Finance Ministry to review salary cap for workers whose companies turn insolvent
The Ministry of Finance will review the salary cap for workers in the event their company turns insolvent.
Office workers in Raffles Place, Singapore.
SINGAPORE: The Ministry of Finance will review the salary cap for workers in the event their company turns insolvent.
The current provision in the Companies Act is restricted to a cap of five months' salary or S$7,500, whichever is lower.
The review will be done in connection with the broader review the Manpower Ministry is conducting on the Employment Act.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said this in a written response to MP Patrick Tay's parliamentary question on Monday.
Mr Tay had pointed out the last review was done in 1993, where monthly salaries were significantly lower.
Mr Tharman agreed that the current cap is outdated and said the structure and quantum of the cap will be reviewed.
The Finance Ministry will also take into account views from the Law Ministry and the Insolvency & Public Trustee's Office as the provision relates to insolvency matters.
These matters will be migrated to the new omnibus insolvency legislation in the future.
Mr Tharman said the review will be completed by the end of the year.
He said the intent of the cap is to strike a balance between the rights of employees and creditors of the company.
It also serves to ensure that managers and executives do not receive in priority, disproportionate sums of retrenchment compensation relative to workers.
