“Employers in Singapore will need to prepare for a year of change in 2025 with the introduction of new legislation, guidelines and increased scrutiny from unions. Businesses should take steps to prepare themselves for the imminent changes to the regulatory landscape in 2025.”
This year has seen some key employment developments in Singapore, with new legislation and guidelines being introduced, alongside increased union scrutiny on employers. This article outlines the key highlights from 2024 and looks ahead to 2025.
2024: HIGHLIGHTS
- Restrictive Covenants: Employers will need to take measures to brace themselves for the non-compete guidelines that are set to be released this year by the Ministry of Manpower. The guidelines were set to be released in the second half of 2024, and will likely be announced soon. Currently, the enforceability of restrictive covenants in Singapore is governed by common law – developed by the courts through case law – with no official guidelines or regulations governing these clauses. When the guidelines are announced, employers will need to consider their adoption as the guidelines join the host of existing guides released by the Ministry of Manpower. Current employment contracts may need to be reviewed to ensure that any existing non-compete clauses or restraint of trade clauses in general are reasonable and justified, taking into account factors such as the sector, geographical area, and duration of employment. It remains to be seen whether these guidelines will affect only mid- and lower-level employees, or if they will impact C-suite executive contracts too. Although guidelines are not regarded as black letter law, non-compliance will incur penalties and other adverse consequences for the employer—in this regard, they are as good as black letter law.
- Workplace Fairness Legislation: The new Workplace Fairness Legislation (“WFL”) is set to be passed possibly in early 2025. Businesses will need to prepare for the implementation of the WFL by reviewing their existing policies and practices to ensure they align with both the existing Tripartite Guidelines on Fair Employment Practices and the WFL. This involves ensuring, at any stage of the employment process (e.g., recruitment, promotion or even termination), that individuals are assessed on a fair, merit-based approach, rather than their personal characteristics, especially the specified protected characteristics. Grievance- and dispute-handling processes should also be reviewed to ensure that clear guidelines are in place. The introduction of the WFL signals a cultural shift in the way work is perceived and managed, and reinforces Singapore's commitment to meritocracy.
- Increased Union Scrutiny: 2024 has been quite the year for numerous “right-sizing” exercises, and businesses this year have face increased scrutiny from unions as compared to previous years. This is the case even if there is no collective bargaining agreement signed with the relevant union. 2024 has shown that unions can, and are willing to, put additional pressure on businesses if the scope and impact of their retrenchment exercises are significant, even if the businesses have complied with industry recommended retrenchment practices. In some layoffs, unions have managed to assist retrenched staff to obtain better severance packages, signalling to businesses that they are taking on a more active role to safeguard the interests of its members. It is recommended that businesses seek guidance from their relevant unions if there is a need to conduct any retrenchment exercises, in order to avoid any subsequent complications and adverse publicity down the line.
2025: OUTLOOK
With the anticipated implementation of new legislation, guidelines, and a shift in union attitudes seen this year, businesses would do well to brace themselves for significant and historical changes to come in 2025. Existing internal policies will need to be reviewed, and employment contracts may need to be updated. Any businesses planning to “right-size” in 2025 will need to be wary of active union involvement, and should consider seeking the union's preliminary views on any such right sizing activities to avoid any complications during the execution of such exercises. 2025 will bring many changes, but each change is a factor that business can prepare for now, so they are not caught unaware.
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