January 26, 2017

“Failure to pay compensation awarded by the Labour Court under the Work Injury Compensation Act is a criminal offence”, Employment Partner Vernon Voon shares more with The Straits Times

RHTLaw Taylor Wessing Partner Vernon Voon was featured in The Straits Times article titled “Give Labour Court more power to protect workers”. The article was first published in The Straits Times dated 26 January 2017. Give Labour Court more power to protect workers With the Labour Court expanding to become the Employment Claims Tribunals covering more workers, it's time to equip it with more power to enforce its own orders Source: The Straits Times © Singapore Press Holdings Ltd. Date: 26 January 2017 Author: Toh Yong Chuan Two separate labour cases against employers. Both involving Bangladeshi construction workers. Both workers won, yet they cannot get the payment orders enforced. In the first Catch-22, Mr Islam Rafiqul was owed $7,363 in unpaid salary and the Labour Court last month ordered his employer, Geosray Engineering and Services, to pay up. The employer ignored the order. The Ministry of Manpower (MOM), which runs the Labour Court, told Mr Islam to go to the State Courts to take action to seize the employer's assets to get the money back. This would involve him having to pay, out of his own pocket, legal fees as well as those for a bailiff and auctioneer, which he cannot afford. In the other case, the Labour Court last September ordered local company Ridgeway Marine and Construction to compensate Mr Sujan Ahmed $11,625. The company, which did not cover the worker with compulsory workplace insurance, made a small partial payment and stopped. To get the remainder, he has to take the employer to the State Courts. These two cases highlight a gap in the law meant to protect foreign workers. And while these cases involve foreign low-wage construction workers, the limitations of the system affect all workers, since the Labour Court covers local ones as well. The cases raise the question: Why can't the Labour Court enforce its own orders? LABOUR COURT'S ROLE AND GOOD INTENTIONS The Labour Court, despite its name, functions less like a court of law and more like an administrative tribunal. Its "courthouse" is within MOM's premises and its powers are mostly drawn from the Employment Act, Singapore's main labour law that sets out the basic terms and conditions for workers. It hears employment-related complaints on issues such as disputes over salary, dismissal and leave. The hearings are held behind closed doors and lawyers are not allowed to represent workers or employers. By cutting down on the legal paperwork and not involving lawyers, the fees for taking complaints to the Labour Court are very low: Employers pay $20 and workers pay $3. This makes the system accessible to all. The mediation process also makes the dispute less combative, which is in line with the longstanding desire by the Government, unions and employers to keep industrial relations harmonious. Other countries use a tribunal system to resolve labour disputes too. Hong Kong has its Labour Tribunal, offering "a quick, informal and inexpensive way of settling monetary disputes between employees and employers", says its website. Here, Labour Court sessions are run by the Commissioner for Labour and his deputies, who are senior officials in MOM. Its primary goal is to settle disputes through mediation, not make rulings and enforce the decisions. Mr Martin Gabriel, founder of human resources consultancy firm HRMatters21, says: "Employers see those chairing Labour Court sessions more as referees settling disputes rather than judges presiding over cases." Mr Gabriel, a former MOM officer, has advised about 10 employers and represented five in Labour Court sessions over the past 15 years. The court does not publish its decisions or an annual report, so little is known about the types of cases it handles. Still, the MOM received about 6,000 complaints of salary disputes each year in 2015 and 2016. Half were resolved without the cases going to the Labour Court. And of the 3,000 cases that went before the latter, 1,000 were resolved through mediation. Manpower Minister Lim Swee Say said in a written reply to Parliament this month that in about 1,400 cases each year, the Labour Court had ordered employers to pay their workers. However, the employers in about 350 cases ignored the Labour Court's orders. Workers in such situations have one recourse, laid out in 2013 by then Manpower Minister Tan Chuan-Jin in a reply to a parliamentary question: "(They) may enforce the orders by way of writ of seizure and sale through the Subordinate Courts." This applies to payment orders across the different courts. Indeed, besides the Labour Court, the Small Claims Tribunals - which handle commercial and civil disputes of up to $10,000, or up to $20,000 if the parties consent to the higher limit - also follow the same process. The limitations of the Labour Court in enforcing its orders has not escaped labour lawyers. Having workers take their disputes to the Labour Court instead of civil courts only solves "half the problem", says Mr Vernon Voon, employment and labour relations partner at law firm RHTLaw Taylor Wessing. This is because the worker still has to go to the civil courts to enforce the order if the employer does not pay up. "This requires time and financial cost, which an employee who is deprived of his salary can ill afford," says Mr Voon. BEEFING UP THE LABOUR COURT The Labour Court needs to do more to protect foreign low-wage workers as they are the most vulnerable to exploitation, says Mr Alex Au, an advocate for foreign workers' rights at Transient Workers Count Too (TWC2). Indeed, the Government already recognises that some workers need more protection than others. For example, the Employment Act covers all workers earning $2,500 and below a month, and manual workers on $4,500 and below. And when the Employment of Foreign Manpower Act was amended in 2012, it gave more powers to the MOM to protect foreign workers. For example, the MOM can appoint Commissioners for Foreign Manpower who can impose fines on companies that breach rules in hiring foreign workers. Boosting the powers of the Labour Court is a logical next step in protecting these vulnerable low-wage workers. The Labour Court is due to be expanded in April when it becomes the Employment Claims Tribunals (ECT). The ECT will cover workers at all salary levels. It will benefit professionals, managers and executives earning over $4,500 a month in particular, as they would otherwise have to file claims with the civil courts. The current Labour Court does not cover them. But one can imagine their disappointment if they were to obtain a court order and, in the event the employers refuse to pay, they are told they have to enforce the orders themselves. Given the expansion of the Labour Court in April, it is timely to review whether it can give workers more help. THREE WAYS TO GIVE IT TEETH First, make it easier for the worker to seek legal recourse against employers which do not pay. They should not have to take the step of seizing the employers' assets, with all the jumping through legal hoops that it involves. In Britain, a worker awarded payment by its Employment Tribunal can get help with enforcement. He can ask the court to force the respondent to pay by filling in a "penalty enforcement form". Respondents will be fined if they do not pay up within 28 days. There is no need for the British worker to seize the employer's assets and sell them. Second, punish employers which ignore the Labour Court orders. Mr Voon notes: "Failure to pay compensation awarded by the Labour Court under the Work Injury Compensation Act is a criminal offence, and there is no strong policy reason why non-compliance with an order of the Labour Court issued under the Employment Act shouldn't be on the same footing." The MOM already has the powers to charge employers in court for not paying salaries or injury compensation. The next logical step is to also punish the employers which ignore the court payment orders. This will reduce the non-compliance rate. Third, for workers whose employers cannot pay up, the Labour Court can direct the workers to get financial aid. In Hong Kong, there is a government-run Protection of Wages on Insolvency Fund that can pay workers if employers are bankrupt. Mr Au suggests another variation: a backstop fund which pays out the Labour Court orders first and claims from the employers later. For foreign workers, there is already a little-known relief fund here. The Migrant Workers' Centre - which is backed by MOM, the National Trades Union Congress and the Singapore National Employers Federation - runs the Migrant Workers' Assistance Fund that has $457,706 as at March last year. It gave out $64,782 in assistance to workers in 2015. Whatever the source and mandate of the relief funds, the idea is that it need not be solely a government effort. Non-governmental organisations can chip in too. In the longer run, the scope and powers of the Labour Court, and the ECT from April, cannot remain static. Any move to review how the Labour Court can be enhanced to protect workers from the apparent injustice of not receiving their ordered payment or compensation cannot come too soon.
January 25, 2017

“The US withdrawal from the Trans-Pacific Partnership will see Singapore putting in more resources to develop FTAs” Deputy Managing Partner Azman Jaafar said in an interview with Channel NewsAsia

“The US withdrawal from the Trans-Pacific Partnership will see Singapore putting in more resources to develop FTAs.” RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar said this when interviewed by Channel NewsAsia on the United States formal withdrawal from the Trans-Pacific Partnership (TPP). The interview was featured in Channel NewsAsia and Channel 5 News. “This may not spell an end for trade agreements for export-oriented Singapore. Singapore might put in more resources to develop bilateral free-trade agreements with other countries in the region.” Other regional integration initiatives are still ongoing, including the Regional Comprehensive Economic Partnership that is seen as a multi-lateral trade pact that will replace the TPP and deepen trade links amongst Asian countries and China.  The emerging global economic leadership of China will be the new normal. Azman’s full feature can be found in the following news reports: Singapore Tonight – Channel NewsAsia, 23 January 2017 5 News – Channel 5, 23 January 2017
December 30, 2016

RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar interviewed by Channel NewsAsia

RHTLaw Taylor Wessing Deputy Managing Partner Azman Jaafar was interviewed by Channel NewsAsia and featured in an article titled "Slow start, but future remains bright for ASEAN Economic Community: Analysts". The article makes reference to an interview with Channel NewsAsia on Singapore Tonight segment, where Azman shared his views on the impact of ASEAN Economic Community on local SMEs in Singapore. The article was first published in Channel NewsAsia on 29th December 2016.  Slow start, but future remains bright for ASEAN Economic Community: Analysts Source: Channel NewsAsia Date: 29 December 2016 Author: Calvin Hui SINGAPORE: Saturday (Dec 31) will mark the first year anniversary of the ASEAN Economic Community (AEC). Conceived as a single market and production base, the AEC is part of broader efforts to integrate ASEAN economies. But one year on from its inception, about 74 per cent of Singapore companies polled in a recent Singapore Business Federation (SBF) survey said they do not think the AEC has benefited them. Associate Professor Simon Tay, chairman of the Singapore Institute of International Affairs (SIIA), said bigger companies have the capabilities to take advantage of opportunities from the AEC, but smaller business may not be so well equipped to do so. “So the big test in the longer term will be whether the SMEs (small- and medium-sized enterprises) will be able to also play across the region,” he said. “And not just Singapore SMEs, (but also) Filipino SMEs, Indonesian SMEs. “It will take some time because the integration is not just as deep. (There's) still too much bureaucracy and rules standing in the way. The tariffs, I think are gone, but these non-tariff measures are almost like barriers to deeper integration.” RHTLaw Taylor Wessing’s deputy managing partner Azman Jaafar agreed that the lack of resources is a stumbling block for smaller companies. However, he added that it “just means that you have to be a little more ingenious”. IMPORTANT TO CHANGE MINDSET                              ASEAN’s market of more than 600 million people, and almost US$3 trillion in combined GDP, represents vast opportunities for companies from the city-state of Singapore. But Mr Azman, who is also chairman of the law firm’s ASEAN Plus Group, said local companies could have traditional business models that limits the extent of their expansion outside of Singapore.  “Local SMEs who want to benefit from the AEC must rethink how they are doing their business, and how they should change their mind set, and apply quite different rules of engagement,” he said. Governments can also help to change these attitudes. Said Assoc Prof Tay: “Sometimes, SMEs, not just in Singapore but other countries - they are really on the defensive. Say (they) don't let people in, because I can't compete in my own home market. “I think increasingly, governments have got to reassure SMEs that as the AEC opens up, they will be given assistance by ASEAN, by governments on the whole, to also go out and become more competitive, become more efficient on the whole about boundaries." There is also the cultural diversity of the 10 member countries in ASEAN to consider, said Mr Azman. “When our local businesses are able to appreciate these differences, they are probably better placed to get into these markets,” he said. LONG TERM OUTLOOK BRIGHT Observers agree that it is premature to write off the AEC despite its slow start. "There's a right to get a bit disappointed with the AEC in the first year,” said Assoc Prof Tay. “But what makes me slightly optimistic is that, at the national level, different key economies have already started to see the need for reform." Mr Azman emphasised that the push for the AEC to succeed must not come from just the governments, but other key stakeholders too. “It’s easy to say that the government has got to push this. But at the end of the day, a lot of things happens without government assistance. “Within industries and within countries, if we keep discussing this, we open up the discussion across borders. This creates a level of awareness that’s very different from the level of awareness in a local forum.”  Azman's full feature can be found in the news report: Singapore Tonight - Channel NewsAsia, 29 December 2016
December 14, 2016

RHTLaw Taylor Wessing Head of Private Wealth Tan Choon Leng featured in Singapore Business Review

RHTLaw Taylor Wessing’s Head of Private Wealth Tan Choon Leng was quoted in an article published in Singapore Business Review titled “Slim pickings for private equity houses”. The article was first published in the December 2016-January 2017 edition of Singapore Business Review. Slim pickings for private equity houses PE houses face a scarcity of deals, but many remain hopeful given the high-growth trajectory of Southeast Asia and with international players setting up office in Singapore. Source: Singapore Business Review © 2016 Charlton Media Group Date: December 2016-January 2017 Edition When you ask private equity (PE) houses why they continue to flock to Singapore despite the dwindling number of deals in the country and in Southeast Asia, they will tell you that the short-term pain is worth the long-term gain. The region is primed for an upswing in PE activity in the coming decades as fast-growing markets become flush with investment opportunities, and a presence in the Singapore hub will ensure they can pounce on those lucrative deals. But, for now, PE firms are rolling with the punches and focussing on a few key plays, from privatisation of listed companies to technology acquisitions. “On a year-on-year basis there has been a marked slowdown both in terms of number of deals that get to completion as well as the number of new deals that PE houses are looking at,” says Tan Choon Leng, head of private wealth practice at RHTLaw Taylor Wessing LLP. “A near universal grouse that we hear from PE houses is the lack of appropriate targets and investee companies, especially in the healthcare and consumer sectors in Southeast Asia.” Tan reckons there has also been a perception of growing instability in the region, citing developments such as Thailand’s succession issue and Malaysia’s financial scandal involving 1MDB, which makes it trickier for PE houses to pick the right deals. There is a lot of “dry powder” in the industry – EY estimating around US$526.6b in September 2016 – but attractive deals providing healthy yields are harder to come by, says Bill Jamieson, partner, head, funds and financial services practice group at Colin Ng & Partners LLP. In fact, funds raised for Singapore had been increasing for years, notwithstanding a reverse in the first half of 2016, with many PE funds targetting Southeast Asia and using Singapore as a base for their business. “Despite the strong showing for funds raised, the challenge for many funds is finding the right investments in Singapore,” says Marcus Chow, partner at Bird & Bird ATMD LLP. “Funds are sitting on dry powder but the challenge is nonetheless in finding good internal rate of return (IRR) projects. Going private transactions and delistings from Singapore Exchange remain a growing trend for Singapore. We are acting on one such transaction now,” adds Chow. Privatisation picks up Singapore has seen a spurt of privatisation deals. This year, UOB Ventures backed the $269m privatisation of Eu Yan Sang, which specialises in traditional Chinese medicine. Other recent headliners include Northstar’s S$331m privatisation of Innovalues, and the Warburg Pincusbacked $1.78b privatisation of ARA Asset Management. “These are examples of classic PE plays on profitable but undervalued companies,” says Tan. “So long as the wider stock market remains relatively undervalued, it is likely that more such privatisation attempts will follow.” An increasing number of listed companies in Singapore are warming up to the idea of delisting due to taxing requirements and lower valuations, says Evelyn Ang, senior partner at Dentons Rodyk & Davidson LLP. “Singapore listed companies are subject to public scrutiny and are required to comply with numerous listing requirements including rules on public disclosure of material information, requirements for shareholders’ approvals for certain types of transactions and obligations to provide quarterly or half yearly reports to investors,” she says. “Combined with thin trading volumes and depressed valuations of companies listed on the Singapore Exchange (SGX), the option of delisting would and does appeal to founders and controlling shareholders.” Ang cites a Bloomberg estimate that around 13 companies with a combined market value of $4.5b have announced their plans to delist from the SGX in the first half of 2016. This year alone, OSIM International, Eu Yang Sang International, Goodwood Park Hotel Limited, SMRT Corporation and Tiger Airways Holdings Limited delisted from the SGX. Foreign buyers looking to establish a foothold in Asia have led the interest in Singapore listed companies, says Ang. In November 2016, Dutch coffee and tea firm Jacobs Douwe Egberts (JDE) made a cash offer for all shares of Super Group Ltd, which owns the popular Owl brand of coffee, for approximately $1.45b. Ang reckons the acquisition will extend the coffee and tea business of the European billionaire’s Reimann family into Asia. If the foray proves successful, she expects JDE to delist and privatise Super Group Ltd. Southeast Asia’s golden promise Aside from privatisation plays, PE houses in Singapore are also preparing for the shower of opportunities as Southeast Asian economies strengthen further. “This market is definitely receiving greater PE attention than it has in the past and is likely to keep PE houses very busy for the foreseeable future,” says Tan about the Philippines, citing Baring Asia PE’s US$137m investment in Telus International. The Philippine economy expanded at its quickest pace in three years, growing at 7.1% in the third quarter of 2016, making it one of the fastest growing economies in Asia. Tan reckons there are a lot of reasons for optimism in the Southeast Asian PE and mergers and acquisitions industry. Not only are the US elections and its destabilising effects over, but the Southeast Asian market will look relatively more attractive than Europe, which will face continued uncertainty and relatively low growth rates. Other than the Philippines, Indonesia is also attracting PE attention after the completion of its tax amnesty in the first quarter of 2017 and the increase in the number of sectors open to foreign investment. In addition, Jamieson says, “Singapore is the PE hub of Southeast Asia and a hub for PE firms looking to invest into India. Hence, when we discuss private equity in Singapore we must necessarily discuss the investment opportunities in the region.” He also points out that privatisation of state-owned entities in countries such as Vietnam presents “once-in-a-lifetime opportunities” for PE players to invest in. PwC predicts that seven of the world’s 12 biggest economies in 2030 will come from emerging markets, which is why PE houses are ramping up their presence in Singapore. “We are seeing a more active private equity market with more international PE players setting up office in Singapore over the recent years,” says Ling Tok Hong, private equity leader at PwC Singapore. “This demonstrates the keen interest of PE in Singapore and the region, in line with a megatrend – we are seeing a shift in global economic power from west to east as well as the growing middle class population in the region.” Ling notes that with a crush of PE interest in the region and the limited number of deals available, competition is becoming fierce and forcing PE managers to differentiate themselves by demonstrating their ability and track record in creating value. Key sectors Given the increased spending power of the growing middle class in the region, analysts identified key sectors driving activity in PE. These are infrastructure, healthcare, retail and e-commerce, financial technology (fintech), and food & beverage (F&B). The larger ticket transactions were in the traditional engineering, manufacturing, F&B, and logistics industries, including large ticket real property plays, notably in the acquisition of Asia Square Tower 1 by Qatar Investment Authority from Blackrock, says Sheela Moorthy, partner in the Singapore office of Norton Rose Fulbright. F&B businesses continue to receive interest among PE firms, notes Doris Yee, director at Singapore Venture Capital & Private Equity Association, as shown in Standard Chartered Private Equity’s investment into Phoon Huat, a family-owned business and leader in the baking ingredients sector. Similarly, PAG’s investment into Paradise Group, a homegrown restaurant chain with restaurants across Southeast Asia, is expected to help it expand into China. “This is perhaps a reflection of Singapore’s own foodie culture with very high expectations on quality which in turn pushes up the standards of food-related businesses in Singapore,” says Yee. Jamieson adds that there has been a trend towards picking undervalued F&B companies with potential for regional growth such as Viz Branz, F&N, and Super Group. A notable transaction was the investment by Hera Capital and DSG Consumer Partners into Salad Stop!, a local F&B chain with fast-growing regional franchises, and there will likely be more F&B transactions in the local market based on current valuations. Southeast Asia’s burgeoning and increasingly tech-savvy consumer market is also fuelling investments into the e-commerce and fintech sectors. Regional e-commerce retailer Lazada received a US$500m investment from Alibaba, which also bought additional stakes worth the same amount from early investors, including Rocket Internet. On the technology front, meanwhile, there was buzz around the acquisition of Singapore-headquartered and micro-optics and optical sensing leader Heptagon by Austria’s global sensor manufacturer AMS. Valued at approximately US$570m, with a potential earn-out of up to US$285m based on certain 2017 targets, the investment attracted the likes of Vertex, Granite Global Ventures, Credence, and Nokia Growth Partners. “Our clients have been investing private equity into fintech,” says Jamieson. “The support from the government for the development of this sector will encourage more financial investors into this space through Singapore.” There are excellent opportunities as well in the troubled offshore marine sector. “Companies under distress would present some opportunities for PE firms with the right expertise and appetite to pick up some acquisitions at attractive valuations,” says Jamieson.