"Small businesses, in particular, may find it challenging to absorb these additional costs," says employment lawyer
Singapore’s Employment Act is set for a comprehensive overhaul, with significant changes anticipated in key areas such as leave entitlements, salary thresholds, rest day protections, employment transfers and dismissal procedures.
According to Peter Doraisamy, managing partner at PD Legal, these adjustments are likely to reshape employer obligations and worker rights in material ways.
One of the more visible changes is expected to be an increase in statutory leave entitlements, with the rising emphasis on employee well-being and work-life balance being drivers behind this development.
“The review of the Employment Act is expected to result in several key changes that will have meaningful implications for employers and employees in Singapore,” he says.
The salary thresholds under Part IV of the Act—currently set at $4,500 for workmen and $2,600 for non-workmen—are also on the chopping block.
“As median wages have risen, these thresholds may no longer reflect the realities of the labour market,” he says.
Adjusting these limits would extend protections such as rest days, overtime pay and limits on working hours to a broader segment of the workforce.
Employers may also face increased regulatory scrutiny in how they handle dismissals. The government is considering requiring employers to state their reasons for termination—an attempt to increase transparency but one that could heighten the risk of disputes.
“Currently, employers can terminate employment with notice and without giving reasons, which makes it difficult for employees to prove cases of unfair dismissal,” Doraisamy says.
Clarifications are also expected around employment transfers through a review of Section 18A. Doraisamy suggests that statutory illustrations or tripartite guidelines may be introduced to assist employers and employees in understanding their rights during mergers or business transitions.
The rationale behind this wide-ranging review is rooted in Singapore’s evolving economic and social landscape – with one of the more pressing catalysts being the shift in median wages. Modernising the Act enhances both local worker protections and the country's reputation as a business-friendly jurisdiction.
“Singapore’s aspiration to remain a competitive and attractive hub for global talent and investment necessitates alignment with international labour standards,” Doraisamy explains. “With more workers now earning above the thresholds in the Employment Act due to rising median wages, there is a pressing need to reassess and potentially raise these limits so that more employees can continue to benefit from core statutory protections,” he said.
Changing workforce demographics have also added urgency, and at the same time, the rise of dual-income households and increasing caregiving responsibilities have pushed the issue of work-life harmony higher on the policy agenda.
“As the population ages and more Singaporeans work into their later years, existing laws and policies must be updated to support older workers meaningfully,” Doraisamy says.
Doraisamy also points to long-standing gaps in statutory leave that no longer reflect the expectations of today’s workers. Currently, employees are entitled to a minimum of seven days of paid annual leave after one year of continuous service, capped at 14 days, and Doraisamy believes the current setup is no longer sustainable.
“Of the various statutory leave entitlements that may be affected by the upcoming review, annual leave stands out as the most likely candidate for amendment; this provision has remained substantively unchanged over the years,” he says. “There is a growing recognition that the existing minimum entitlement may be inadequate to meet the legitimate needs of today’s workforce, particularly in light of rising levels of occupational stress, fatigue and burnout.”
While the policy goals may be well-intentioned, employers are unlikely to welcome all of them. In particular, increased leave entitlements, higher salary thresholds and the requirement to provide reasons for termination could raise costs and operational complexity.
“The anticipated changes to the Employment Act may face resistance from employers,” Doraisamy says. “Employers may be concerned about the increased operational and administrative costs these changes could bring.”
And smaller businesses could be hit especially hard.
“Small businesses, in particular, may find it challenging to absorb these additional costs,” Doraisamy says. “The expanded leave entitlements may lead to more complex workforce planning, as companies will need to account for potential disruptions caused by more frequent or extended employee absences.”
To manage the transition, Doraisamy recommends early and detailed preparation. Strong documentation practices will also be essential.
“HR teams and legal departments should regularly review and update company policies, contracts, and procedures,” he says. “Employers will need to ensure that all performance evaluations, disciplinary actions, and termination decisions are well-documented and supported by objective reasoning.”
Legal teams should take a proactive role in navigating the upcoming shifts. That includes not just internal briefings but employee-facing communication.
“It is crucial to provide clear guidance to managers and HR staff on how to navigate the new requirements,” Doraisamy says. “Legal departments should also be prepared to support HR in communicating the changes to employees, answering any questions, and addressing concerns.”
For companies operating in a tighter, more accountable regulatory environment, the stakes are high. Adapting early may not just be a matter of compliance—it could be key to remaining competitive in a workforce that is becoming more demanding, better informed, and legally protected.
