Safeguards for Employers who Make Advance Salary Payments for their Foreign Domestic Workers to Settle Loans

32 Mr Murali Pillai asked the Minister for Manpower what safeguard can be provided to employers of foreign domestic workers (FDWs) who are required by employment agencies to make advance payment of the FDW's monthly salary purportedly to settle loans or outstanding dues owed by the domestic workers to foreign parties.

The Senior Parliamentary Secretary to the Minister for Manpower (Ms Low Yen Ling) (for the Minister for Manpower): Mr Speaker Sir, foreign domestic workers (FDWs) incur expenses in their home countries when they seek opportunities to work overseas. For instance, they may be required to pay their employment agency (EA) a fee. This cost is typically paid by their employers on their behalf in the form of advance salary payments facilitated by the EA.

To protect employers and FDWs, EAs are required by law to fully disclose the terms and conditions of their services, including the amount FDWs are charged and their refund policies on advance salary payments by employers. In the event that the employer terminates the FDW employment contract early and sends the FDW back to the EA, or the FDW commits an offence and has to be repatriated, the EA would usually refund any outstanding advance salary payment made by the employer.

MOM expects EAs to fully discharge their duties and obligations to employers and FDWs, and safeguard the interests of these parties. In addition to conducting regular inspections, we also act on feedback received and will not hesitate to take irresponsible or errant EAs to task.

Mr Murali Pillai (Bukit Batok): Mr Speaker, Sir, I thank the hon Senior Parliamentary Secretary for the answer. I have a supplementary question. It is in relation to allocation of risk. In a situation where a foreign domestic worker leaves earlier than anticipated, and where a family has already made advance payment to an employment agency, which collects it for a foreign employment agency. Could the Ministry consider, perhaps, the employment agency issuing a bond such that if such a situation happens, at least the family can recoup the losses through the exercise of its rights under the bond.

Ms Low Yen Ling: Mr Speaker, I would like to thank the Member Mr Murali Pillai for the suggestion on the bond. Let the MOM team think through the pros and cons of this suggestion. At this point in time, allow me to assure Mr Murali Pillai that the employers of FDWs have alternative options and also avenues for recourse. For example, although employers generally prefer the advance salary payments because they hope that the FDW will stay with them for the entire contract, there are some employers, who, for various reasons, do not prefer the advance salary payments and these employers can approach EAs that are able to customise a package to suit their needs. So, there are varying practices in the market.

For Mr Murali Pillai's point, to protect employers and FDWs, MOM requires the EA to clearly state their refund policies in the service agreement. For example, if the FDW terminates the employment prematurely, the employers should check the contract that they signed with the EA, because the contract will lay out whether and under what circumstances, they will get full or partial refund. I want to assure Mr Murali Pillai that we take this very seriously. Every single case that is surfaced to MOM, will be followed-up and investigated thoroughly. Since 2016, MOM had investigated and taken actions against two EAs that had failed to state their refund policies.

Mr Murali Pillai: Mr Speaker, Sir, I have a further supplementary question. The suggestion I have made in relation to the provision of a bond, is to deal with the function of the employment agency as a collecting body, as opposed to the usual situation envisaged in a contract where the employment agency is really seeking to be paid its own fees. In the context of the employment agency being a collection agency, perhaps, the risks associated with the monies being given to the employment agency only to be delivered to a foreign employment agency can be dealt with through the bond system.

Ms Low Yen Ling: I want to thank the Member for his supplementary question. He rightly described it as risk and a bond instrument could also mean that there will be fee charges which may inadvertently be passed on to the consumer, in this case, the FDW employer. So, we need to think through the suggestion very carefully. I want to say that MOM has put in place fee caps to regulate what an EA can charge the FDW, and that is important, because that may then manifest itself as advance salary payment. And EAs are not allowed to collect fees that exceed FDWs' monthly salary for each year of contracted service. EAs who flout this rule may be prosecuted or even have their licences revoked. We will also issue warning letters or composition fines to less egregious EAs.

The example that Mr Murali Pillai highlighted was that the EAs should not function as a collection agent. While MOM will undertake all the necessary efforts to prohibit our Singapore-based EAs from charging the FDWs beyond the fee cap, we must also explain that we have no jurisdiction over the EA in the home country of the FDW.

Having said that, for the case that Mr Murali Pillai's resident is facing, if he could share with us the information, that would be most helpful. We will then be able to investigate this further and if we find any suspicious or irregular practices, we can follow up with the relevant Embassy and enlist their help so that we can stop the malpractice at source.