A guide to the upcoming flexible work arrangements in Singapore

Vincent Tan on June 11, 2024

Flexible working arrangements in Singapore: Are you ready for the new mandatory guidelines?

The global trend in supporting flexible working arrangements remains strong in a post-COVID-19 world, as regulators and employers address challenges in the form of workforce transformation and advances in digital technology. Increasingly, employers are realising key benefits from allowing this greater flexibility; such as cost-savings due to the need for less office space and gaining access to a wider talent pool, which is important in a tight labour market. These positive impacts are seeing employers be more receptive to giving their employees flexibility in choosing where and when to work.

Singapore’s Ministry of Manpower announced in April 2024 the implementation of the Tripartite Guidelines on Flexible Work Arrangement Requests (the Guidelines), which will be effective from 1 December 2024. The Guidelines set out how employees should make a formal request for flexible work arrangements (FWAs), how employers and supervisors should handle those requests, and the minimum requirements employers must abide by to remain compliant with the mandatory Guidelines. 

What is a flexible working arrangement?

FWAs are work arrangements where employers and employees both agree to a variation from the standard work arrangement. The Guidelines set out the following three broad categories of FWAs:

  • Flexi-Place – where employees work flexibly from locations outside of the office.
  • Flexi-Time – where employees work flexibly at different timings, with no changes to total work hours and workload.
  • Flexi-Load – where employees work flexibly with different workloads and with commensurate remuneration.

How to request flexible working arrangements – key steps

  • The employee submits a formal FWA request – at a minimum, the formal FWA request must state, in writing, each of the following four requirements:
    • the date of the request;
    • the FWA requested (including its expected frequency and duration);
    • the reason for the request; and
    • the requested start and end date (if relevant).

    If the employer has instituted a process for employees to make a FWA request (for example, through a HR or company portal), the employee must follow that process in order for their request to be classified as a formal FWA request.

  • The employer should properly consider the FWA based on business needs (set out below).
  • The employer should communicate its decision within a timely manner in writing; at most, within two months. Any clarifications and discussions concerning the request should also be made within the two months.
  • If the FWA request is rejected, the employer should include the reason for doing so in writing and is encouraged to engage the employee on other alternatives.

    The employer may refer to Annex B of the Guidelines for how a formal FWA request could be responded to.

Scope:

The Guidelines only extend to:

  • Employees who have completed probation. However, employers can consider FWA requests from employees on probation.
  • Employees who have made a formal FWA request. Hence, if the employee does not satisfy the requirements for a FWA, it will be considered a non-formal FWA request and will not be covered by the Guidelines.

Factors for employers to consider:

When considering FWA requests, employers should consider factors pertinent to the employee’s role and the potential impact of the requested FWA on both the business and the employee’s job performance. Rejection of FWA requests should be grounded solely on reasonable business considerations, such as cost implications, productivity or output concerns, or practical feasibility, rather than personal biases against flexible working practices. Decisions that are influenced by a preference for traditional working arrangements, or a reluctance to depart from established customs, would be considered unreasonable grounds for rejecting a FWA request. 

How to prepare for the implementation of flexible working arrangements in Singapore?

  • Employers should start to devise a process for eligible employees to submit formal FWA requests and inform their workforce of the same.
  • Employers may consider implementing a formal policy for FWAs to streamline FWA requests or enquiries, detailing:
    • the types of FWAs available;
    • the guidelines for stakeholders (i.e. senior management, employees, supervisors and human resources) to consider in ensuring the successful implementation of FWAs; and
    • a code of conduct or expectation for the effective implementation of FWAs.
    • As far as reasonably practical, employers should explore ways to accommodate FWA requests, such as reviewing work processes or re-assigning work across team members, so that the company remains productive.

Are you ready for the new flexible working arrangements?

In introducing the new flexible working arrangements, the Singapore Government has purposefully chosen the route of mandatory guidelines, rather than enforcing the arrangements through legislation. Ms Gan Siow Huang, the co-chair of the tripartite workgroup, who made the recommendations to the Government and also the Minister of State for Manpower, said that a decision was made to introduce mandatory guidelines instead of legislation because of the need to be “administratively light”. She reiterates that the focus is on enabling and equipping workplaces, employers and employees, so that flexible working arrangements can be implemented in a sustainable way.

While the Guidelines are not law, and employers are permitted to reject (with reasons) FWA requests, employers who do not follow the Guidelines may be issued with a warning by the Ministry of Manpower and errant employers required to attend corrective workshops.

If you are wondering how to effectively implement the FWAs for your workplace or would like to have a chat to find out more, please contact our Singapore-based colleagues Vincent Tan and Prashaanth Rajandran, working in the offices of JurisAsia LLC with whom Gowling WLG has an exclusive association. We acknowledge, with thanks, the contributions of Ashley Tok, practice trainee to this article.

Retrenchment in Singapore, Lazada lay-offs

Vincent Tan on January 24, 2024

The recent round of layoffs at e-commerce giant Lazada caused a minor stir in Singapore and triggered a number of media reports reflecting on the rights of the employees in a retrenchment exercise. This article discusses the retrenchment exercise at Lazada and its impact.

Practical challenges in implementing a successful equity incentive plan in Singapore

Vincent Tan on August 30, 2022

There are cogent reasons why organisations should establish an equity incentive plan or scheme to achieve its aims of attracting, retaining and rewarding its employees and contractors. In theory, it is an effective method to align the objectives of employees with those of the organisation, and has an added benefit of being a cost efficient way to augment the remuneration packages of senior employees and new hires. However, less discussed are the practical difficulties to establish a successful equity incentive plan, and in this article, we will discuss some of the common issues that a Singapore-based company may encounter.

Difficulties in administering the incentive plan

For large multinational conglomerates or publicly-listed companies, a remuneration committee of directors or senior management usually oversees the remuneration schemes, including equity incentive plans, of the organisation. Such committees often comprises seasoned professionals who are familiar with equity reward schemes, and comfortable in making decisions relating to such schemes. However, smaller private companies which are running on a much leaner scale may not have sufficient manpower to monitor and operate an equity incentive scheme effectively, and may also suffer from a lack of expertise at the management level. This will likely culminate in poorer decisions being made and a poorer outcome for all stakeholders of the scheme.

In addition, it is common for well-funded companies to engage external professionals or hire an experienced scheme administrator to perform administrative tasks including preparing corporate documents, making filings with government authorities, or keeping track of awards granted under the incentive plans. On the other hand, private companies that do not enjoy the same level of resources may instead rely on inexperienced staff who have to juggle the additional responsibilities that come with the administration of the incentive schemes with their day to day work responsibilities. For an incentive scheme to succeed in achieving its objectives, it is vitally important that the incentive rules are properly administered and followed, so as to retain the trust and confidence of the recipients of the awards.

Complex plan rules

For private companies in Singapore, there are little specific regulations or restrictions on the terms of the incentive plan rules, save for certain provisions relating to the issuance or buy back of shares. Given the regulatory flexibility, companies may decide to include innovative provisions or provisions that were lifted from incentive plans used in other jurisdictions which were only included to satisfy the regulatory requirements of that jurisdiction.

Unfortunately, if such terms are not well drafted or tailored to comply with Singapore law, it may cause confusion in interpretation and could negatively impact upon the motivation of employees and / or contractors.

Imbalance of power for plan managers

It is also common for companies to reserve certain powers or discretion to the incentive plan managers so as to allow the company to have the flexibility to make amendments to the incentive plan rules where there are changes in the circumstances of the company. However, it is a delicate balancing act to ensure that the company retain sufficient power to make reasonable amendments where warranted, while keeping in mind that recipients of the awards may feel alienated if their award grants or performance targets are regularly subject to change, no matter how reasonable the changes are. Since the scheme is usually overseen by the senior management of the company, recipients of awards granted under such incentive plans may, with good reason, have reservations on whether their plan managers would favour the interests of the company before the award holders. Given the growing demands on employers to act ethically and responsibly, plan managers will need to take care to ensure that any decision in relation to the equity incentive plans is taken with the interests of employees at its core. It is also inappropriate for plan managers to abuse their power and “punish” award holders by withholding or cancelling awards without justification.

Failure to consider applicable regulations in other jurisdictions

One of the emerging trends from the global pandemic is that organisations have an increasingly geographically diverse and mobile workforce, especially organisations in the new, technology-enabled industries. It is now possible for such workers to be physically located outside of the jurisdiction of their employer and this presents a formidable challenge to the scheme designers since they will then need to consider the laws of other jurisdictions. Prior to implementation, it is important that the scheme designers have a clear understanding of where the potential recipients of awards would be located so that they can take into consideration the relevant regulatory or tax impact that would be applicable to such awards. In certain circumstances, it may also necessitate a change in the underlying structure of the scheme. For example, if potential recipients are based in China, which has a strict foreign exchange controls regime, granting options for shares in a foreign company may not be feasible for such recipients.

Furthermore, while companies may feel that income tax issues are personal to the employee and do not concern the employer, it is not unusual that many of such compliance requirements actually apply to employers as well. Taking Singapore as an example, employers are required to prepare tax filings for employee earnings and may be required to withhold monies for tax clearance purposes. Companies should ensure that all applicable compliance requirements in respect of the incentive schemes are met.

Key takeaways for businesses

There are a myriad of challenges to implement an equity incentive plan but once the plan is implemented successfully, the rewards can be significant. Many challenges can be overcome by having an experienced team, and by consulting the subject matter experts who are able to anticipate potential issues and provide practical solutions. Regardless of the size of your organisation, it is also possible to encounter unforeseen problems such as the ones highlighted in this article.

If you are encountering any issues with the structuring and implementation of an equity incentive plan, or would like to have a chat to find out more, please contact our Singapore-based colleague Vincent Tan, working in the offices of JurisAsia LLC with whom Gowling WLG has an exclusive association.