Understanding the upcoming changes to the Work Injury Compensation Act

Last year, the Ministry of Manpower announced significant amendments to compensation limits in the Work Injury Compensation Act (WICA), to enhance employee protection and ensure fair compensation for work-related injuries. These changes, which take effect later this year, will have direct implications for businesses, requiring adjustments in workplace safety policies, financial planning, and insurance coverage.

Here’s what employers need to know:

Who is covered?

The Work Injury Compensation Act covers any local or foreign employee under a contract of service or contract of apprenticeship, regardless of salary, age or citizenship.
It is mandatory for employers to purchase Work Injury Compensation Insurance for:

• All employees doing manual work, regardless of monthly earnings
• All employees doing non-manual work, earning $2,600 or less a month

While it is not mandatory for employers to purchase Work Injury Compensation Insurance to cover non-manual employees with a salary exceeding S$2,600 a month, employers remain liable to compensate these employees for work injuries under Legislation.

As of 01 January 2025, platform workers will also be covered under the Work Injury Compensation Act. Platform operators are required to provide Work Injury Compensation Insurance coverage.

Increased Compensation Limits (Effective 1 November 2025)

• Death Benefits: The maximum compensation for work-related deaths will increase from SGD 225,000 to SGD 269,000, while the minimum will increase from SGD 76,000 to SGD 91,000.
• Permanent Incapacity ^[1]: For total permanent incapacity, the maximum compensation will escalate from SGD 289,000 to SGD 346,000, and the minimum from SGD 97,000 to SGD 116,000.
• Medical Expenses: The cap on medical expenses will be raised from SGD 45,000 to SGD 53,000, or up to one year from the date of the accident, whichever is reached first.

^[1] If the Permanent Incapacity % is lower than 100%, the minimum and maximum compensation sums will be prorated. If the employee has 100% Permanent Incapacity, an additional 25% will be paid to offset the cost of care for the injured employee.

Implications for Employers

1. Anticipated increase in Work Injury Compensation Insurance Premiums

As payouts increase with the higher limits of coverage afforded under Work Injury Compensation Insurance, you may face upwards trending renewal premiums even if you do not have any prior claims.

2. Higher Financial Liabilities

If you do not have a Work Injury Compensation Insurance policy, consider purchasing it as your financial exposures are now even higher. Work Injury Compensation Insurance cannot be substituted by Group Medical or Group Personal Accident Insurance.

For insured employers, medical expenses and medical leave wages are generally processed on a reimbursement basis by your insurers. The increased compensation limits will mean that businesses will need to prepare for potentially higher cash reserves to pay for medical expenses upfront. 

3. Need to review existing sub-limits for enhanced coverages

Other than the statutory coverage requirement, your policy may come with extensions that provide additional benefits. These extensions are typically sub-limited and it is worthwhile to review these sub-limits to keep pace with the general compensation limit increases.

Do note that under the Employment of Foreign Manpower Act, employers must pay for the medical expenses of employees who are S Pass and Work Permit holders. This means that the financial obligations of these employers are beyond the medical expenses limit set under the Work Injury Compensation Act. You may wish to review the need for enhanced coverage for medical expenses over and above the Act limits.

4. Workplace Safety Measures and Risk Management

With higher compensation at stake, businesses should place greater emphasis on workplace safety to reduce the likelihood of work injuries. Implementing stringent safety protocols, conducting regular risk assessments, and providing ongoing safety training can help minimize accidents and claims.

5. Ensure disclosure of material information pertaining to the work of the employees

It is the onus of the employers to disclose material information pertaining to the employees. Material information will include work description, wages, number of employees and other information critical for insurers to make an informed decision on the terms to offer for the Work Injury Compensation insurance. Insurers have the right to seek financial recovery from the employers on grounds of non-disclosure of material information should they discover that there is omission of key information that should have been disclosed prior to policy issuance. Such recovery will cause greater financial strain to the employers with the higher compensation limits to be implemented. 

Staying informed about these legislative changes and taking proactive steps will help businesses remain compliant while protecting their employees and financial stability. If you have questions about how these amendments impact your business or need guidance on updating your insurance policies, reach out to us for tailored advice.