Priority of debts and interest on debts
296.—(1)  The following are to be paid under a debt repayment plan applicable to a debtor in priority to all other debts proved under the debt repayment scheme (to which the plan relates) and included in the plan:
(a)first, the costs and expenses incurred by the Official Assignee in the administration of the scheme;
(b)second, the costs (whether taxed or agreed) of the applicant creditor in respect of the relevant bankruptcy application made against the debtor;
(c)third, subject to subsection (2), all wages or salary (whether or not earned wholly or in part by way of commission) including any amount payable by way of allowance or reimbursement under any contract of employment or award or agreement regulating the conditions of employment of any employee;
(d)fourth, subject to subsection (2), the amount due to an employee as a retrenchment benefit or an ex gratia payment under any contract of employment or award or agreement that regulates the conditions of employment, whether such amount becomes payable before, on or after the effective date of the scheme;
(e)fifth, all amounts due in respect of any work injury compensation under the Work Injury Compensation Act 2019 or the Work Injury Compensation Act repealed by that Act accrued before, on or after the effective date of the scheme;
[Act 27 of 2019 wef 01/09/2020]
(f)sixth, all amounts due in respect of contributions payable during a period of 12 consecutive months beginning not earlier than 12 months before, and ending not later than 12 months after, the effective date of the scheme, by the debtor as the employer of any person under any written law relating to employees’ superannuation or provident funds or under any scheme of superannuation which is an approved scheme under the Income Tax Act;
(g)seventh, subject to subsection (2), all remuneration payable to any employee in respect of vacation leave or, in the case of the employee’s death, to any other person in the employee’s right, accrued in respect of any period before, on or after the effective date of the scheme;
(h)eighth, the amount of all taxes assessed and any goods and services tax due under any written law on or before the effective date of the scheme;
(i)ninth, all premiums (including interest and penalties for late payment) and other sums payable in respect of the debtor’s insurance cover under the MediShield Life Scheme mentioned in section 3 of the MediShield Life Scheme Act 2015, and the CareShield Life Scheme established by section 5 of the CareShield Life and Long-Term Care Act 2019, respectively, before the time fixed for the proving of debts has expired.
[Act 26 of 2019 wef 01/10/2020]
(2)  The amount payable under subsection (1)(c), (d) and (g) must not exceed such amount as the Minister may prescribe by order published in the Gazette.
(3)  The debts in each class specified in subsection (1) rank in the order specified in subsection (1) but debts of the same class rank equally between themselves, and are to be paid in full, unless the amount standing to the credit of the debtor in the Debt Repayment Schemes Account is insufficient to meet them, in which case they abate in equal proportions between themselves.
(4)  Where any payment has been made to any employee of the debtor on account of wages, salary or vacation leave out of money advanced by a person for that purpose, the person by whom the money was advanced —
(a)has, under the debt repayment plan, a right of priority in respect of the money so advanced and paid, up to the amount by which the sum in respect of which the employee would have been entitled to priority under this section has been diminished by reason of the payment; and
(b)has the same right of priority in respect of that amount as the employee would have had if the payment had not been made.
(5)  Where a debt proved by a creditor under a debt repayment scheme includes interest, the interest is to be calculated —
(a)in a case where the rate of such interest was previously agreed or reserved, at the rate previously agreed or reserved; or
(b)in any other case, at the prescribed rate of interest.
(6)  Interest on preferential debts ranks equally with interest on debts other than preferential debts.
(7)  In this section —
“employee” means an individual who has entered into or works under a contract of service with the debtor and includes a subcontractor of labour;
“ex gratia payment” means an amount payable to an employee on the termination of the employee’s service by his or her employer on the ground of redundancy or by reason of any re‑organisation of the employer, profession, business, trade or work, and “an amount payable to an employee” for these purposes means an amount ascertained from any contract of employment, award or agreement;
“interest” includes any pecuniary consideration in lieu of interest and any penalty or late payment charge by whatever name called;
“preferential debt” means any debt specified in subsection (1);
“retrenchment benefit” means an amount payable to an employee on the termination of the employee’s service by his or her employer on the ground of redundancy or by reason of any re‑organisation of the employer, profession, business, trade or work, and “an amount payable to an employee” for these purposes means an amount ascertained from any contract of employment, award or agreement, or if no amount is so ascertainable, such amount as is determined by the Commissioner for Labour or by an Employment Claims Tribunal constituted under section 4 of the State Courts Act;
“wages or salary” includes —
(a)all arrears of money due to a subcontractor of labour;
(b)any amount payable to an employee on account of wages or salary during a period of notice of termination of employment or in lieu of notice of such termination, whether such amount becomes payable before, on or after the effective date of the debt repayment scheme; and
(c)any amount payable to an employee, on termination of the employee’s employment, as a gratuity under any contract of employment or any award or agreement that regulates the conditions of the employee’s employment, whether such amount becomes payable before, on or after the effective date of the debt repayment scheme.