Singapore’s Employment Act undergoes periodic revisions to ensure fair employment practices and adapt to the evolving needs of the workforce. Latest updates to the Act introduce significant changes that employers must understand and implement to maintain compliance and foster a positive work environment. If you’re wondering what are the changes, here’s a breakdown.
Breakdown of Key Employment Act Changes
The latest amendments to the MOM Employment Act bring several key changes, impacting various aspects of the employer-employee relationship. Let’s delve into the specifics.
1. Increased Paternity Leave and Shared Parental Leave
Source: Freepik
Paternity Leave
From 1 April 2025, eligible working fathers with Singapore citizen children will be entitled to four (4) weeks of Government Paid Paternity Leave (GPPL), an increase from the current two (2) weeks. This leave is paid by the government, up to the prevailing cap of SGD 2,500 per week. Employees must provide at least four (4) weeks’ notice before taking GPPL.
Shared Parental Leave
Similarly, a new Shared Parental Leave (SPL) scheme will be implemented in two phases. Initially, eligible parents can share up to four (4) weeks of leave, but starting 1 April 2025, they can share six (6) weeks of leave.
From 1 April 2026, this will increase to 10 weeks of shared leave, with each parent receiving five (5) weeks. This SPL is in addition to GPML and GPPL and should be consumed within the first 12 months of the child’s birth.
Parents can reallocate their share of SPL, and employers are encouraged to agree on leave plans with their employees. All SPL will be paid by the government, up to the prevailing cap of SGD 2,500 per week.
2. Raised Salary Threshold for Employment Pass Holders
The minimum qualifying salary for Employment Pass (EP) holders is set to increase:
| |
Current |
WEF 1 Jan 2025 |
| General |
At least SGD5K
Increases with age, from at least SGD5K at age 23 to $10,500 at age 45 and above |
At least SGD5.6K
Increases with age, from at least SGD5.6K at age 23 to $10,700 at age 45 and above |
| Financial |
At least SGD5.5K
Increases with age, from at least SGD5.5K at age 23 to $11,500 at age 45 and above |
At least SGD6.2K
Increases with age, from at least SGD6.2K at age 23 to $11,800 at age 45 and above |
Please note: revised salary thresholds will apply to renewals EPs expiring from 1 January 2026 onward.
Additionally, a new salary benchmarking table for the Complementary Assessment Framework (COMPASS) will be used for all new EP applications from 1 January 2025 and all renewals from 1 July 2025. For more information, please refer to the Ministry of Manpower’s website.
3. Adjustments to CPF Contribution Rates and Monthly Salary Ceiling
Source: Freepik
The CPF Ordinary Wage (OW) ceiling will be progressively raised to SGD 8,000 by 2026. This means a larger portion of an employee’s salary will be subject to CPF contributions. Additionally, from 1 January 2025, CPF contribution rates for employees aged above 55 to 65 will increase.
This aims to strengthen their retirement adequacy. The increase will be allocated to the Retirement Account (RA).
|
CPF OW ceiling |
| From 1 Jan 2016 to 31 Aug 2023 |
$6,000 |
| From 1 Sep to 31 Dec 2023 |
$6,300 (+$300) |
| From 1 Jan to 31 Dec 2024 |
$6,800 (+$500) |
| From 1 Jan to 31 Dec 2025 |
$7,400 (+$600) |
| From 1 Jan 2026 |
$8,000 (+$600) |
Source: Central Provident Fund Board (CPF)
These changes have significant implications for payroll processing. Employers need to ensure their payroll systems are updated to reflect the new OW ceiling and contribution rates. A compliant payroll software can automate these updates and ensure accurate CPF calculations and contributions.
Impact on Employers: Understanding the Implications
Source: Freepik
These Employment Act updates have several implications for employers in Singapore:
Increased Costs: Increased paternity and shared parental leave entitlements may lead to higher costs for businesses. To address this, HR, Finance, and Operations teams must work together to plan budgets, anticipate salary adjustments, allocate expenses, and ensure sufficient headcount. Such measures ensure smooth business operations, and financial implications (if any) are minimal.
Talent Acquisition Challenges: The updated salary threshold for EP holders may pose challenges in attracting and retaining foreign talent, especially for SMEs and startups competing with larger corporations.
Payroll and HR Policy Adjustments: Changes to CPF contribution rates and the monthly salary ceiling require adjustments to payroll processes and HR policies to ensure accurate calculations and compliance.
Ensuring Compliance: Steps for Employers
Source: Freepik
To navigate these changes and maintain compliance, employers are encouraged to:
Review and Update Employment Contracts and HR Policies: Ensure your employment contracts and HR policies are updated to reflect the latest amendments to the Employment Act. This includes incorporating the new leave entitlements, salary thresholds, and CPF contribution rates.
Communicate Changes Effectively to Employees: Transparent communication is crucial. Communicate the changes to your employees, explaining the implications and addressing any queries they may have.
Leverage HRMS Solutions: Implementing a robust HR software in Singapore, like BIPO’s HRMS, can help automate payroll and leave management processes, ensuring accuracy and compliance. BIPO’s leave management system can help track and manage various leave types, including the new paternity and shared parental leave entitlements.
Beyond Compliance: Creating a Positive Workplace
While compliance is essential, fostering a positive and supportive work environment is equally important. Go beyond the minimum requirements by implementing flexible work arrangements (FWAs), promoting work-life balance, and creating a culture of open communication.
HR technology can facilitate these efforts through features like employee self-service and mobile app access, streamlining and simplifying HR processes for both employees and managers, especially for FWA requests.
Stay Informed and Adapt
Singapore’s Employment Act is a legislation that undergoes periodic revisions. Staying informed about these updates and adapting HR practices is crucial to maintaining compliance, and protecting the rights of both employees and employers.
By staying informed, embracing change, and leveraging the right HR tools, businesses in Singapore can navigate the evolving regulatory landscape and create a workplace that benefits both employers and employees. Explore how BIPO’s HR solutions can help. Contact us today to learn more or request a demo.
