Singapore Employment Update: Return to Phase 2 (Heightened Alert) and Tax Implications for Overseas Employees Working Remotely from Singapore

Singapore Returns to Phase 2 (Heightened Alert)

On 20 July 2021, the Multi-Ministry Taskforce announced that Singapore will return to Phase 2 (Heightened Alert) effective from 22 July 2021 until 18 August 2021.

The announcement follows a recent spike in COVID-19 case numbers associated with the KTV and Jurong Fishery Port clusters. The full press release issued by the Ministry of Health can be accessed here (together with a detailed Annex here).

From an employment perspective, the workplace safety requirements largely remain the same as those that have been in place during Phase 3 (Heightened Alert). In particular, work from home continues to be the default arrangement with employers needing to ensure that employees who are able to work remotely do so. For employees who need to return to the workplace, start times should be staggered and employers should implement flexible working hours. There should be no cross-deployment of workers to multiple worksites. This week the Ministry of Manpower confirmed that it had taken enforcement action against 66 firms since May for breaching these requirements, with the most common violation being failure to ensure that employees who are able to work from home do so.

While the majority of workplace safety requirements remain unchanged, the Safe Management Measures at the Workplace have been updated in one respect. Effective 22 July 2021, employers should avoid organising work-related events unless critical. “Work-related events” are defined as events not organised primarily for social interaction. Work-related events that are allowed to proceed are those which primarily involve employees or stakeholders such as conferences or seminars, corporate retreats, staff training sessions, Annual General Meetings and Extraordinary General Meetings.

For any work-related events that do proceed:

• The number of persons per event must be capped at 50 persons.
• Attendees must maintain at least 1 metre safe distancing between individual attendees, as per the requirement at the workplace.
• Food and drinks are not allowed.

Work-related events at third-party venues will also be subject to any additional safe management policies implemented by the owner of the premises.

In addition to the above workplace requirements, other restrictions have been imposed on the public more generally and employers will need to ensure these are also followed. These include (among others):

• Reducing the limit for social gatherings from 5 persons to 2 persons.
• Reducing the limit for social visits to 2 visitors per household per day.
• Cessation of all dining-in at F&B establishments.
• Cessation of strenuous indoor exercise classes, or strenuous individual and group indoor sports and exercise activities.
• For businesses with unmasked clients/patrons who were placed on mandatory regular Fast and Easy Test (FET) regimes beginning from mid-July and who continue to remain open (including F&B outlets that stay open for delivery/ takeaways), their staff must continue with the regular 14-day FET requirement (which will continue to be free of charge).

In view of the above tightened measures, the Government will provide a support package to affected businesses and workers. The package will take reference from the support provided in the previous Phase Two (Heightened Alert). More details of this will be announced by the Ministry of Finance in the coming days.

Tax Exemption for Singapore Citizens / PRs Working Remotely Comes to an End

Singapore citizens and permanent residents who are employed overseas but working in Singapore remotely may now have to pay local income tax after a COVID-19 exemption recently expired.

In April 2020, the Government introduced an exemption for employees who were employed by an entity overseas but who had relocated temporarily to Singapore due to COVID-19 travel restrictions. The Inland Revenue Authority of Singapore (IRAS) has until now been prepared to treat such employees as not exercising an employment in Singapore provided they met certain conditions. The exemption was introduced to provide support to citizens and residents who wanted to come back to Singapore for family or other personal reasons.

The exemption expired on 30 June 2021. As a result, going forwards such employees will likely need to begin paying income tax on the basis of the time they spend working remotely in Singapore.

Multinational employers should consider conducting an audit to identify whether any of their current workforce is working remotely from Singapore and, if so, assess the possible tax implications for the individual and the employing/host entities. For example, it may be possible to ask the IRAS to review the situation on a case-by-case basis if the individual cannot leave Singapore because of a travel ban in the country they are based in, or because flights or other transportation modes are not available.

If you have any questions in relation to the above, please contact David Smail.

DLA Piper is restricted for regulatory reasons from practicing local law in Singapore, as are most international law firms. Where advice on Singapore law is required, we will work with a local firm to provide such advice while leveraging our own knowledge and experience as international counsel in international advisory and transactional work.