Attendance Incentives Tied to Employees Sick Leave No Longer Seen as Fair or Reasonable Practice

Employers are to review and restructure their incentive schemes to adhere to the principles of Tripartite Guidelines on Fair Employment Practices.

03 Apr 2023 Articles Grievance handling Performance management Remuneration Tripartite Guidelines on Fair Employment Practices Best practices

The Ministry of Manpower (MOM) and tripartite partners have stated that attendance-related incentive schemes that consider sick leave utilisation should no longer be seen as a reasonable or fair practice as it unintentionally discourages employees from taking sick leave and are not in the best interest of employees and the workplace.

From 1 January 2023, companies with incentive schemes that consider statutory sick leave utilisation will face enforcement action.

Why attendance-related incentive schemes are no longer seen as reasonable or a fair practice 
We need to first recognise that sick leave is a basic statutory protection under the Employment Act. Employers are legally required to excuse their employees from work if they are certified unfit for work by their doctor so that they can take the sick leave to rest and recuperate.

Any form of measures imposed on employees that either incentivises them for not taking any statutory sick leave for any period of time or penalises them for taking sick leave is deemed unfair and unreasonable and runs contrary to the principles of the Tripartite Guidelines on Fair Employment Practices (TGFEP).

In short, employers who have implemented attendance-related schemes that consider sick leave utilisation are to review and restructure them into appropriate productivity and welfare schemes which contribute to employees’ well-being and productivity at the workplace.

Employers (who are SNEF members) can approach SNEF for further advice on whether an incentive scheme is permissible, or unionised companies can approach NTUC and work with the union to mutually agree on an alternative scheme.
 
Key considerations before implementing an incentive scheme 
While having a disciplined workforce who exhibit all the desired behaviours is important, it is just as important for employers to ensure that any incentive schemes designed to help achieve these outcomes are fair and reasonable. 

Before implementing any incentive schemes, it is important for employers to consider these 3 factors: 
 
#1  What is the purpose of the incentive scheme?
  • What is the root issue or problem you are wanting to solve? 
  • What are the factors that are contributing to the situation?
  • Is the issue/problem prevalent across different teams?

#2 Is the incentive scheme a fair and reasonable one?

  • How is the incentive scheme structured? 
  • What are the eligibility criteria for the incentive scheme? Do the criteria contravene any labour laws, regulations, or guidelines? 
  • Will employees be able to give feedback or ask questions on the scheme before implementation? 
  • How would the incentive scheme be perceived by employees? How would it potentially impact their behaviour? Would it negatively affect their well-being in any way? 
  • Is the scheme sustainable for the company in the long term?

#3 Will this scheme engage and motivate my employees in a positive manner?  

  • What are other innovative ways that I can implement that will achieve the same objective and not compromise on their overall well-being? (e.g., non-monetary rewards)

Besides the use of monetary rewards to reinforce desired employee behaviour at the workplace, research has shown that non-monetary rewards are not only able to achieve the same outcomes as monetary rewards, but they tend to leave a lasting, more positive impact with employees. Some of these examples would include:

  • Giving recognition and appreciation of the employee’s performance or contribution to a particular project, which can take place in a formal setting (e.g., townhall or company-wide event) or informally (e.g., at department or team meetings, or a personalised written note from the manager/supervisor).
  • Providing career development opportunities for employees to grow and develop new skills and experience.
  • Providing wellness benefits which contribute to employees’ well-being and productivity at the workplace.

Conclusion 
From 1 January 2023 onwards, TAFEP will refer employers who continue with incentive schemes based on sick leave utilisation to MOM for enforcement action, which could include the suspension of work pass privileges.

Employers are advised to review and adjust their incentive schemes to abide by the TGFEP to remunerate employees fairly, taking into consideration factors such as ability, performance, contribution, skills, knowledge and experience. 

For more information on TGFEP, visit tafep.sg. If you require advise for a specific scenario, you may contact the Employer Advisory Service (payable) to schedule an appointment. 

 
 

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