Singapore’s new law weaves safety net for gig workers

Gig workers will be enabled to secure their retirement, benefit from improved workplace safety, and gain greater visibility within the industry.

What began as an alternative to acquiring goods and necessities during the pandemic when people were forced into isolation became a life-changing tool post-pandemic, offering convenience in this busy and demanding world.

Gig workers, also known as platform workers, are delivery workers, private-hire car drivers, and taxi drivers using online matching platforms which have incessantly become vital to daily life. But despite providing convenience to others, these workers lack benefits and face risks in their everyday lives on the road.

In light of their increasing significance in the industry, the government has taken the initiative to introduce measures that ensure improved safety conditions and secure retirement options for gig workers.

“As platform workers are a ‘precarious’ segment of Self-Employed Persons (SEPs), this legislation comes in to provide certain basic protections for them,” Lim Jia Ying, partner for Employment Practice at WongPartnership, told Singapore Business Review. “In particular, unlike typical SEPs, platform workers have less control over their income and working conditions. When operating costs increase, they are unable to increase prices and may need to deplete their own savings.”

Lim pointed out the financial challenges faced by platform workers: relatively modest incomes, limited prospects for wage progression, the risk and cost of getting injured on the job, and the absence of income if unable to work.

“With significant and continuing growth of the platform economy, new legislation is necessary to strengthen protections for platform workers, in alignment with the Singapore government’s vision to build a fairer and more inclusive society with stronger safety nets and collective support,” she said.

Lacking security, benefits, and safety assurances, gig workers are considered “vulnerable.” Even if platform workers switch platforms, they cannot escape management control as all platforms have their own set of rules workers need to adhere to.

“The new legislation addresses the gaps in the existing framework which was not designed with the unique nature of platform work in mind. Employees generally have less flexibility, autonomy, and control over business strategy decisions but enjoy certain basic protections, while SEPs generally have greater autonomy and can take responsibility over their own well-being, which also means less of a need to strengthen basic protections. While platform workers are considered SEPs, in reality, many of them lack the autonomy and flexibility of typical SEPs due to control exerted by platform companies,” Lim said.

Amongst the major concerns voiced out by gig workers are the lack of work accident coverage, of expeditious access to payouts, and the absence of a dispute resolution mechanism, as well as their statutory right to make CPF contributions in the absence of co-contributions from platform companies.

Still, the rising demand for convenient services in a gig economy ushers in many workers despite these concerns.

Jod, a multi-industry on-demand gig work platform, knows this trend all too well. “At Jod, we’ve seen the rapid growth of the gig economy over the last few years, amidst the pandemic with many full-time employees transitioning to gig work, seeking better work-life balance and flexibility. We have seen more and more business partners coming onboard our platform to seek gig workers for shift work whilst the worker pool has also gradually increased,” Sebastian San, Singapore country manager at Jod, told Singapore Business Review.

“However, they often find themselves without access to traditional employment benefits. This shift has left many gig workers benefits-starved, contradicting the initial allure of ‘being their own boss,’” San added.

For Jod, the new legislation is a welcome development as it would significantly enhance safety and retirement benefits for gig workers in Singapore.

“By implementing these basic protections, gig workers will receive injury compensation, ensuring that they have financial support in case of work-related injuries. Additionally, the introduction of CPF (Central Provident Fund) contributions will also help secure their retirement needs, providing a more stable financial future,” San said.

Proposed benefits

The implementation of the new law will address the longstanding concerns of gig workers, providing them with equality and improving their life circumstances.

“As CPF contribution rates of platform companies and eligible platform workers will be aligned with that of employers and employees, respectively, platform workers will be able to make CPF contributions into their Ordinary Accounts and Special Accounts to support their housing and retirement needs while platform companies making CPF co-contributions for platform workers will also increase the amount of CPF contributions platform workers receive,” Lim explained.

In addition, gig workers will have more confidence and security doing their jobs on the road.

Lim also pointed out: “The new legislation will entitle platform workers to the same scope and level of work injury compensation as employees are entitled to under [the] Work Injury Compensation Act 2019 of Singapore (WICA), ensuring adequate financial protection for platform workers who are injured at work.”

More importantly, the new law will increase visibility for this working segment by introducing a new representation framework. This framework will enable platform workers, who are currently unable to form unions, to be represented by platform worker representative bodies (PWRBs) capable of negotiating for their collective interests.

Industry effect

As benefits increase, so will company costs, which leads to higher service prices for consumers.

“It is recognised that implementing these recommendations would result in significant cost increases for the affected firms. The Advisory Committee on Platform Workers (Committee) has made sure to closely involve key stakeholders such as platform companies in the co-creation of the framework. Generally, the government has accepted the Committee’s recommendation to phase the recommendations in at a reasonable pace to allow the market to gradually adjust,” said Ho Wei Jie, partner on Employment Practice at WongPartnership LLP.

Ho explained that based on the Committee’s recommendations, the increased CPF contributions would be phased over a five-year period, subject to major economic disruption which warrants a longer timeline.

“Furthermore, scoping down the mandatory group that requires CPF contributions (to workers aged below 30 in the first year of implementation) will help ease the cost impact,” she said.

In terms of work injury compensation, the Committee assessed the financial viability of insurance for platform companies and worked with insurers to ensure that premiums are proportionate to each company’s earnings.

The Singapore Government accepted the recommendation to maintain this insurance through the open, competitive market, said Ho.

Whatever strengths inherent in the current WICA regime, including work injury compensation insurance through the open market, should be retained, said Ho.

To serve this interest, the Ministry of Manpower has set up the Platform Workers Work Injury Compensation Network to develop policies for platform workers. So far, this legislation has been receiving positive reactions from both platform companies and consumers.

“Although this increase in cost will likely result in higher prices for platform services, surveys have shown that a majority of consumers are willing to pay slightly higher prices to ensure adequate protection for platform workers,” Ho said.

The five-year phase-in period for the increased CPF contributions is also intended to help ease the industry into the transition of CPF contributions and to manage the immediate impact on consumers, platform workers and the business costs of the platform companies.

Platform companies have also released statements saying that the recommendations are fair and balanced, and they welcome the changes.

“Platform companies Grab Singapore and TADA have entered into Memorandums of Understanding (MOUs) with the National Private Hire Vehicles Association (NPHVA) and National Delivery Champions Association (NDCA), while GoGoX has entered into a MOU with NDCA, to express their intention to to better protect the interests of platform workers in Singapore,” Ho told Singapore Business Review.

“These MOUs are intended to enhance representation of platform workers by according direct recognition to existing associations such as NPHVA and NDCA as well as the new PWRB(s) to be formed under the new law,” she added. 

To ensure compliance with the new law, new mechanisms will be developed whilst retaining the strengths of current regimes. As such, the Singapore government will create a system to deduct mandatory CPF contributions from platform workers’ earnings as they receive their income.

In addition, platform companies will be legally required to negotiate with the PWRB(s) representing these workers under the new representation framework.

As for gig hiring platforms like Jod, preparatory measures are underway. Jod is already implementing mechanisms such as automated compliance monitoring, regular education and updates, feedback and reporting systems, as well as regular audits and reviews.

“We have established a robust feedback and reporting system that allows gig workers and business partners to report any non-compliance issues confidentially. This system helps us quickly identify and address any areas where compliance may be lacking,” San said.

Jod also conducts regular audits and reviews of compliance processes to ensure they remain effective and up-to-date with the latest legislative changes.

“These audits help us continuously improve our compliance mechanisms and maintain the highest standards,” he added.

“The introduction of this law will have a significant impact on Singapore’s labour market and gig economy by providing gig workers with much-needed protections and benefits. This creates a more equitable and supportive environment for gig workers, enhancing the appeal and sustainability of gig work, while also encouraging traditional employers to offer more competitive benefits,” San said.