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Business Guide: Key Employment Terms (KETs) for Employee Contracts in Singapore
Businesses in Singapore should be familiar with the key employment terms (KETs) for employee contracts. These terms dictate the rights and obligations of both employers and employees, covering areas such as job title, basic salary, duration of employment, overtime hours, and notice period. By understanding the various components of KETs, businesses can foster a productive workforce while abiding by Singapore's employment laws and regulations. In this article, we will provide insights into the common employment terms and practices that can help employers improve their employee relations, reduce conflicts, and create a positive working environment.
Key Employment Terms (KETs) Defined
KETs refer to the fundamental terms and conditions of employment that an employer is required to provide to its employees. These terms cover the basic entitlements and benefits that are expected in an employment relationship. The inclusion of KETs in employment contracts ensures that both employers and employees have a clear understanding of the employment terms and their respective rights and obligations.
MOM has set out 18 KETs that employers are required to include in their employee contracts, unless they do not apply.
When dealing with PMEs, it is not necessary to include the Key Employment Terms related to overtime pay as it does not apply to them. Additionally, if the employment is not fixed, there is no requirement to include the Duration of Employment in number 5 below.
Salary and Compensation Structure
A comprehensive salary and compensation structure is a crucial element of any employment contract in Singapore. It outlines the various components of an employee's remuneration package, ensuring that both the employer and employee have a clear understanding of the terms and conditions of employment.
One crucial aspect of the Employment Act that employers must adhere to is the maximum salary period and overtime rate and payment period. The salary period should not be longer than a month, while the overtime rate should be at least 1.5 times the employee's basic salary for any hours worked beyond the standard workday. Employers must also pay their employees overtime within 14 days of the end of the salary period.
The basic salary forms the foundation of an employee's salary and compensation structure. This refers to the fixed amount an employee receives in exchange for their work. In addition to the basic salary, employers may offer bonus and incentive schemes to reward excellent performance or provide additional motivation for employees. Allowable deductions, such as CPF contributions or taxes, should also be clearly outlined in the employment contract.
Mandatory contributions to the Central Provident Fund (CPF) are another crucial component of an employee's remuneration package. CPF contributions are a form of social security that Singaporean employers must provide for their employees. The funds are used to provide retirement, healthcare, and housing-related benefits to employees.
Leave Entitlements and Public Holidays
In Singapore, employees are entitled to various types of leave entitlements as part of their employment contract. These include annual leave, outpatient and hospitalization sick leave, maternity leave, and childcare leave.
Annual leave is a form of paid leave that employees are entitled to take every year. According to the Employment Act, all employees are entitled to a minimum of 7 days of annual leave per year. This increases to up to 14 days after the employee has completed 8 consecutive years of service. However, employers may provide additional annual leave beyond the statutory minimum.
Sick leave is another type of leave entitlement available to employees. Outpatient sick leave is given for minor illnesses and injuries, while hospitalization leave is provided for serious health conditions that require hospitalization. Employees are entitled to a minimum of 14 days of sick leave per year, and a maximum of 60 days of paid hospitalization leave per year under the Employment Act.
Maternity leave is provided for new mothers giving birth to their child. According to the Employment Act, employees are entitled to 16 weeks of maternity leave if they have served their employer for at least 3 months. Employers can choose to offer additional maternity leave to their employees beyond the statutory minimum.
Childcare leave is a special type of leave entitlement that is available to employees with young children aged 7 years old and below. Each parent is entitled to 6 days of childcare leave per year, which can be extended to 2 days per year for children between the ages of 7 and 12. Employers can provide additional childcare leave beyond the statutory minimum to attract and retain talent.
In addition to the above-mentioned leave entitlements, employees in Singapore are also entitled to public holidays. There are 11 public holidays per year, including New Year's Day, Chinese New Year, Good Friday, Labor Day, Vesak Day, Hari Raya Puasa, National Day, Hari Raya Haji, Deepavali, Christmas Day, and the day after Christmas. If public holidays fall on a non-working day, employees should be given an extra day off or additional pay in lieu of the day off.
Medical Benefits and Insurance Coverage
Medical benefits are an essential aspect of any employment package, and employers are responsible for providing their employees with adequate medical coverage to ensure their wellbeing.
One of the types of medical benefits that employers typically provide is reimbursement for medical consultation fees incurred by employees.
Employers should not only comply with the Employment Act but also other relevant Acts in Singapore to provide adequate coverage for their employees. These Acts include the Medical Benefit Act and the Work Injury Compensation Act. It is essential that employers provide their employees with the necessary medical benefits and insurance coverage to support their physical and emotional wellbeing.
Read also: Step-by-Step Guide: Top 7 Reasons Why SMEs Should Buy Work Injury Compensation Insurance
Termination and Notice Periods
Termination and notice periods are important policies and regulations that both employers and employees need to understand in Singapore. The Employment Act outlines the minimum requirements that must be met for termination and notice periods in Singapore.
According to the Employment Act, employers may terminate an employee's contract for just cause, such as misconduct, poor performance, or redundancy. However, to ensure fairness and transparency, employers must follow a proper termination process and provide a notice period to the employee.
The notice period required by law must be the same for both employers and employees. For employees who have been employed for less than 2 years, the notice period is 1 week. For employees who have been employed for at least 2 years, the notice period is 2 weeks.
Employers must also adhere to allowable salary deductions when it comes to termination payouts. Allowable salary deductions include unpaid salary, damages, or loss suffered by the employer due to the employee's misconduct or breach of contract.
Dispute Resolution Mechanisms
Disputes can arise in any employment relationship, regardless of how well-defined the terms of the employee contract are. Therefore, it is important to have dispute resolution mechanisms in place to prevent disputes from escalating and causing disruption to the productive workforce.
One of the most common dispute resolution mechanisms included in Singaporean employee contracts is mediation. Mediation is a voluntary process where a neutral third party facilitates discussion and negotiation between the two sides to reach an agreement that is mutually acceptable. The benefits of mediation include its cost-effectiveness, informality, and confidentiality. Additionally, unlike litigation, which can damage professional relationships, mediation can help preserve these relationships.
Another dispute resolution mechanism is arbitration. Arbitration is a more formal process where a neutral third party, usually an arbitrator, hears evidence from both parties and issues a binding decision. The benefits of arbitration include its speed, expertise, and flexibility compared to litigation. However, arbitration can be relatively expensive and lacks transparency, as the proceedings and outcomes are generally confidential.
Litigation or going to court is a final option for dispute resolution. However, this tends to be an expensive and time-consuming option that should be avoided, if possible, due to the possibility of permanent damage to professional relationships between the parties involved.
There are several legal requirements and guidelines for dispute resolution in Singapore that should be taken into consideration when drafting an employee contract. For example, the Tripartite Guidelines on Fair Employment Practices recommends the inclusion of mediation or a similar dispute resolution mechanism in employment contracts. Additionally, the Singapore Mediation Centre provides rules for conducting mediation, and the International Court of Arbitration has rules for conducting arbitration.
Read also: What's New: Release Of Tripartite Guidelines For Flexible Work Arrangements In 2024
Mandatory KETs in Singapore
Key Employment Terms (KETs) are important elements of an employment contract in Singapore. KETs outline the minimum requirements for the employment agreement between the employer and employee. Singapore's Employment Act sets out the mandatory KETs that must be included in an employment contract. In addition to the mandatory KETs, there are standard KETs that are commonly included in employment contracts in Singapore, while others may vary depending on the individual agreement between the employer and employee.
The Employment Act requires that all employee contracts in Singapore include minimum KETs such as the duration of employment, basic salary, working hours, rest days, and public holidays. Employers are also required to provide notice periods for termination of employment, medical benefits, and allowances for overtime work.
Apart from the mandatory KETs, there are standard KETs that are commonly included in employment contracts in Singapore, such as the probation period and the issuance of KETs. The probation period is usually three to six months, during which the employer assesses the employee's performance and suitability for the role. KETs should be issued to new employees within 14 days of starting work, outlining the basic terms and conditions of their employment.
Some KETs may vary depending on the individual agreement between the employer and employee, such as additional benefits and allowances, performance-related bonuses, and flexible working hours. These KETs are negotiated between the employer and employee during the hiring process and are usually included in the employment contract.
Complying with legal requirements and industry standards is important for both employers and employees. Employers who fail to comply with the mandatory KETs set out by the Employment Act risk fines and legal action, while employees who are not provided with their entitled KETs may face exploitation and unfair treatment. Complying with the standard and individual KETs is crucial for maintaining a productive workforce and positive employee relations.
Additional Considerations for KETs
When drafting KETs for employee contracts in Singapore, there are several additional considerations that should be taken to ensure that the terms accurately reflect the needs of both the employee and employer. Some of these considerations include the employee's job title and industry, any union agreements or collective bargaining agreements, the company's compensation practices, and legal requirements or guidelines.
The job title and industry of the employee should be taken into account when drafting KETs as different roles and industries have varying work requirements and compensation practices. For example, an employee working in the hospitality industry may require different working hours and rest days compared to an employee working in the finance industry. Additionally, the job title may affect the amount of compensation and job responsibilities, which should be reflected in the KETs.
If the company has any union agreements or collective bargaining agreements in place, these should also be considered when drafting KETs. These agreements may outline specific requirements for employees, such as minimum pay rates or additional benefits, that must be included in the employment contract.
Companies should also consider their compensation practices when drafting KETs, such as how they determine salaries, bonuses, and other benefits. This information will help ensure that KETs accurately reflect the company's policies and practices.
Lastly, it is important to consider the overall company culture and values when drafting KETs. Terms that align with the company's ethos can positively impact employee engagement and retention. Conversely, terms that do not align with the company's values may cause dissatisfaction among employees.
Drafting Effective KETs in Employee Contracts
When drafting employee contracts, it is crucial to include key employment terms (KETs) that accurately reflect the company's policies and practices while also complying with legal requirements and guidelines. Effective KETs help establish clear expectations and avoid potential disputes or legal issues down the line.
Seek legal advice or HR consultancy services
When it comes to drafting Key Employment Terms (KETs) for employee contracts in Singapore, it is crucial for businesses to ensure they comply with relevant laws and regulations as well as industry standards. To ensure the KETs are properly drafted and fully in compliance, HR professionals should consider seeking legal advice or HR consultancy services.
Seeking legal advice or HR consultancy services can provide several benefits to businesses. Firstly, these services provide expert guidance on drafting KETs, ensuring that all important terms and conditions that govern the employment relationship are fully captured. This helps to minimize legal disputes arising from misunderstandings or different interpretations of KETs.
Furthermore, seeking legal advice or HR consultancy services reduces the risk of noncompliance with relevant employment laws and regulations. Compliance with employment law is crucial for businesses, and failure to comply with these laws can lead to penalties, fines, and even lawsuits that can be financially damaging to any organization.
Businesses in Singapore can seek legal advice from law firms with expertise in employment law or HR consultancy firms that offer a range of HR services including drafting employment contracts. Additionally, the Ministry of Manpower offers advisory services that can provide free information on employment laws and regulations that businesses need to comply with.
Ensure clarity and coherence in the contract language
When drafting an employment contract, it is essential to ensure that the language used is clear and simple. This is because the typical employee may not have a legal background and may not fully understand technical terms or complicated sentence structures.
To avoid confusion, it is important to avoid using legal jargon or technical terms that may be difficult for the average employee to understand. Instead, use language that is easy to understand and explain important terms and conditions in a simple and straightforward way.
Proofreading and editing the contract is also crucial to ensure that it is free from errors and inconsistencies. This can help to prevent confusion and misunderstandings between the employer and employee.
Issuing Written KETs as an Employer
Preparing and issuing written KETs
When it comes to employee contracts in Singapore, one of the most important aspects is the inclusion of Key Employment Terms (KETs). These are defined as the core terms and conditions of employment that both employers and employees have agreed upon. In order to ensure that these are properly communicated and understood by all parties involved, it's crucial to prepare and issue written KETs.
To start with, it's necessary to consider the requirements for KETs and ensure that all necessary information is included in the document. This should include the full names of both the employer and employee, the job title and responsibilities of the employee, the commencement date and duration of employment, the working arrangements (such as whether it's full-time or part-time), the salary period and basic salary, allowances and deductions, the overtime payment period and rate, any remunerations, leave entitlements, medical benefits, notice period, and work location (optional).
It's important to ensure that all of this information is clearly articulated and easy to understand. This will help to avoid any confusion or misunderstandings down the line, and will make it easier for both parties to refer back to when necessary.
Another crucial aspect of preparing and issuing KETs is the timing. It's required by law that KETs are issued within 14 days of the start of employment. This means that it's important to have all the necessary information prepared in advance so that it can be delivered to the employee in a timely manner.
Finally, it's worth noting that KETs can be issued in either soft or hard copy format. This means that it's important to ensure that the document is easily accessible and can be easily stored and retrieved when necessary.
Overall, preparing and issuing written KETs is a vital aspect of employee contracts in Singapore. By ensuring that all necessary information is included and that the document is delivered in a timely and accessible way, both employers and employees can be confident that they are on the same page when it comes to the terms and conditions of employment.
Communicating and Obtaining Acknowledgment of KETs
Communicating and obtaining acknowledgment of Key Employment Terms (KETs) is an essential step in ensuring a productive workforce and avoiding any disputes that may arise between the employer and employee. To effectively communicate the KETs, employers should prepare a clear and concise document that outlines all relevant terms and conditions of employment. This document can be included in the employee's contract or provided as a separate document.
During the onboarding process, employers should take the time to explain the KETs to the employee. This allows the employee to ask any questions they may have and gain a clear understanding of their employment contract. Employers should ensure that the employee fully comprehends the KETs before proceeding with any work-related duties.
To further solidify acknowledgment, employers can consider including a separate page for the employee to acknowledge that they have received and understood the KETs. This acknowledgment page can be signed by both the employer and the employee and placed in the employee's personnel file.
In conclusion, Key Employment Terms (KETs) should be included in employee contracts to ensure a productive workforce and avoid disputes with employees. Compliance with legal requirements and industry standards is crucial when drafting KETs to avoid ambiguity and prevent costly legal disputes.
In order to achieve clear and concise language in KETs, employers should use simple language and clear formatting and structure. Seeking legal advice or HR consultancy services can also help to eliminate errors and ensure that KETs are effectively communicated to employees.
In light of the importance of KETs for both employers and employees, it is important for organizations to take action to ensure their contracts include effective and appropriate KETs. Consultation with legal advisors or HR consultancy services can help organizations to achieve this and avoid any potential issues or disputes down the line.
Overall, KETs are an essential aspect of employment contracts that should not be overlooked or neglected. By including clear and concise KETs, organizations can maintain a productive and harmonious workforce while avoiding any potential legal complications.
Frequently Asked Questions
What are KETs, and why are they important in employee contracts?
KETs are the terms and conditions that define an employee's role and responsibilities within an organization. These terms include the duration of employment, basic salary, notice period, working hours, and benefits, among others. KETs are essential as they provide clarity and transparency to both the employer and employee, ensuring that both parties are aware of their rights and obligations.
Do all employee contracts in Singapore need to have KETs?
Yes, all employee contracts in Singapore must include KETs. The Ministry of Manpower requires employers to issue KETs to employees within 14 days of their employment start date. Failure to include KETs can result in legal implications and disputes down the line.
Can KETs be amended or changed after the contract is signed?
KETs can be amended or changed if both the employer and employee agree to the changes, and it is recorded in writing. The amendment should state the new terms and the date when they come into effect.
What happens if there is a dispute regarding KETs?
In case of any dispute regarding KETs, both parties should seek resolution through appropriate channels, such as mediation or arbitration. Employers and employees may also seek legal advice or consult with HR consulting services to resolve any issues.
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