Contract workers matter too

While employers in Singapore generally offer some form of health coverage to full-time employees, can contractual staff be left out? HRM finds out more

With stringent labour guidelines in Singapore, companies are obliged to accord their workers with health insurance recommended by the Ministry of Manpower. “Some companies may provide more comprehensive coverage depending on the nature of business, demographic of staff, employees’ medical entitlements and corporate healthcare budget,” says Richard Kwok, Senior Manager – Corporate and Business Development, NTUC Unity Healthcare Co-operative (Unity Denticare).

Singapore’s tripartite partners have also been encouraging each other to enhance the portability of inpatient and hospitalisation medical benefits.

“To incentivise employers to make the move, the Government has revised the tax policy to allow employers implementing any of three portable medical benefits options to enjoy higher tax deductions for medical expenses of up to two per cent of total employees’ remuneration (the normal tax deduction limit is one per cent),” Kwok explains.

The three options are:

  • Portable Medical Benefits Scheme (PMBS)
  • Transferable Medical Insurance Scheme (TMIS)
  • Provision of Shield plan (MediShield or Medisave-approved private integrated plan)

While all employees, including foreign workers, should enjoy basic health coverage, contractual staff are generally not included in the comprehensive health coverage. They are deemed temporary workers with no long-term work commitment by some companies, says Kwok.

Nee Soon GRC Member of Parliament Patrick Tay told TODAY newspaper that employment laws that directly protect freelance professionals are “rare across the globe”, as those in a “contract of service” are usually the only ones covered by legislation.

Kwok says that the misconception that temporary workers have no long-term work commitment should be managed top-down within the company’s management level to ensure that compensation and benefit policies are relevant and effective.

“It is simply not logical to exclude contractual staff and foreign workers totally from the compensation and benefit policies, as they do contribute to the company’s performance in different areas and capacities,” he adds.
 
Health coverage today
Different tiers of entitlements can be allocated between full-time, contractual workers and foreign workers to ensure transparency and impartiality of a company’s compensation and benefit policies.

“These include the claim amounts set, extent of coverage (for illnesses and accidents), and inclusion of immediate families,” says Kwok.

Generally, both medical and dental benefits are capped at a certain amount for full-time staff. This has to be utilised by the end of each calendar year. Medical coverage in Singapore generally also includes hospitalisation benefits and hospitalisation medical leave due to accidents and (non-pre-existing) illnesses. Companies with greater budgets may also include standard annual health screenings for staff, with some even according the same to the immediate family members of staff.

“For the mutual benefit of employers and employees, it is important to note that health coverage has to be relevant, reliable and robust,” says Kwok. “Thus, determining the practicality and sustainability of any health coverage is paramount before it should be implemented.

“No employee will be happy to learn that their health coverage is scaled back or compromised when the company discovers that existing coverage is affecting its bottom line over the long run,” he adds.
 
Covering contractual staff
Kwok believes there’s a misconception that contractual employees contribute less than full-time staff or that they do not stay long in their roles. “This could explain why some of them are left out of, or not accorded with the same health coverage as their full-time peers,” he explains. “This misconception should be managed top-down within the company’s management level to ensure that the compensation and benefit policies are relevant and effective.”

Different amounts or entitlements can be provided for contractual staff based on their length of service, working hours, and probable health risks that they may be exposed to in their job responsibilities. Necessary claim guidelines must be set to ensure that abuse does not take place during or after contractual employment period.

“Having said so, all health coverage should at least meet the authorities’ stipulated labour guidelines, and not fall below the required benchmark even if it is due to the internal varying compensation and benefit policies within a company,” says Kwok.
 
Involving loved ones
Health coverage for dependents may vary from company to company and it is not uncommon to see organisations allowing their employees’ dependents to tap on their annual health coverage cap for the year. “This can allow greater flexibility for staff to use the coverage at their personal discretion,” says Kwok.

A separate amount may be set for dependents, particularly with companies that provide more comprehensive health coverage. “Such companies will have more to ‘sell’ and attract their prospective employees, as this may portray them as more caring and sincere employers, as compared to others that offer minimal coverage,” Kwok explains.

Separately, other employers may provide more or wider coverage for staff and families of less privileged background. Besides aiming to alleviate the dire financial conditions of these staff, these practices also help to instill staff loyalty and commitment; reducing the possibility of high staff turnover over the long term.
 

Obamacare impacts contract employees
 
The US Affordable Care Act (known informally as “Obamacare”) requires organisations that employ more than 50 full-time workers to provide health insurance to employees at an affordable rate. If they don’t, these companies will face fines from the US Internal Revenue Service.

With a relatively low cut-off rate, the law will affect giant organisations like Google and Apple, as well as small, regional businesses, according to a US-based HR consultancy, Employment Contractor Services (ECS).

Economists predict that Obamacare will have an impact on the full-time workforce. Some positions may become part-time to avoid mandatory healthcare costs.

This is exemplified by Wal-Mart, which cut some of its staff rosters to below the 30 hours-per-week threshold that would qualify them as full time under the Obamacare legislatsion. Sales have been sinking dramatically at the retailer as the company has turned to hiring mostly temporary workers (those who must reapply for a job every 180 days) to staff stores.

Still, the retailer has since announced that 35,000 part-time employees will soon be moved to full-time status, entitling them to the full healthcare benefits.

The American workforce may become like that of many European countries: a large base of temporary employees, says ECS. “These employees will work month-to-month contracts. They will receive few benefits and a smaller base pay.”

 

Contract work now more attractive: Hays survey
 
Eight out of 10 workers in Singapore are finding contract assignments an attractive option, given the current global economic environment.

According to a survey by recruiting experts Hays, 13% of workers say this kind of work is now less attractive to them, while seven per cent reported no change in their attitudes over the last year.

“Contract work is not limited to entry-level office support roles. Professionals at all levels and various sectors are working on a temporary basis,” says Chris Mead, Regional Director of Hays in Singapore and Malaysia.

“We are seeing employers engage contract workers as a long-term solution to their staffing needs and candidates are making the most of this trend as there are many advantages for them too.”

Some benefits for candidates considering contract work include the ability to advance their skills and careers on their own terms, attain work-life balance, and to increase their earning potential.

Employers, on the other hand, are able to hire particular expertise when needed for special projects. This supports the business’s permanent workforce, thereby increasing productivity. Employers can also use contract workers on a trial basis to test their ability and assess their compatibility with the organisation.

An added benefit of using contract workers is that they can be engaged and released at short notice, which can help organisations address challenging times in their business schedules.

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