Singapore platform workers set to get same levels of CPF, injury coverage as employees

RIDE-HAILING and on-demand delivery workers in Singapore will not be recognised as employees, but are set to receive the same levels of work injury insurance and contributions to the national Central Provident Fund (CPF) savings scheme. 

These changes come as the government on Wednesday (Nov 23) accepted a set of recommendations by the Advisory Committee on Platform Workers, which has spent the past year reviewing how Singapore should better protect this vulnerable group. Platform workers have thus far been treated as self-employed persons (SEPs). 

Under the recommendations, both platform workers and companies will need to make CPF contributions at the same rate as employees and employers, as long as the worker is aged below 30 in the first year of implementation. Those aged 30 and above that year can choose to opt in to the full CPF regime. 

Singapore will ease the process by gradually increasing the CPF contribution rates over five years, until they hit the prevailing rates, which are currently at 20 per cent of wages for workers and 17 per cent for companies.

In addition, platform companies will be required to insure the workers to the same level that employees are covered under the Work Injury Compensation Act (Wica). The coverage will be based not just on earnings from a single platform, but all the platforms the worker serves in the sector.

The changes will affect Singapore’s 73,200-strong pool of platform workers, comprising 30,600 private-hire car (PHC) drivers, 16,700 delivery workers and 26,300 taxi drivers. However, cabbies’ street-hail jobs will be excluded from the measures.

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The committee said in its 58-page report: “Taxi drivers when undertaking street-hail trips are not subject to a significant level of control by taxi companies, as the companies generally do not play a role in matching the driver to the customer.”

Likewise, logistics companies that use self-employed delivery workers on an ad-hoc basis, without algorithmic matching of demand and supply, are unlikely to exert significant management control over the workers, it added.

With the committee’s findings, platform workers are now set to be counted as a new category, separate from employees and SEPs.

The government plans to make legislative changes and roll out the measures from the later part of 2024, at the earliest, Minister of State for Manpower Koh Poh Koon said at a Wednesday press conference. This timeline may be adjusted depending on the economic situation.

Asked about the potential impact on consumer prices, he said: “(With) a functioning market that’s competitive, with consumers exercising their power to choose, that would really constrain any risk of the platforms trying to overprice and make themselves unpalatable to the consumers.”

Likewise, drivers and riders would also choose platforms that have better earnings opportunities, he said. The committee’s full recommendations are as follows.

Mandatory CPF with opt-in for older cohort

The advisory committee recommends that both platform workers and companies contribute to the CPF scheme at the same rates as employers and employees. This currently stands at 20 per cent of wages for employees and 17 per cent for employers, with lower rates for employees aged above 55.

The contribution rate will be applied on platform workers’ total earnings less expenses. For example, PHC and taxi drivers can choose a fixed-expense deduction ratio of 60 per cent, meaning that CPF only applies to 40 per cent of gross earnings.

However, the full CPF regime will be compulsory only for those aged below 30 as of the first year of implementation. Platform workers who are 30 and above as of that year will have the choice to opt in.

For example, if Singapore implements the CPF rule in 2025, full CPF contributions will be voluntary for all platform workers born in 1995 or earlier, but compulsory for those born after that year.

As SEPs, platform workers have been required to only contribute between 8 per cent and 10.5 per cent of their earnings into their MediSave accounts, which serves healthcare needs. They have had to settle the administrative processes for this on their own.

The advisory committee recommends that platform companies be instead required to collect the contributions for workers. The government is working with the companies on a new mechanism to deduct CPF contributions from platform workers’ earnings as and when they receive their income.

The new CPF regime for platform workers will be phased in over five years. On average, the contribution rate for workers will increase by 2.5 per cent every year for workers; that for platforms will go up by 3.5 per cent annually.

The committee said that the phase-in will still allow platform workers to accumulate significant CPF savings.

“In particular, a young platform worker today is estimated to be able to accumulate about 95 per cent of the CPF savings that an employee with similar earnings can expect to set aside at age 55,” it said.

But it also noted that platform workers’ take-home pay will be hit, and called on the government to consider extending support to affected workers.

Higher work injury coverage with multi-homing adjustment

Platform workers will be provided the same scope and level of work injury coverage as what employees are entitled to under Singapore law, as per the advisory committee’s recommendations.

Wica, which protects employees but not SEPs, stipulates minimum and maximum thresholds for coverage of medical expenses, income loss compensation and total permanent disability and death.

The committee recommends that platforms be required to insure the workers according to these same thresholds. For instance, Wica stipulates compensation of between S$76,000 and S$225,000 for a worker’s death. But many platforms currently provide much lower death benefits.

With the new coverage requirement, the platform that the worker was serving at the point of injury will be responsible for compensation. For instance, Grab will compensate a worker injured in the course of making a GrabFood delivery.

However, the complexity of insuring platform workers is that many are “multi-homing”, or working for multiple platforms. When the GrabFood worker is injured, it is not just his earnings from that platform that is impacted, but also his earnings across the other platforms he works for, such as foodpanda and Deliveroo.

To account for this, the advisory committee recommends that the platform company will have to make the compensation based on the worker’s total earnings, less expenses, across all platforms in the sector that he works for.

For instance, if the injured GrabFood rider also delivers for foodpanda and Deliveroo, Grab will need to compensate the rider based on his net earnings with all three platforms. Specifics on how this is computed has yet to be announced.

The advisory committee said insurers have confirmed that premiums charged will be proportionate to the total earnings paid out by each platform company, when compensating for income loss across the platforms.

“Such compensation fairly accounts for varying levels of risk exposure by platform companies from an actuarial perspective. For instance, assuming the same accident rate across platform companies, a platform company with 10 per cent of all platform workers working for them would likely be required to make pay-outs 10 per cent of the time,” it said in the report.

Another detail that will have to be ironed out is the timeframe in which a platform worker would be considered to be “at work”.

In the case of goods delivery, the worker is determined to be “at work” while journeying to pick up the goods, as well as on the way to the delivery destination, until he or she returns to the vehicle.

But this is more complex for ride-hailing and food delivery. Drivers and riders will be determined to be “at work” in the time between the acceptance of a job and the drop-off, as well as a fixed duration of “x” minutes to account for waiting for a job. This “x” figure will be decided by the government, possibly taking into account data on waiting time in between jobs.

Finally, the committee recommends that like Wica, insurance for platform workers should be left to the open market. This is so sustainable premiums can be set based on the claims history and relative risks of platforms across the sector.

Enshrining a collective voice 

The advisory committee recommends that platform workers are given the right to seek formal representation, through a new framework designed for them. Existing associations will be able to register themselves through this new framework and seek the mandate to formally represent platform workers.

These workers are presently represented by three associations: the National Delivery Champions Association (NDCA), the National Taxi Association (NTA) and the National Private-Hire Vehicles Association (NPHVA).

The new framework will cover how the representative body can seek its mandate from workers, issues it can negotiate with the platforms and dispute resolution processes.

In line with this, the advisory committee had in August convened the Tripartite Workgroup on Representation for Platform Workers (TWG) to discuss the new framework.

The TWG is co-chaired by the government, the National Trades Union Congress and the Singapore National Employers Federation. It also comprises representatives from the platforms, the Ministry of Manpower and existing platform-worker associations.

Platforms raise concerns

Responding to the announcement, Grab called for street-hail taxi and third-party logistics companies to also be covered under the new regulations, “as they similarly tap on gig workers with the same workplace protection needs for their business requirements”.

“Excluding them will result in an unlevel playing field and may lead to price and market distortion. It may also encourage other industry players to innovate and fit their business models to the exclusion guideline which may then render the recommendations ineffective,” the company said in an emailed statement.

Grab also highlighted the challenge of providing Wica-like compensation and income loss insurance across the whole sector, instead of just for the liable platform. It called for a trial of the concept involving a smaller group of workers across platforms, to ensure costs are kept manageable. On the topic of worker representation, Grab suggested a model where one association covers one platform.

Separately, ride-hailing platform Gojek said that CPF contributions will mean less take-home earnings for its drivers.

“Implementing these recommendations will also impact costs to platforms and consumers, and drivers may experience lower demand for rides. Coupled with rising vehicle and fuel costs, we will work together with all industry partners to implement these changes whilst ensuring the sustainability of the ride-hail industry,” a spokesperson said.