Tax and Legal update: Amendments of Labor Protection Act
The Labor Protection Act (No.7) has been officially published in the Royal Gazette on 5 April 2019, and will be in effect on 5 May 2019.
The essentials of the amendments are set out below:
|
No
|
Issues
|
Amendments
|
|
1
|
15% Interest
|
There are some additional events where the employers shall be responsible to pay 15% interest per annum, e.g. no payment in lieu of advance employment termination notice, no payment in case cease to operate the business or no payment in accordance with the decision of the Labor Welfare Committee, and so on.
|
|
2
|
Change of employer
|
Any change of employer, such as transfer of employment due to merger, acquisition or amalgamation, is subject to prior consent from each employee to be transferred
|
|
3
|
Relocation of business
|
The existing law has been entirely replaced. Where an employer relocates its business whether to a new place or other existing place, the employer must post notice of this change within its business location. Where an employee decides that such relocation will ‘materially’ affect their course of living and therefore does not want to be relocate, the employee must notify the employer of this decision within 30 days the posting of the notice. In such case the employee is still entitled to ‘special severance pay’ in the same amount as normal severance pay.
|
|
4
|
Payment on termination date
|
In case of termination without advance notice, the employer shall, at such date, pay the amount to the employee all the remuneration which the employee is entitled to receive, including severance pay, payment in lieu of advance notice, and salary compensation to the date of termination.
|
|
5
|
Additional Personal Business Leave
|
Under current law personal business leave is stipulated in the work rules and is subject to the employer’s discretion. Under the amendment, the employee is entitled to least 3 days of additional leave per year to attend to personal matters. This is in addition to all other existing leave and holidays.
|
|
6
|
Maternity Leave
|
Increase the period of maternity leave from 90 days to 98 days. This is now inclusive of leave for maternity check-ups before delivery. The employee is still entitled to 45 days of paid maternity leave.
|
|
7
|
Severance
|
Increase the severance up to 400 days for termination of an employee who has been working for 20 years.
|
Our Observation
This new law will affect many employers’ existing work rules due to the change in some particulars required. Therefore, all employers should proceed to amend their work rules so as to comply with this new law, given that there is criminal punishment in case of breach. There are severe penalties that can now be imposed for failure to comply fully with the provisions of these new Amendments.
If you would like to discuss any of the points raised in this article, please contact us.
