Employment law update: Platform Workers Bill passed in Parliament

On 10 September 2024, the Platform Workers Bill 2024 (the Bill) was passed in the Singapore Parliament. The Bill will apply to platform services, which includes on-demand delivery and ride-hailing services, and will create a third class of workers for businesses providing platform services - "Platform Workers".

The Bill was introduced to provide strengthened protections for these Platform Workers in three areas - (a) housing and retirement adequacy through Central Provident Fund (CPF) contributions by both Platform Operators and Platform Workers, (b) financial compensation if they get injured while working, as well as (c) a legal framework for Platform Workers' representation.

The Ministry of Manpower (MOM) issued a press release dated 9 September 2024, indicating that they will work with Platform Operators and Workers to implement these protections from 1 January 2025. Once in effect, this will be a landmark piece of legislation that will place ride-hailing drivers and freelance delivery workers in Singapore in a distinct labour class category, affording them greater protection. The Bill will also make consequential amendments to other acts, including, for example, the Central Provident Fund Act 1953 to provide for the new protections and obligations, as well as the representation of Platform Workers and Platform Operators under the relevant acts.

"Platform Operators" and "Platform Workers"

MOM has described the nature of the relationship between Platform Operators and Platform Workers as unique and distinct from employment and freelancing. As such, specific categories such as "Platform Operators" and "Platform Workers" will be established to cater to this.

Additionally, pursuant to the Bill, companies will be required to assess whether they are a Platform Operator, and notify MOM of this. This will be a self-assessment and the MOM will provide resources such as a checklist on their website to assist in a company's assessment of themselves as a Platform Operator. Companies will thereafter need to notify MOM if they assess themselves to be a Platform Operator. Upon notification to MOM, the company will be added to MOM's list of Platform Operators on their website. Workers can refer to this list to ascertain whether they should receive Platform Worker protections.

The new classifications of Platform Workers and Platform Operators are discussed below.

"Platform Workers"

"Platform Workers" will be designated as a distinct and separate group of workers, which shall be for individuals working for businesses providing platform services. They are defined as workers who (a) have an agreement with a Platform Operator to provide ride-hail or delivery services in Singapore to users for the Platform Operator and from this, derive any payment or benefit in kind; and (b) are also subject to the control of Platform Operators, such as what tasks are assigned to them and how much they are paid.

Platform Workers will be given an earnings slip that specifies their status as a Platform Worker.

"Platform Operators"

"Platform Operators" will also be designated as a distinct category. Platform Operators are defined as companies that (a) have an agreement with users to provide ride-hail or delivery services to the users; (b) use data to automate decision making relating to Platform Workers, in areas such as task assignment and how much Platform Workers are paid per task; and (c) impose rules, requirements or prohibitions on Platform Workers.

Impact

CPF Contribution for Housing and Retirement Adequacy

Platform workers will eventually have their CPF contributions at the same levels as regular employees, as these will be gradually increased to match that of employees and employers. The gradual increase has the intention of moderating the impact on stakeholders, giving the market time to adjust.

CPF contribution rates for Platform Workers and Platform Operators will be increased over 5 years, by up to 2.5% points per year and up to 3.5% points per year respectively, to match that for employees and employers, increasing the overall total earnings for Platform Workers. These CPF contributions will go to Platform Workers' Ordinary, Special and MediSave Accounts on a monthly basis, and help Platform Workers achieve the same levels of housing and retirement adequacy as employees earning the same amount.

The increased CPF contributions will be mandatory for Platform Workers born on or after 1 January 1995. Older Platform Workers can choose to opt in to the increased CPF contributions on a voluntary basis. Platform Workers can opt in from November 2024 on the CPF website, and such decision will be irreversible. Older Platform Workers who do not opt in will continue to be required to make CPF MediSave contributions, however, will not receive the Platform Operator's share of CPF contributions. Platform Operators will deduct the CPF contributions from Platform Workers' earnings and transmit them to the CPF Board monthly for all Platform Workers, including the MediSave contributions for those who choose not to opt in.

To ease the impact on Platform Workers' take-home pay, MOM will enhance the Platform Workers CPF Transition Support (PCTS), a scheme introduced to mitigate platform workers' concerns about take-home pay with the increase in CPF contributions. Eligible lower-income Platform Workers who see an increase in their share of CPF contributions to the Ordinary and Special Accounts will be supported through the PCTS. The enhanced PCTS will offset 100% of a Platform Worker's share of increase in the CPF Ordinary and Special Account contributions in 2025. As such, the Singapore Government will pay for the increase in Platform Workers' CPF contributions in 2025 fully. The offset for 2026 will be 75%. Lower-income Platform Workers will continue to be supported through the Workfare Income Supplement Scheme (WIS). Further details on the computation and collection of CPF contributions, the caps for eligibility, as well as Government's support for lower-income Platform Workers are set out in Annex B of MOM's press release dated 9 September 2024.

Work Injury Compensation - On-the-job protections

To provide compensation to Platform Workers during recuperation from work injuries, Platform Operators will need to provide their Platform Workers with Work Injury Compensation (WIC) insurance at the same level of coverage as employees under the Work Injury Compensation Act (WICA). MOM have cited the fact that Platform Workers are exposed to significant risks and bear the risk of getting injured while working on the job.

However, Platform Operators and Platform Workers will also have a role to play in preventing work-related safety incidents, and parameters for when Platform Workers may make a claim, the types and computation of compensation, and determination of liability have generally been set out. Details on when Platform Workers can claim for WIC, the types and computation of compensation, as well as the process for determining liability, and the relevant forthcoming amendments to the Workplace Safety and Health Act are set out in further detail in Annex C of MOM's press release dated 9 September 2024.

Legal Framework for Representation of Platform Workers

Additionally, a legal representation framework for Platform Workers will be set up to allow Platform Workers to organise and represent the interest of fellow Platform Workers. This is to address the fact that Platform Workers are not employees, and there would otherwise be no legal framework for the representation of Platform Workers.

Under this new framework, Platform Work Associations (PWAs) will be able to represent Platform Workers in negotiations with Platform Operators after obtaining their mandate to do so. This will either be through recognition by a Platform Operator or a ballot among its members. This will allow PWAs to negotiate agreements with Platform Operators, and gain access to avenues of redress for Platform Workers not previously available, similar to how trade unions represent employees.

Registrars will be appointed by MOM to regulate and oversee the activities conducted by PWAs, and PWAs must apply to be registered with the Registry of PWAs.

Application of Fixed Expense Deduction Amount for Work Injury Compensation and CPF contributions

A Fixed Expense Deduction Amount will be applied to all Platform Workers' gross earnings to derive the Platform Workers' net earnings (i.e. the Fixed Expense Deduction Amount will be deducted from the gross earnings), to streamline processes for WIC claims and CPF contributions. The net earnings will be used to compute the WIC quantum and CPF contributions. Factors such as the Platform Workers' mode of transport, which would reflect the expenses of a majority of Platform Workers, will affect the Fixed Expense Deduction Amount for a Platform Worker. For example, the Fixed Expense Deduction Amount for a Platform Worker who uses a bicycle or public transport versus a motorcycle or car would differ. The application of the Fixed Expense Deduction Amount has the aim of removing the administrative burdens and inconveniences for Platform Workers and Platform Operators to manually track and compute Platform Workers' individual business expenses.

Conclusion

Platform Workers provide services that have become integral to the daily lives of Singaporeans. However, MOM has highlighted that such workers are placed precariously, subject to risks such as uncertain earnings, traffic accidents and limited CPF savings for housing and retirement needs. However, unlike self-employed persons, Platform Workers are subject to some degree of management control by Platform Operators and do not have full control of their employment circumstances and conditions. As such, the Bill will have the aim of benefiting both businesses and workers, and strengthen Singapore's social compact, where Platform Operators, Platform Workers and consumers may contribute to the protection of Platform Workers. This will help ensure fair treatment while preserving the flexibility that such platform work offers.

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