Committee (ERC) has recommended that companies be given exemption from the statutory provisions in the Employment Act on overtime, rest day and public holiday work so that they could adopt flexible work schedules. Flexible work schedules would give companies greater flexibility on scheduling their working hours to optimise their manpower resources, thereby enhancing productivity and competitiveness in a globalised economy. Workers would also benefit from the implementation of flexible work schedule as there would be a lower risk of retrenchment during lull periods.
2 Based on the recommendations of the ERC, the Employment Act was amended on 1 st October 2004 to allow companies to seek exemption from the statutory provisions on overtime, public holiday and rest day work. A Tripartite Work Group consisting of members from Singapore Business Federation (SBF), Singapore National Employers Federation (SNEF), National Trades Union Congress (NTUC) and Ministry of Manpower (MOM) was also established to formulate and issue a set of tripartite guidelines which include conditions for companies to seek exemption. The Tripartite Work Group would also assess the various applications of flexible work schedule and make recommendations to the Commissioner for Labour to exempt companies from the statutory provisions in the Employment Act on working hours and the minimum rates of payment for overtime work and work on rest days and public holidays as specified in the Employment Act.
3 The Tripartite Work Group is chaired by Mr Ong Yen Her, Divisional Director, Labour Relations & Workplace Division, MOM. The members and resource persons of the Work Group are as follows:
Members :
• Mr Yeo Guat Kwang, Director, Quality Workplace Department, NTUC
• Mr Koh Juan Kiat, Executive Director, SNEF & SBF
• Mr Tan Jing Koon, Deputy Director, Labour Relations Department, MOM
Resource Persons:
• Mdm Halimah Yacob, Assistant Secretary-General, NTUC
• Mr Lim Chin Siew, Director, Industrial Relations Department, NTUC
ANNEX B
TRIPARTITE GUIDELINES ON FLEXIBLE WORK SCHEDULES
1 Introduction
1.1 With rapidly changing market demands and volatile business cycles, companies would need to have greater flexibility in scheduling their working hours to optimise their manpower resources. A more flexible work pattern would help companies to enhance productivity and competitiveness in a globalised economy.
2 Legal Provisions on Payment for Overtime, Rest Day and Public Holiday Work
2.1 The Employment Act stipulates the following higher differential rates that an employer is required to pay in cash to an employee for work performed in excess of his contractual working hours: -
• 1.5 times the hourly rate of pay for overtime work;
• 2 days' salary for work done on a rest day at the employer's request; and
• An extra day's salary for work on a public holiday.
These rates of payments are meant to compensate workers for the extra hours worked beyond their normal contractual working hours. The additional costs would also encourage companies to properly schedule their working hours so as to ensure minimum disruption to workers.
2.2 While the current legal provisions governing the payment for overtime and work on rest days and public holidays have worked well for most companies, companies which face uneven and seasonal fluctuations in demand due to their nature of operations or seasonal or business cycles, have encountered rigidities and difficulties scheduling their working hours to optimise their manpower resources, and this has hindered productivity improvement. During periods of high demand or peak seasons, companies have no difficulty paying the higher rates for overtime and rest day work. However, when demand is low due to poor market conditions, companies are burdened with excess manpower and are unable to reduce their wage costs through rescheduling of the working hours of the excess manpower. This results in inefficiency and may compel companies to retrench the excess employees during the lull periods only to re-hire new ones when business picks up. To these employers, this would result in the loss of employees with valuable experience and skills. To the employees, this would mean less job security and greater risk of retrenchment. Faced with unpredictable business fluctuation, companies, which face such market conditions, should be allowed to deviate from these provisions of the law so that they can implement flexible work schedules. Implementing such schedules will help achieve cost effectiveness and enhance job security, and these will benefit both the company and employees.
2.3 Given the volatile business conditions, the Economic Review Committee (ERC) had recommended that companies should be given exemptions from the statutory provisions on overtime, rest day and public holiday work so that they could adopt flexible work schedules. Exemptions should however be given on the condition that safeguards are put in place and that the benefits and productivity gains derived from the more efficient use of manpower resources would be shared with the employees.
2.4 The ERC also recommended that a Tripartite Workgroup be set up to assess the various applications of flexible work schedules and the need to empower the Commissioner for Labour to exempt companies from the statutory provisions in the Employment Act on working hours and the higher rates of overtime work and work on rest days and on public holidays. The Government accepted the recommendations.
3 Amendment to the Employment Act
3.1 To allow deviation from the provisions of the Employment Act on overtime work and work on rest days and public holidays, Section 41A of the Employment Act has been amended to allow the Commissioner to exempt companies from these statutory provisions.
3.2 With the amendments to the Employment Act effective from 1 October 2004, an employer, on the approval of the Commissioner for Labour, is allowed to compute the average weekly working hours over a longer period beyond the current 1 to 3 weeks cycle. The Commissioner may also exempt companies from cash payments and/or at a rate different from those prescribed for overtime, rest day or public holiday work, if the situation warrants such an exemption.
4 Concerns of employees and unions
4.1 Employees' primary concerns associated with flexible work schedules are the loss in overtime income and possible abuse by employers to avoid paying the differential rates for overtime, rest day and public holiday work. Also, without the differential rates, employers would have no incentive to use their manpower resources efficiently and to avoid deploying their workers to work excessive hours. The flexibility accorded to companies to maximise working time to meet fluctuating demands could potentially disadvantage the lower income employees who may be deprived of their overtime earnings as the weekly working hours are averaged out over a longer period. The impact on take home pay could be significant for employees who perform substantial overtime work and whose overtime pay constitutes a large proportion of the total monthly income. Another implication is that employees who have earned overtime income can only receive such payments after the quarterly, 6 monthly or even yearly working hours have been fulfilled as the case may be.
5 Flexible Work Schedules also benefit Employees
5.1 On the other hand, while employees could face possible loss of overtime pay, they are assured of a stable monthly income and greater job security. With the flexible work schemes, companies can optimise its manpower resources to enhance their competitiveness and also avoid or minimise retrenchment of its excess employees during a downturn.
6 Tripartite Guidelines on the Implementation of Flexible Work Schedules
6.1 To ensure that the implementation of flexible work schemes is not abused and will benefit both employers and employees, the Tripartite Workgroup was set up to formulate a set of guidelines to help companies formulate appropriate flexible work schedule schemes. The guidelines are as follows: -
6.2 Qualifying Conditions for Applications
6.2.1) Rationale for Implementing Flexible Work Schedule
There must be a compelling need for the company to operate flexibly to cope with uneven and fluctuating business cycles to optimise its manpower resources for the benefit of the company and its employees. The company concerned must be able to support its proposal by providing information relating to its businesses, products or services that are seasonal or fluctuating in nature and hence requires flexible work schedule to better meet its demands.
6.2.2) Income Stability
Companies should ensure that the incomes of their employees are stable in that they will continue to receive their monthly basic salary during the lull periods when they work less than the contractual hours.
6.2.3) Occupational Safety and Health
Companies applying for the exemption should have a good track record in respect of safety and health. They should ensure that the safety and health of the employees is not compromised and that the employees would not be subjected
to hazardous work environment and conditions as a result of implementing the flexible work schedule schemes. Regular inspections may be carried out by Ministry of Manpower (MOM) to verify the level of compliance of safety and health legislations and other measures taken to bring about a safe and healthy environment. In line with this objective, companies are required to observe the maximum 12 hours daily working limit and monthly 72 hours overtime limit, except in special circumstances where the Commissioner is satisfied that these limits may be exceeded.
6.2.4) Gain Sharing or Incentives for Employees
The company should put in place a profit sharing or incentive scheme to share gains derived from the efficient use of manpower and productivity improvement as a result of implementing the flexible work schedule with their employees. Such incentive payments could be made to employees who participate in the scheme on a monthly, quarterly or less frequent interval basis.
6.2.5) Consent from Unions and Affected Employees
Under the tripartite guidelines, companies should first seek the union's consent or in the case of non-unionised companies, the consent from the majority (i.e. 50%+1) of the employees affected by the proposed scheme. The scheme should be clearly explained and communicated to the affected employees. After an exemption has been granted, MOM may, at any time deem fit, interview employees to get feedback on how the flexible work schedules have worked.
6.2.6) Regular Review and Renewal of Exemptions
Exemption should only be granted for a specific duration of not more than 2 years in the first instance and on the condition that the company concerned will carry out regular reviews on a 6-monthly or yearly basis to ensure that the scheme can continue to achieve its objective. The company needs to seek renewal upon the expiry of the exemption but the subsequent period of exemption could be longer if the scheme has worked well. Companies which failed to comply with the stipulated conditions may have their exemptions revoked.
7 Application Procedure
7.1 Annex C lists the details that a company needs to furnish to the Commissioner in its application for the exemption under Section 41(A).Issued by: Ministry of Manpower in consultation with NTUC and SNEF
27 December 2004
Annex C
Application for Exemption to Implement Flexible Work Schedule
A company which intends to implement a flexible work scheme must obtain the approval of the Commissioner for Labour for exemption from the relevant provisions of the Employment Act: Sections 37(2) or (3), 38(4), 40(4) and 42(4).
The application, to be made in writing to the Commissioner, must be submitted at least 2 months before the date of implementation and include the following information:
i) Particulars of Company
Submission should include name of the company, registration number of company with Accounting and Corporate Regulatory Authority (ACRA), registered and operating address, contact number, person in charge of the application/scheme
ii) Nature of company's business
Application should also include information pertaining to the business activities of the company
iii) The reason(s) for application
Company should explain the need for exemption and be able to support its proposal by providing information relating to its operations, products and services that are seasonal or fluctuating in nature and thus requires flexible work schedules
iv) The date of implementation
The commencement date of the scheme should be indicated in the application
v) Name of union (if unionized)
vi) Number and name list of employees affected by the scheme
vii) Nature of work of affected employees
Company should in its application provide the job designation, department and job description of the employees who would be affected by the scheme
viii) Written agreement/consent
The application should include written agreement/consent from the union(s) or affected employees (in the case of non-unionised companies) to support the flexible work scheme. The agreement/consent should indicate that the scheme has been clearly explained and communicated to the affected employees. It should be signed by both parties and should comprise the following: -
1. Monthly salary, average overtime earnings over a period of time (e.g. 6 months or 1 year), payment date and payment details (salary period)
2. Contractual working hours and days per week, specifying any rest period or any period which the worker is not required to work under certain circumstances
3. Monthly/2-monthly/Quarterly Roster
4. Annual Leave Entitlement
5. The required working hours, both maximum and minimum
6. Procedures for notifying the employees and supervisors in urgent situations
7. The required notice period for termination of employment and formula in calculating the salary in lieu of notice
8. Incentive Package
9. Opt out procedures/form
ix) Detailed proposal of scheme
Company, in its application, should include information such as the percentage of overtime cost over its total manpower cost, the date where payment for overtime work would be made to the employees (i.e. payment for overtime work could be computed beyond 3 weeks but not more than 13 weeks), etc.
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