The recent announcements made during the Singapore Budget 2023 reading will progressively change how businesses manage and engage their workforce in the coming months. As is, it already brought up a key question - what must businesses do to ensure maximum compliance?
With emphasis placed on expanding the retirement fund of its workforce and raising workplace equality, it is clear that Singapore Budget 2023 is focused on future-proofing employees. This is to ensure its current and upcoming workforce are ready for any inflationary issues and can also enjoy better employment growth opportunities and workplace equity in the future.
These changes have already raised very specific questions for businesses to consider –
- What are the new regulations that payroll need to quickly comply with?
- What must human resources (HR) and management must focus on in regards to these changes?
- How to quickly comply with current and upcoming changes to Singaporean employee rights?
- What must-haves to consider so business can be fully compliant with current and new changes?
- Are admin functions for Singaporean businesses prepared for these incremental changes?
New Employee Priorities in the Digital Era
Streamlining CPF to Expand Retirement Potential
This recently over-used phrase – “raising the salary ceiling” – is not to be confused with minimum wage. To be clear, this refers to the maximum cap for an employee’s contribution to the Central Provident Fund (CPF). With the previous increase taking place in 2016, which saw the ceiling for Ordinary Wages going up from S$5,000 to S$6,000, this move is considered as timely to keep pace with rising salaries and growing inflation rates.
The Singapore Government, at its recent Budget 2023 reading, revealed that it will continue to raise the salary ceiling in stages, from the current S$6,000 cap to S$8,000 by 2026. The first increased step will come into effect on September 1 2023 – raising the maximum cap from S$6,000 to S$6,300. The timeline for the staggered increase is as per below:
- September 1 2023: S$6,300
- January 1 2024: S$6,800
- January 1 2025: S$7,400
- January 1 2026: S$8,000
While it will impact spending power of employees and operational expenses for businesses in the short-term, the long-term goal is to ensure the Singaporean workforce has enough for retirement.
“Retirement adequacy is a very important issue and if we don’t start building up for our retirement, we are storing up more problems for ourselves and for society,” said Lawrence Wong, Deputy Prime Minister of Singapore during a press interview.
This is not the only change to the CPF as Platform Workers, also known as Gig Economy employees, are now considered as contributors as well. The Singapore Budget 2023 has made it mandatory for Platform Workers who are aged below 30 years to become CPF contributors. This will come into effect sometime in 2024. Those aged 30 years and above are allowed to opt-in for this as well.
As this will impact their take-home salaries, the Singapore Government has also introduced a Platform Workers CPF Transition Support programme that will help lower-income Platform Workers for the first four years after this amendment is implemented.
In many ways, Singapore is looking to be hyper-inclusive and focused on ensuring its entire workforce can retire comfortably. Considering how these compliances and workplace options must be included in HR workflows, it is critical that proper systems must be in place. This is so HR teams, especially finance and payroll, are ready for updates to mandatory salary deductions, can quickly address any concerns within the workplace, and are ready for pre-mediated changes to salaries.
Expanding Workplace Inclusivity and Flexibility
Demands for flexible working arrangement, better employee engagement, and fairer career growth opportunities are on the rise in Singapore. In fact, over the last two years, the flexible working arrangements trend had become a focal point among HR, management, and the workforce – enough to push the Singaporean government to act on this trend.
This is due to how it became a central theme for businesses reacting to various economic restrictions that the recent COVID-19 pandemic brought about. Having had a real taste of remote working and showing positive results, most – if not the entire – workforce wants this as the de facto standard to achieve proper work-life balance.
While some businesses are adapting to this new norm, most prefer to get back to being fully operational without such an option. In contrast, governments around the world are in favour of the workforce and have begun to implement regulation that support this growth trend.
In Singapore’s case, it widely encouraged businesses to consider flexible working arrangements for staff that have requested for it. The Ministry of Manpower for Singapore made known its stance on this trend via a press statement in April 2022 and have confirmed of plans to include proper Standards of Fair Employment Practices into law.
These include new guidelines, such as higher contribution ceiling rate from monthly salaries for retirement savings and flexible work arrangements that are now currently being studied via multiple whitepaper proposals.
Improving Workforce Protection
Besides addressing these trending demands, there are also plans to stamp out workplace biases and encourage upskilling and re-skilling workforce capabilities. In addition to the whitepaper studies, there is also an interim report for a proposed regulatory bill that will enshrine into law new workplace anti-discrimination guidelines. It is currently open for public input and feedback.
This new soon-to-be legislated law – called the Workplace Fairness Legislation – will act as an add-on to the broader Tripartite Guidelines on Fair Employment Practices. It will focus on providing protection of workers against nationality and age biases; oversee and manage discriminatory acts at the workplace; and deal out penalties on errant employers.
The new Act, set to be enacted into law in 2024, will contain 20 recommendations including:
- Protecting workers against common biases, such as nationality; age; sex, marital status, pregnancy, and care-giving responsibilities; religion, race, and language; and disabilities
- Expanding the potential for employees who are seeking redress beyond dismissals – including hiring and promotions
- Introducing new penalties that reflect the degree of regulation breaches
- Protecting employees from potential employer retaliation
The move drives home the fact that inclusivity is critical. In fact, some foreign investors have moved to address this need. Undoubtedly, it is now important for Singaporean businesses to comply with these regulations. The best way to do this is via fast-tracking digitalisation efforts within HR teams.
Being Constantly Ready
The upcoming changes to Singapore’s CPF contribution rates and employee protections are some of the biggest updates in the last few years. As is, the recent Singapore Budget 2023 announcement have sent businesses into a tailspin panic as they scramble to ensure they are fully compliant.
At The Access Group, we strive to provide clients and partners with digital solutions that are constantly updated and consistently focused on ensuring compliance. In fact, these ongoing and new changes to Singapore’s employment laws will be included in the latest updates for all our available HR platforms and services. After all, the goal is to set up your business and HR teams for success and that includes ensuring maximum and consistent compliance to current and new regulations.