Singapore’s extended circuit breaker has forced businesses to put a pause on operations till June 1. As revenues shrink, some companies might choose to reduce labour costs with measures such as asking staff to take no-pay leaves.
For instance, ride-hailing firm Grab is encouraging employees to go on voluntary no-pay leave. Or in harder-hit industries, we have seen Singapore Airlines rolling out compulsory unpaid leave for about 10,000 employees on varying days each month.
As businesses are increasingly affected by the COVID-19 pandemic, more employers are likely to turn to no-pay leave as an option. Here’s what you need to know if your employer asks you to take no-pay leave and the rights you have as an employee.
What Is Unpaid Leave?
According to the Employment Act, unpaid leave, or no-pay leave, means a leave of absence without pay granted by the employer at the request of the employee.
As an employee, you can apply for unpaid leave, subject to approval from your employer. In Singapore, employees are not legally entitled to unpaid leave. Hence, it comes down to employer discretion, or subject to the company’s standard policies. At certain companies, the terms of unpaid leave may be stated in your employment contract or employee handbook.
In normal circumstances, employees may wish to go on unpaid leave to pursue interests outside of work or go on sabbatical leave. But the COVID-19 outbreak has presented a new scenario where employees are being asked or forced to go on no-pay leave, perhaps even on an indefinite period.
How Is My Salary Computed For No Pay Leave?
As a full-time employee, your salary will be calculated according to the formula below when you take unpaid leave.
The total number of working days in that month, including public holidays, annual leave and paid hospitalisation leave. The monthly gross rate of pay refers to your basic monthly salary plus any allowances you are entitled to according to the contract terms.
So if you are on no-pay leave, it will be deducted from the total number of days you have worked in that month. CPF contribution is not payable for the duration of no pay leave during which an employee is not entitled to any wages.
During the Circuit Breaker period, some companies might put workers on unpaid leave but provide a certain amount of living (travel, food and housing) allowance. Such allowance is not included in the gross rate of pay, but for any allowance given, CPF contribution would be required.
How Will Unpaid Leave Affect My Annual Leave?
Under the Employment Act, you are entitled to annual leave if you have worked for at least 3 months. The days of leave depending on how long you have been with your employer. In your first year of service, you are entitled to 7 days of annual leave. It is pro-rated according to this formula:
(Number of completed months of service ÷ 12 months) x Number of days of annual leave entitlement
When you take unpaid leave, it is considered an incomplete month of work.
For example, if you started work on 14 Mar 2019 and left on 31 July 2019, you have 4 completed months. If you are entitled to 10 days of leave a year as per your contract, you would have (4 completed months of service ÷ 12 months) x 10 days = 3.33 days of annual leave. After rounding down, that would be 3 days of pro-rated annual leave.
With the extended circuit breaker, being put on unpaid leave would impact the days of annual leave you are entitled to. You might want to check with your company what will your existing leave entitlements be, or if additional paid leaves will be granted.
Am I Entitled To Paid Public Holidays On No-Pay Leave?
Under the Employment Act, you are entitled to 11 paid public holidays in a year. In April and May, the public holidays are Good Friday (Apr 10), Labour Day (May 1), Vesak Day (May 7), and Hari Raya Puasa (May 24).
Workers are not entitled to holiday pay if it falls on unpaid leave that you requested for. Since there are no guidelines on holiday pay for compulsory unpaid leave, your paid public holiday entitlement would be at your employer’s discretion.
Can My Company Ask Me To Go On No-Pay Leave?
When it comes to managing excess manpower, employers are reminded to abide by the tripartite advisory to retain workers, such as adjustments to work arrangements with or without wage cuts. No-pay leave should be considered as a last resort.
Advisories, in itself, have no real legal implications. While there are no enforceable guidelines to follow regarding unpaid leave, MOM has stressed the need for employers to treat workers fairly and responsibly, and to consider the income relief (under the Job Support Scheme) provided by the Government.
The ministry will also investigate complaints of those who reduce employees’ salaries or put them on prolonged no-pay leave. According to MOM, it is ‘not reasonable to implement extended no-pay leave… without engaging or seeking the consent of their employees.” Threatening employees with termination if they report such issues to MOM is also unacceptable.
While there are no specific guidelines on unpaid leave, the ministry has previously stepped forward to clarify matters. In February, MOM warned that employers who force workers to take no-pay leave for the stay-home notice could have their privileges to apply for work passes suspended. This was back when returnees from China had to abide by the 14-day stay-home notice.
Hence, the best practice would be if your company can reach an agreement with employees before implementing unpaid leave. If you know someone who is receiving irresponsible or unfair treatment, encourage them to speak to their employee to negotiate a mutually agreeable arrangement. To facilitate the discussion, the Advisory for Salary and Leave Matters during Circuit Breaker can be shared too. As a last resort, workers may also contact MOM at firstname.lastname@example.org for assistance.
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