Global | Publication | July 2023
On 6 July 2023, our Singapore office hosted an in-person event as part of a series on navigating socio-economic risks. The event comprised two panel discussions, with the first addressing social risks in the workplace relating to workplace discrimination and harassment, and the second focusing on human rights risks in the business and supply chain. Speakers comprised:
Below are the key takeaways and highlights from the panel discussions. If you would like to learn more about these topics, please reach out to our global regulatory compliance and investigations team.
Focusing on the two key risks of workplace discrimination and workplace harassment, the Social Risks Panel discussed the likely implications and issues arising from increasing regulatory oversight which businesses ought to be aware of, and practical measures which businesses could take to manage such risks.
Workplace Discrimination
To kick off the discussion, Wilson highlighted the growing importance of building inclusive corporate cultures and how the regulation of workplace issues such as workplace discrimination and harassment is critical to this effort. On the local front, Wilson noted the absence of specific laws regarding such issues in Singapore and how this gap is expected to be addressed by the implementation of a workplace fairness legislation (WFL) in 2024.
Setting the scene, Jeremiah shared that the WFL will co-exist with existing guidelines issued by the Tripartite Partners (i.e., the Ministry of Manpower, the National Trades Union Congress, and the Singapore National Employers Federation) and will apply to all employment-related decisions across all stages of employment. One of the most vital functions of the WFL would be to provide more enforcement options against errant employers and responsible persons within the company, beyond the curtailment of work pass privileges (as is currently the case).
Turning to tackle how workplace discrimination would be regulated under the WFL, Jeremiah elaborated on how the WFL would prohibit discrimination in respect of a defined set of protected characteristics (namely, (i) age, (ii) nationality, (iii) sex, marital status, pregnancy status, caregiving responsibilities, (iv) race, religion, language, (v) disability and mental health conditions).
Leveraging on his international experience, Paul shared how the scope of such characteristics could differ across jurisdictions (for instance, genetic information could constitute a protected characteristic in the US). Such inconsistent protections may create issues where, for instance, employees with certain protected characteristics are seconded or posted to another country where they would not enjoy such protections, or where employees in a jurisdiction with more limited protections engage in conduct which would not be deemed acceptable elsewhere. The practical upshot of this uneven landscape was that while multinational businesses are free to implement group-wide policies based on the laws of their home jurisdiction to set baseline expectations of acceptable workplace behaviour, such group-wide policies may not sufficiently take into account differences in local law protections for specific groups of employees. One practical solution is to adopt local addenda to the group-wide policies, to ensure that minimum protections for certain groups of employees remain upheld. Businesses should also remain alive to the possibility of such issues when considering their manpower and resource allocation.
The panel then discussed exceptions where discrimination on the grounds of the protected characteristics would be allowed by the legislation, to provide flexibility to accommodate business needs. Jeremiah shared how the WFL would likely allow employers to (i) make hiring decisions based on a protected characteristic where is a “genuine and reasonable job requirement” (such as language proficiency or religious requirements where religious organisations are concerned); and (ii) favour seniors over 55 years and persons with disabilities in hiring decisions even if there are other equally or more qualified candidates.
On the latter, Paul observed that such affirmative action in favour of those above 55 would not be permissible in the United Kingdom (UK), where it would instead be impermissible to discriminate in favour of someone on the basis of age. However, where persons with disabilities were concerned, certain European jurisdictions have allowed for quotas to promote employment of such individuals. Jeremiah noted that this proposed exception was likely aimed at addressing Singapore’s situation of having a rapidly ageing population and to align with other government initiatives such as the raising of the retirement age.
Moving to the key concerns arising from the implementation of the WFL, Wilson pointed out that there could be concerns that such legislation would signal a trend towards affirmative action for certain segments of society at the expense of others. In response, Jeremiah emphasised that the Singapore government has clarified that employment decisions should ultimately remain merit based. For example, returning to the exception regarding seniors and persons with disabilities, such individuals would still have to perform consistently and meet standards upon being hired. Similarly, Paul stressed that affirmative action remains unlawful in many jurisdictions and businesses should be wary of introducing campaigns to increase the number of persons with protected characteristics at the expense of those without such characteristics.
Finally, Wilson observed that another concern would be that the introduction of such legislation could pose the risk of a litigious culture in the workplace. Drawing from the experience in the United Kingdom, Paul shared that there has indeed been an increase in claims based on workplace discrimination and whistleblowing as the quantum of compensation for such claims are uncapped, as opposed to there being a statutory cap for claims for wrongful dismissal. In this regard, Jeremiah provided assurance that Singapore regulators were alive to this issue and that the WFL is expected to address this concern by expanding the current dispute resolution framework for workplace disputes to claims for workplace discrimination. Parties would therefore be required to undergo compulsory mediation before adjudication at the Employment Claims Tribunal (ECT) as a last resort. In addition, costs of up to S$5,000 may be awarded by the ECT against unsuccessful claimants to deter frivolous or vexatious claims.
Workplace Harassment
Moving on to issues concerning workplace harassment, Jeremiah provided an overview of what constitutes workplace harassment in Singapore, including how in this modern era of remote working and where business events or travel is commonplace, harassment could extend beyond the physical boundaries of the workplace. In addition, conduct which would be likely to cause harassment, alarm or distress could also constitute workplace harassment in Singapore. Paul shared how English courts have accepted a wide definition of workplace discrimination / harassment including any conduct connected to the workplace (for example, conduct taking place at work related events funded by the employer or arising in connection with an event held by the employer).
Turning to another situation where workplace harassment could arise, Wilson observed a global trend towards rising activism in the workplace which could potentially go against the leanings or beliefs of more conservative employees. Jeremiah observed that in light of Singapore’s status as a multireligious and multicultural society, guidelines have been issued to address this concern by making clear that employees should not be penalised for participation (or refusing to participate) in non-work related activities. As for the position abroad, Paul concurred that this was a real issue which many countries face and acknowledged that the conflict between freedom of religion and expression and the protections afforded by anti-discrimination legislation continues to be an area of interest worth monitoring.
Moving to the management of investigations into workplace harassment complaints, the panel discussed how to grapple with competing rights and interests of the victim and the alleged harasser. In particular, the panel recognised that a common tension arises between protecting the confidentiality of the victim and providing the alleged harasser sufficient information to respond in defence. Safeguards discussed to manage this tension included avoiding making any commitments about confidentiality to the victim to manage expectations, and more broadly, ensuring that fair and established procedures for such investigations are put in place and followed.
During the BHR Panel, hot topic issues relating to human rights risks in the business and supply chain were explored by Wilson, Stuart and Jeff.
Jeff and Stuart began the panel with a primer on the global and current BHR legal landscape, highlighting the influential “soft law” principles based on the United Nation’s Guiding Principles on Business and Human Rights, as well as the increasingly prevalent “hard law” implemented through jurisdiction-specific legislation – these include the Modern Slavery Act of UK, Canada and Australia respectively, the draft EU Corporate Sustainability Due Diligence Directive, and the US Tariff Act, to name a few. BHR laws generally expect companies to be responsible for human rights abuses and environmental harm throughout their global supply chains, and require them to identify their key/salient human rights risks and impacts, so as to proactively take steps to minimise them. Specifically, BHR legislative frameworks can impose a variety of obligations and penalties, from mandatory due diligence, and human rights impact reporting requirements to trade/import restrictions and fines.
Of particular importance is the extraterritorial impact of these BHR laws, which can and do often apply to companies (including those in Asia) that may not be subject to similar laws within their home jurisdictions. For instance, the UK Modern Slavery Act will apply as long as the company (wherever incorporated) carries on business in any part of the UK and has an annual turnover of £36 million or more. Similarly, the upcoming EU Corporate Sustainability Due Diligence Directive is to apply to non-EU companies with a generated global net turnover of EUR 150 million or more (with at least EUR 40 million generated from within the EU). Products being imported into the US can also be seized under Withhold Release Orders issued by the US Customs and Border Protection, where there are suspected ties to forced labour.
In practice, a company can also be indirectly subject to similar requirements and pressures arising from BHR laws and principles by e.g., a key customer imposing contractual requirements / conducting due diligence on the company, activist shareholders using resolutions to compel the company’s disclosure of information on human rights, and/or a lender bank with sustainable finance requirements.
The panel also discussed the challenges and complexities involved in satisfying the various BHR requirements, including the perennial issue of “how much is enough”? Recognising it is often difficult to obtain visibility and control over the activities of suppliers downstream on the value chain, BHR requirements are often qualified by a reasonableness standard, and do not require perfection. Companies may thus take a cost-effective and risk-adjusted approach in conducting risk assessments based on geographical and product/industry-based risks, and prioritising resources to address risks that are known (or ought to be known), taking into account the company’s degree of exposure to a relevant supplier and leverage against them. Differing levels of scrutiny (from a desktop review to a full audit) applied to different suppliers may then be justified on this basis.
The panel also addressed a misperception that BHR issues are confined to the engagement of low-cost migrant labourers. In this regard, the panel explained that BHR risks are faced by a broad spectrum of companies, including technology and e-commerce businesses. This is particularly the case as advances in artificial intelligence (AI) technology are expected to surface a variety of human rights issues, including how personal data ought to be collected and used, and how vulnerable data subjects and sensitive data should be protected. Such risks may have to be addressed by the conduct of human rights impact assessments in the provision of AI technology.
Key considerations and steps for conducting an investigation into an alleged breach of BHR were also discussed by the panel. These considerations/steps include:
Companies would also be well-advised to ensure that any corrective action plan devised to remedy an identified breach is fully executable in practice. Past experiences in investigating and remediating cases of BHR breaches were also shared by the panel with the audience.
The session concluded with lively Q&A from the audience, and networking drinks and refreshments.
Publication
In this edition of Regulation Around the World we review recent steps that financial services regulatory authorities have taken as regards investment research.
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