Enforcement of Labour Court Orders on Errant Employers

1 Ms Denise Phua Lay Peng asked the Minister for Manpower how the Ministry can improve the process by which workers, including foreign workers, can be protected against errant employers who do not insure them or compensate them for injuries and/or owe them their salaries.

2 Ms Kuik Shiao-Yin asked the Minister for Manpower (a) from 2012 to 2017, how many employers have been prosecuted in the Labour Court for respectively failing to compensate injured workers or insure them adequately; (b) what is being done to reduce the incidence of errant employers who ignore Labour Court orders and default on compensation for injured workers; and (c) how does the Ministry assist low-wage local and migrant workers who cannot afford further legal action to recover their unpaid wages.

The Minister for Manpower (Mr Lim Swee Say): Mdm Speaker, may I take Question Nos 1 and 2 together, please?

Mdm Speaker: Yes, please.

Mr Lim Swee Say: Mdm Speaker, the Ministry of Manpower (MOM) received about 9,000 salary-related claims involving some 4,500 employers in 2016. So, 9,000 claims and 4,500 employers. Through mediation by MOM and adjudication by the Labour Court, we have been able to resolve more than 95% of these claims.

The remaining 5% of the salary-related claims were unresolved because one of the employers has appealed the Labour Court order and the case is now with the High Court, eight are still in business but have yet to comply with their orders, while a vast majority − 199 out of 208 employers − had either ceased operations or faced impending business closure due to financial difficulties. Therefore, out of the 208 employers, 199 either have closed down or are going to close down soon. We are left with only nine employers, one of whom is appealing against the Labour Court order and eight have yet to comply with the orders. All these companies have been debarred from hiring foreign workers until they comply with the Labour Court orders. The debarment also applies to culpable directors even if they were to start new companies.

We are also investigating those employers who are still in business because non-payment of salary is an offence under the Employment Act. While it is not our intention to criminalise every non-payment of salary, especially if it is the result of a business failure, we do prosecute serious or repeated cases for deterrence.

In the last three years, 158 employers have been prosecuted and convicted for salary-related offences. Such offences carry a fine of between $3,000 and $15,000 per charge, or imprisonment for a term not exceeding six months, or both.

Let me now turn to work injury cases. In 2016, over 99.9% of the approximately 16,000 injured workers had their cases successfully resolved. However, five out of about 16,000 cases did not because their employers had failed to purchase work injury compensation insurance and were unable to pay due to financial difficulties. MOM takes such offences seriously and prosecutes such employers under the Work Injury Compensation Act (WICA) and debars the companies and individual directors from hiring foreign workers, until they compensate their workers. Such offences carry a maximum penalty of $10,000, or imprisonment of up to 12 months, or both. In the last five years, 14 employers have been prosecuted for non-insurance and non-compensation or work injury.

Madam, in most of the unresolved cases of unpaid salary or work injury compensation, the chance of workers recovering payments from their employers is slim. This is not because the employers could just ignore and refuse to pay up, but because they are mostly in deep financial difficulties, as I have explained earlier.

For cases where there is still some hope of enforcing the orders for unpaid salary or work injury compensation, the workers are required to apply for the Writ of Seizure and Sale through the State Courts. This is the same process that applies to all unpaid Civil Court orders, including those made by the State Courts. In other words, the Labour Court orders are not less enforceable, compared to those issued or made by the State Courts. All civil claims have to go through the same process.

For those who need help, MOM assists the workers by advising them on the process and preparing the necessary documents. Eligible low-wage local workers may seek legal assistance from the Legal Aid Bureau, whereas foreign workers may approach the Migrant Workers' Centre (MWC). Workers can also apply to the State Courts Registrar to waive or defer the costs of enforcing the order or to recover these costs from the sales proceeds. Meanwhile, foreign workers with valid salary claims are also allowed to change employers. More than 2,200 of such requests were granted in the past three years.

Mdm Speaker, while we are relieved that the vast majority of unpaid salary, or 95%, and work injury cases, or 99.9%, are successfully resolved, we are, however, concerned with workers who are unable to recover their claims because their employers no longer have the financial means to pay. We will continue to strengthen our support for them.

Currently, foreign workers can already receive financial relief from MWC. Likewise, for local low-wage workers, as announced in this House in August last year, those with unresolved salary claims will be able to receive short-term relief from the Tripartite Alliance for Dispute Management (TADM) when it comes into operation in April this year. As for workers with more serious injury, if they fail to receive their work injury compensation and are in financial difficulties, we will continue to assist them through the Workers' Fund managed by MOM.

On the part of the workers, I urge them to bring their cases to MOM as early as possible. This will greatly improve the chances of successfully resolving their claims before the employers reach dire financial straits.

Mdm Speaker: Ms Denise Phua.

Ms Denise Phua Lay Peng (Jalan Besar): I would like to thank the Minister for his comprehensive answer and that he has got most of the ground covered. Just a couple of supplementary questions.

First, for the upstream actions by MOM, is there a more certain way by which the Ministry can assure and ensure that the insurance coverage is for both local and foreign employees? As it is, I think there seems to be a gap somewhere, where some of the employers did not have their workers covered and, therefore, some of the issues arose.

The second question is downstream. Looking at the comprehensive slew of measures that the Minister has described, I am not sure if many people know about them and so, is there a way by which MOM can facilitate and publicise a lot more on the actions that can be taken, especially for workers who are from foreign lands and who may not be clued in and where the language might be an issue? I think there needs to be a lot more work to be done in communicating the slew of measures that the Minister had mentioned. For example, I think the Minister is familiar with the cases that were mentioned about the Bangladeshi workers who had been told to —

Mdm Speaker: Ms Phua, please keep your supplementary questions short.

Ms Denise Phua Lay Peng: They have been told to go and seize the assets of the errant employers. So, I would appreciate if the Minister could consider publicising the slew of measures a lot more.

Mdm Speaker: Can I just remind Members to keep your supplementary questions short? There is no need to add long preambles to supplementary questions, please. Minister, your reply, please.

Mr Lim Swee Say: Mdm Speaker, on the issue of insurance coverage for work injury, I want to assure the House that the compliance rate is high. And that is the reason why 99.9% of the cases had no problems. Out of the 16,000 cases, only five cases had problems.

Having said that, we do take such non-compliance seriously. That is why for every single case of non-compliance and non-payment, even for the first-time offender, MOM would prosecute the employer. We do need to send a very clear message.

Of course, some may wonder why MOM cannot ensure 100% coverage. Our challenge is that when a company purchases WICA coverage for its employees, the insurance policy does not go by name. It is a group insurance. Along the way, during the year, there are workers who leave the company and workers who join the company. As a result, the responsibility of making sure that workers are covered has to rest with the employer. It is impossible for MOM to comb through every WICA policy and to cross-check with the movement of staff, and so on.

Having said that, we want to assure this House that the compliance rate is high. For the five cases, all of the five employers have been or are being prosecuted.

I also want to assure the House that we take every of these five cases very seriously. For the information of this House, these five cases involve four foreign workers and one local worker. For the four foreign workers, we continue to pursue the cases, and one employer has just paid up and another case is now with the State Courts. We are also helping the workers to find employment in Singapore and, at the same time, continue to find ways to resolve their outstanding claims. In the case of the local worker, we have started actions to enforce the payment.

We are keeping track of these five cases to make sure that we derive the best outcome possible.

In the case of the foreign workers mentioned by the Member, the media reports may have created a few misperceptions. First, the media reports said that the employers could just ignore and refuse to pay. I want to assure this House that no employer can afford to ignore and refuse to pay. As far as MOM is concerned, if I assess that this employer has the ability to pay, we will pursue it to the fullest. I do not have to wait for the workers to enforce the order from the State Courts. As MOM, I am already able to prosecute the employers because non-payment of salary, in itself, is an offence. So, I want to assure this House, please do not go away with the impression that any employer out there can afford to refuse and ignore the Labour Court orders. I assure Members that this has never been the case and we will make sure it will never happen in the future.

Second, in this particular case, we did try very hard to help the worker. The issue is that this worker has outstanding salary for 11 months. The employer stopped paying him in October 2015 and it took him 11 months to come to MOM. By the time he came to MOM, the company was already in serious trouble. Notwithstanding this, there were 10 workers involved. The employer made an offer − paid each and every one of them $2,000 as a partial payment and, through the MWC, we offered to pay an ex-gratia payment of another $1,000. Every worker affected is guaranteed of at least $3,000; that is, $2,000 of partial payment from the employer and $1,000 from MWC. The rest of it, the employer promised that he would pay up in instalments, through best effort. Nine out of the 10 workers accepted this because they were realistic; they know the situation the company is in and they accepted it. At least two of them are now still working in Singapore with new employers.

This particular claimant rejected the partial offer by the employer. He wanted to recover the full sum, which comes to about $7,500. As a result, he declined the offer by the employer. We are now in the process of helping him to file the claim and enforce the Labour Court order, knowing that the chance of recovery is very slim. The company has already ceased operations.

I want to assure the House that we do take every case very seriously. What the workers can do, the best thing the workers can do to help themselves, is to come to us early. Eleven months is too long to wait because by the time the employer has stopped paying you for 11 months, there is a high chance that the company is in deep financial difficulty. By and large, most workers will come to MOM after two to three months. As a result, we were able to resolve 95% of them.

I also agree with Ms Denise Phua's point that we should step up more in terms of educating the employer, the workers and members of public that in Singapore, we do take the welfare of our workers − whether foreign or local − very seriously. Salary is hard-earned money. Compensation for work injury is very important because when the worker is injured, it may affect his ability to work. To not pay him the compensation is unacceptable.

I want to assure this House that we will continue to strengthen the system. Yes, I think the system today, by and large, is working well; 95% percent for unpaid salary and 99.9% for work injury, but I can assure this House that we will come up with more measures to link them up with MWC.

Mdm Speaker: Mr Ang Hin Kee.

Mr Ang Hin Kee (Ang Mo Kio): Can I seek a clarification from the Minister? For the cases where the businesses ceased operations and majority of them ceased operations, will the owners or the directors be allowed to start new businesses or take up directorships in other businesses while they continue to not pay the salaries that were owed to the workers that were approved by the Labour Court?

Mr Lim Swee Say: Mdm Speaker, as I mentioned earlier, the debarment we impose on the companies also applies to culpable directors. What is meant by "culpable directors"? This refers to directors who deserve blame for not paying salary, regardless of whether it is due to negligence, intentional or otherwise. In other words, if you are a director of a company and you have contributed to the non-payment of salary, the debarment applies to this director as well. So, this director can go on to open and start a new company, the debarment will follow him to the new company until he pays up the outstanding salary to the ex-employees.

Mdm Speaker: Ms Sylvia Lim.

Ms Sylvia Lim (Aljunied): Mdm Speaker, a supplementary question for the Minister. I would like to follow up on what the Minister was saying about salaries being unpaid by employers who are in some financial problems. We are seeing some of those from our residents these days. They have noticed that for those employers who have their fair share of foreign workers as well as local, the foreign workers, ironically, have a sort of a safety milestone in the sense that when the employer decides to cancel their work pass, I think MOM will have to make sure that the employer pays them what is due to them, in terms of salaries and all that.

The shedding of foreign workers could come at an earlier stage whereas the local workers may continue to work in the firm. Some of our residents are seeing that this payment of the foreign workers, their full packages and so on when their Work Permits are cancelled, this could be something risky for them as local employees will continue while the company's situation deteriorates.

I believe the Minister did mention he is alive to the situation. So, I would like to ask him whether the Ministry is reviewing this framework to, for example, have a mechanism in place that where you see an employer starting to cancel passes of foreign workers and so on, that the company is still able to make their payments to the local workers who remain with the company.

Mr Lim Swee Say: Mdm Speaker, I think it is not quite possible for MOM to be able to assess the financial health of an organisation or a company to assess whether the company is able to continue paying salaries. What MOM does is this – we always encourage our workers, "The moment your employers stop paying you any salary, please come to us as early as you can". This is our message and that remains our message.

Ms Lim may wish to advise her residents that anytime their employers stop paying them their salary, they can come to MOM straightaway. They do not have to wait for two or three months. The moment it is overdue, you have the right to exercise that option. That is the best way.

Mdm Speaker: Mr Louis Ng.

Mr Louis Ng Kok Kwang (Nee Soon): Mdm Speaker, just one quick supplementary. Moving forward, will MOM consider requiring all companies which employ Work Permit holders to place a security bond or a deposit with MOM, which can specifically be used when companies ignore the Labour Court orders for compensation to the workers?

Mr Lim Swee Say: Mdm Speaker, currently, employers of foreign workers already have to place a security bond of $5,000 per worker. Last year, 115 foreign workers were owed salaries, unpaid and unresolved. Of that number, 28 of them were Work Permit holders with security bonds. We managed to get the security bond insurer to offer $2,000 to pay each of the workers. So, what Member Louis Ng mentioned is effectively already in practice today.