Amendments to Companies Act means you get protection if your employer goes bust


When retrenchment hits or a company becomes insolvent, the first thing in a worker’s mind is the salary and benefits due. The latest amendments to the Companies Act passed in Parliament on 7th October 2014 addresses that aspect.

Labour MP Patrick Tay has been pointing out that there is a need for the cap limit on salaries and wages to keep up with the changing economic times in the event a company becomes insolvent or when a worker is retrenched.

patrick tay

At the debate in Parliament on the Second Reading of the amendments to the Companies Act, Senior Minister of State for Finance and Transport Josephine Teo said “Employees of an insolvent company are currently entitled to be paid their wages and salaries, followed by retrenchment benefits and ex-gratia payments, in priority of other unsecured creditors.


The limit in the Companies Act on such priority payment is “five months salary of the employee or $7500, which ever is lower.

The $7500 limit is based on the monthly salary cap of $1500 for non-workmen under the Employment Act of 1993.

Patrick Tay tells Parliament that the limit is by now too low.

Because the latest amendments to the Employment Act has brought the salary cap for non-workmen up to $2500. In light of this increase, the new cap in the Companies Act is now “five months salary or $12,500, whichever is lower”.







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