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Monthly Variable Component (MVC) |
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What is MVC? |
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MVC is a variable component in wage built-up over the years from annual wage increases. |
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It is included in computation of overtime payment, CPF contribution and annual variable bonus (AVB). |
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It applies to all levels of employees. |
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It can be linked to your company's performance. |
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Why have an MVC ? ~ To minimize the need to cut employer's CPF |
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contribution. |
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To further enhance the flexibility of our salary system, so that we will have flexibility of adjusting wage cost downward more responsively and quickly in the event of an economic recession or sharp business downturn. |
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And most importantly is TO MINIMIZE JOB LOSS |
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Representation of Executives by Rank and File (R & F) Unions
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Objective |
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The industrial Relations (Amendment) Act and Trade Unions (Amendment) Act 2002 took effect from 1 September 2002.
The objectives of the two Amendment Acts are: ~ To provide an additional avenue for executive employees to seek redress on certain employment disputes.
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To avoid multiplicity of unions in the work place. |
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To help enlarge the union membership and leadership pool. |
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Who is an executive employee ? |
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An " executive employee" is defined as someone who is employed in a managerial or an executive position.
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Classes of executive to be represented by R & F unions. |
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All classes of executives except: |
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Those having substantial managerial functions or substantial influence on hiring, firing, promotion, transfer, reward or disciplinary matters.
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Those given duties and responsibilities that are in conflict with their affiliation with unions. |
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Those given access to confidential information relating to labour-management matters and policies. |
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Those entrusted to represent the interests of employers in labour-management matters; |
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Those holding senior management responsibilities. |
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Areas of representation |
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Representation of executives is on an individual basis. |
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Representation is limited to the following areas: |
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Retrenchment |
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Dismissal |
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Breach of individual contract |
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Victimization/serious disciplinary action with a view to dismissal. |
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Leadership position |
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v Executives working in the same company as the rank & file employees can join the union as Ordinary Member and can therefore hold office in the union. |
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Retrenchment
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Can an employee be eligible to claim retrenchment benefit? |
| An employee who has 3 years’ continuous service with the employer may claim for benefits if he is retrenched. |
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What is the quantum of retrenchment benefit? |
| The Act does not stipulate the quantum of retrenchment benefit to be paid. The quantum is to be negotiated between the employee and his employer, unless it is provided for in the contract of service or the collective agreement. |
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What other payments union will get for employee affected by retrenchment? |
These include outstanding salary, payment for unconsumed annual leave, payment for notice of termination if insufficient notice of termination is given, and pro-rated AWS/bonus (if this is provided in your employment contract, or in the collective agreement) on your last day of work. |
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What is the notice period an employer must give to his workers who will be retrenched? |
The notice will depend on what is stated in the employment contract or collective agreement. If no notice of termination is stated, the following minimum notice period must be observed: |
| Length of Service |
Notice Period |
| Less than 26 weeks |
1 day |
| 26 weeks to less than 2 years |
1 week |
| 2 years to less than 5 years |
2 weeks |
| 5 years and above 4 years |
4 weeks |
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What is the tax liability on retrenchment benefits? |
Gains and profits from any employment are chargeable to tax by virtue of Section 10(1) (b) of the Singapore Income Tax Act.
The items that are taxable in relation to retrenchment are:
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Salary / Wages, Pro-rated AWS , Encashment of leave , salary in lieu of notice period, Gratuity or ex-gratia payment, Allowances, Commission. |
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The item that is not taxable is the basic pay that is paid for each year of service. |
Please check with the tax officers at this number if you need more information 1800-356 8300. |
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Which components of the retrenchment package attract CPF contribution? |
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CPF payable components: |
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Encashment of leaves and the pro-rated AWS would attract CPF contribution. |
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The following components of the retrenchment package are not required to pay CPF: |
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Retrenchment pay, ex-gratia payment, salary in lieu of notice, severance pay, compensation for loss of employment, retirement gratuity. |
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National Wages Council (NWC) Guidelines For 2008/2009
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Push for Productivity Improvement |
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The NWC strongly urges the government, companies and workers/unions to work together in a concerted effort to improve productivity through innovation, job re-design and stepping up of the training of workers through the enhanced Continuing Education and Training (CET) system. |
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Grant Sustainable Wage Increase Commensurate with Performance and Prospects |
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The NWC recommends that companies grant built-in wage increase commensurate with the companies’ performance as well as business prospects to endure that such increases are sustainable. Companies should make greater use of variable payment to reward workers for their contribution to corporate performance, taking into consideration the total wage increase to be given. As with previous years, companies which have done exceptionally well and with continued good prospects should consider granting workers a higher variable payment. |
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One-off Special Payment for Rank-and-File Workers |
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Companies should consider giving a one-off special lump sum payment to rank-and-file workers, with heavier weightage for low wage workers. |
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Enhancing Employability of Older Workers |
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The Council strongly urges employers to work with union/workers to implement re-employment policies and systems as soon as possible, by adopting the Tripartite Advisory on Re-employment of Older Workers issued by the Tripartite Implementation Workgroup TIWG). |
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Enhancing Efforts to help Low Wage, Contract and Informal Workers |
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To help low wage workers including contract and informal workers benefit from the WIS and improve retirement adequacy, the NWC urges the tripartite partners to step up efforts to help them contribute to their CPF so that they can be eligible for WIS and participate in CPF LIFE. |
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As with previous years, companies that are granting wage increases could include a dollar quantum for built-in wage increases as well as variable bonus payments to benefit the low wage workers more. |
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Companies outsourcing work are urged to adopt the Tripartite Advisory on Responsible Outsourcing Practices. |
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Enhancing Wage Flexibility |
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Monitoring the Situation |
| For more details on the NWC guidelines, please click here. |
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