Spike in wrongful dismissal claims in Singapore in Q2

A total of 436 such claims were lodged under Section 14 of the Employment Act between April and June.
A total of 436 such claims were lodged under Section 14 of the Employment Act between April and June.ST PHOTO: DESMOND FOO

SINGAPORE - There was a significant spike in wrongful dismissal claims in the second quarter of this year, in tandem with the decline in local employment during that period.

A total of 436 such claims were lodged under Section 14 of the Employment Act between April and June, compared with between 209 and 279 per quarter in the preceding four quarters, said a report on employment standards released on Thursday (Nov 19) by tripartite groups and the Ministry of Manpower (MOM).

Many of the claims were lodged by employees who were unhappy over the abrupt manner in which they were let go, due in part to restrictions in face-to-face meetings during the circuit breaker period, and "there is no evidence that more employers terminated their employees unfairly to deny them of retrenchment benefit", said the report.

Observers have expressed concern recently about the possibility of more disguised retrenchments, where a company takes cost-cutting measures and retrenches employees with no intention of filling the vacancies, but calls it contractual termination.

There were 69 claims for retrenchment benefits lodged in the second quarter, which is low, said the report by the MOM, the Tripartite Alliance for Dispute Management (TADM) and the Tripartite Alliance for Fair and Progressive Employment Practices (Tafep).

In all, 1,506 wrongful dismissal claims were lodged under the Employment Act and Child Development Co-Savings Act between April 1 last year and June 30 this year, including 75 by employees who said they had been dismissed during pregnancy.

About a quarter of those claims under Section 14 of the Employment Act - for dismissal without just cause or excuse - which have been mediated by TADM were assessed to be substantiated, while the rest were not.

A total of 333 dismissal claims lodged under Section 14 of the Employment Act were by managers and executives who were newly covered under the Act since April 1 last year.

This comes after changes to the Employment Act last year extended the coverage of core provisions to all employees, instead of excluding managers and executives earning above $4,500 a month.

There were another 115 dismissal appeals lodged under the Retirement and Re-employment Act and 65 lodged under the Industrial Relations Act between April 1 last year and June 30 this year. These are heard by the MOM, while claims under the Employment Act and Child Development Co-Savings Act are handled by TADM and the Employment Claims Tribunals.

For dismissal claims lodged between April 1 last year and June 30 this year, the total payment by employers to employees was $1.4 million.

As economic conditions worsened over the past year in certain sectors, the incidence of salary claims among local employees has also been going up, said the report.

Salary claims include owed basic salary, overtime pay, salary-in-lieu of notice and maternity leave, for instance.

The figure rose last year to 1.53 salary claims per 1,000 employees, up from 1.43 in 2018. In the first half of this year, the incidence rose to 1.73 on an annualised basis.

Locals refer to Singaporeans and permanent residents. Basic salary and salary-in-lieu of notice were the most common items claimed.

The incidence of salary claims among foreign employees also rose last year, to 4.98 salary claims per 1,000 employees, up from 4.45 in 2018, partly due to more group claims among foreign construction workers.

But it decreased in the first half of this year to 3.96 on an annualised basis.

With the workers quarantined at dormitories, TADM resolved salary issues that workers raised with the Forward Assurance and Support Team officers on the ground so workers did not have to lodge claims, said the report.

MOM has also required all employers with employees living in dormitories to pay salaries electronically since April, so that workers can receive their pay despite movement restrictions. 

As at end August, about 90 per cent of employers complied, up from 76 per cent before the requirement was introduced. 

Since May, all construction sector employers must also submit monthly declarations on the status of salary payment to their foreign employees. MOM has received a monthly response rate of 97 per cent from about 14,000 employers, with more than 90 per cent of these declaring that they paid salaries promptly.

TADM followed up with the remainder and recovered salaries owed to about 9,000 foreign workers between May and August, said Thursday’s report.

Of the 13,591 salary claims lodged between Jan 1 last year and June 30 this year, 90 per cent of employees fully recovered their salaries at TADM or the Employment Claims Tribunals. About half of the remaining employees recovered part of the owed salaries.

The amount recovered totals about $23 million over that period.

About 2 per cent of unsuccessful claims are due to employers refusing to pay, and these employers are referred to MOM’s enforcement division.

The percentage of salary claims concluded within two months has declined from 84 per cent in 2018 to 73 per cent in the first half of this year. The report said this was partly due to an increase in the number group claims and more employers facing financial difficulties.

"(Group) claims generally take longer to resolve, as the parties need time to discuss and agree to an acceptable payment schedule. This was further exacerbated during the circuit breaker where face-to-face communication between employers and employees was limited," said the report.

TADM general manager Kandhavel Periyasamy said that employers should communicate any financial difficulties to their employees in an upfront and sensitive manner. If cost-saving measures are required, management should lead by example by taking wage cuts first.

"This would help to build stronger employment relationships and prevent workplace disputes," he said.

"However, employers should not act unilaterally and use financial difficulties as an excuse to not pay salaries while expecting employees to continue working."