Employment claims in Singapore rise with more job losses, firms in financial difficulties
The increase does not mean a worsening of employment standards, say MOM and TADM
[SINGAPORE] Claims for both wrongful dismissal and salaries rose in 2024, but this does not reflect a decline in employment standards, the Ministry of Manpower (MOM) and the Tripartite Alliance for Dispute Management (TADM) said on Tuesday (Aug 26).
Rather, the rise reflects higher job turnover – from retrenchments, dismissals and business closures – and failure or delays in salary payments due to financial difficulties, they said.
The overall incidence of employment claims and appeals has risen each year since 2021 – and observers expect this trend to continue, due to both labour market conditions and rising awareness of employee rights.
The latest Employment Standards Report noted that the rate of claims and appeals grew to 3.12 per 1,000 employees in 2024, up from 2.53 in 2023 – slightly higher than the pre-Covid figure of 3.04 in 2019.
In 2024, a total of 11,685 employment claims and appeals were lodged with MOM and TADM, with 46 per cent by local employees, and the remainder by foreign employees.
There were 9,848 salary claims and 1,720 wrongful dismissal claims.
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The rest were dismissal appeals lodged under the Retirement and Re-employment Act and the Industrial Relations Act, as well as cases in which TADM offered voluntary mediation for issues not covered by employment law.
More than 80 per cent of employment claims were resolved at TADM through mediation, without going to the Employment Claims Tribunals (ECT).
Rise in dismissal claims
The incidence of wrongful dismissal claims rose more steeply than that of salary claims. Their incidence increased to 0.46 per 1,000 employees in 2024, from 0.32 in 2023. This was also higher than the recent peak of 0.39 in 2020, the first year of the Covid-19 pandemic.
Similar to previous years, the incidence of wrongful dismissal claims was higher for local employees, reaching 0.56 per 1,000 employees in 2024, up from 0.39 in 2023. For foreign employees, the rate rose to 0.27, from 0.18 a year earlier.
Observers said the rise was unsurprising, and that it may even continue, for several reasons.
One factor is “the tough labour market”, with higher job turnover, said Baker McKenzie Wong & Leow principal, Ng Zhao Yang.
Head of employment at Withers Singapore, Amarjit Kaur, expects the incidence of dismissal claims to continue rising as more companies restructure.
In addition, to save costs amid economic headwinds, some companies dismiss employees just before payouts are due, or disguise retrenchments as termination with a cause, she added. Such actions may lead to dismissal claims.
Temasek Polytechnic law and management lecturer Jason Chua agreed with the correlation between rising dismissal claims and the higher number of dismissals, retrenchments and business cessations.
He added that in his experience with the Employment Claims Tribunals, he came across several wrongful-dismissal cases filed upon business cessations.
Knowing their rights
Beyond labour market conditions, another reason for the rise is that employees are more informed about their rights and how to pursue claims, said observers.
This awareness has grown due to government outreach efforts and increased public discussion, said Ng. He and Kaur noted that artificial intelligence (AI) tools make it easier to draft claims, removing a potential barrier.
Ng noted that new laws on workplace fairness are expected to take effect next year and expand the scope of claims that employees can make, particularly those relating to discrimination. This may cause a further increase in employment claims, he said.
Of the wrongful dismissal claims lodged in 2024, 71 per cent were resolved at TADM – up marginally from 70 per cent in 2023 – while the other 29 per cent were referred to ECT for adjudication.
In 61 per cent of the cases resolved at TADM, employers were found to have fulfilled their obligations, or the cases were withdrawn after mediation. The rest involved some kind of settlement by the employer, with this taking such forms as goodwill payments, certificates of service, allowing the employee resign, or clearing up of miscommunications.
The proportion of claims concluded at TADM within two months was 86 per cent in 2024, higher than the 2023 figure of 79 per cent.
More salary claims
The incidence of salary claims rose to 2.63 per 1,000 employees in 2024, from 2.19 in 2023, though it remained below the pre-Covid figure of 2.68 in 2019.
For local employees, the incidence rose to 1.59 claims per 1,000 employees, from 1.32 before. The most common claim items for local employees were basic salary, salary in lieu of notice and encashment of unconsumed annual leave.
The top three sectors with salary claims lodged were information and communications; administrative and support services; and food and beverage (F&B) services.
The incidence of salary claims was much higher for foreign employees, at 4.64 per 1,000 employees, up from 3.91 in 2023. The most common claim items for foreign employees were basic salary, salary for overtime work and payment for work done on rest days and public holidays.
“The construction sector continued to be a key contributor of salary claims, due to companies facing business failures, financial difficulties or undergoing liquidation,” the report read. This was followed by manufacturing and F&B services.
In 2024, 90 per cent of salary claims were resolved at TADM, up from 88 per cent in 2023. The rest were referred to the ECT for adjudication.
Of salary claims concluded at TADM, 87 per cent were concluded within two months, down slightly from 90 per cent in 2023.
After lodging claims, 94 per cent fully recovered their salaries; 4 per cent recovered their salaries partially; and the rest did not recover any of it.
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