Employers Notifying MOM of Downward Revision to Salary Terms for Work Permit Holders
Ministry of ManpowerSpeakers
Summary
This question concerns MP Louis Ng Kok Kwang’s inquiry regarding employers notifying the Ministry of Manpower about downward salary revisions for Work Permit holders. Minister for Manpower Mrs Josephine Teo stated that revisions require the worker’s written agreement and Ministry notification, currently affecting less than 2% of non-domestic workers annually. She noted that 17 employers were fined $105,000 in early 2018 for non-compliance, and the Tripartite Alliance for Dispute Management now mandates documented proof of consent. Minister for Manpower Mrs Josephine Teo also shared that the Ministry is considering a total ban on downward revisions to ensure wage certainty for foreign workers. The government will now consult stakeholders to balance this proposed policy against the potential risk of increased early contract terminations for employees.
Transcript
52 Mr Louis Ng Kok Kwang asked the Minister for Manpower in each of the past three years (a) how many employers have informed the Ministry in writing of modifications to the salary terms for a Work Permit holder to less favourable terms than declared and stated in their in-principle approval letter; (b) how many employers have been fined for not having done so; (c) how many notices of salary reduction have been issued to workers; and (d) on what grounds does the Ministry determine whether a salary reduction can be allowed.
Mrs Josephine Teo: When applying for Work Permits, employers are required to declare key salary terms, including the basic and fixed monthly salary, offered to prospective Work Permit Holders (WPHs). Since 2011, these terms have been reflected in the In-Principle Approval (IPA) letter, which is available in the WPHs' native languages, and must be sent by the employer to the worker in his home country prior to the worker’s departure to Singapore. This ensures that the worker is fully aware and accepts the terms of conditions before leaving his home country.
In some cases, employers may discover that the WPH's performance falls below what is expected and thus cannot justify paying the agreed salary. Instead of terminating the WPH's contract, the Ministry of Manpower (MOM) allows employers to revise the salary downwards, provided they have obtained the worker’s written agreement and have notified MOM of the revision. In the past three years, MOM was notified of salary reductions affecting less than 2% of non-domestic WPHs per year.
We have taken action against employers who reduced salaries without informing MOM or obtaining the WPH's written consent. In the first half of 2018, a total of $105,000 in Administrative Financial Penalties were imposed on 17 errant employers.
Notwithstanding these safeguards, we have been monitoring salary disputes involving IPA salary reduction. The proportion of WPH salary claims which involve IPA salary reductions was stable at about 7% over the last three years but increased to about 11% in the second half of last year.
Since February 2018, when mediating salary disputes, the Tripartite Alliance for Dispute Management (TADM) has insisted that employers provide documented evidence that the worker has consented to any salary reduction. TADM no longer allows for arguments from employers that the worker had provided tacit or verbal consent. In addition, MOM is considering the possibility of disallowing downward salary revisions altogether. While this will provide workers with more certainty of their wage for the entire duration of their stay in Singapore, it could also lead to possible early termination of employment even when the worker is willing to accept a lower wage. We will thus consult with relevant stakeholders to determine the best step forward.