The Straits Times
Published on Nov 10, 2012

Fixing an honest month's wages for pass holders


I WAS surprised to learn that one criterion for an Employment or S Pass is an applicant's monthly basic salary when the way pay is structured today is based on an employee's annual total cash or annual total target cash (ATTC).

The structure is predicated on a pay-for-performance philosophy, under which most employees are paid a fixed or guaranteed base salary plus a variable component, which is tied to a company's business results and the individual's performance or contribution to the bottom line.

The general rule is that the higher one is on the corporate ladder, the greater the variable component of one's ATTC.

So, while a non-management employee may have a variable component that makes up only 8 per cent of his ATTC, his manager's variable component could well be as high as 30 per cent.

Thus, a manager earning $6,000 per month would have an ATTC of $101,400, which includes his 30 per cent performance bonus.

So it would appear that the work pass criterion ignores the variable component - and even allowances. This results in an incorrect reflection of the applicant's true worth.

The Ministry of Manpower should review how it calculates the baseline salary that qualifies a person for an Employment or S pass.

Most employment contracts these days spell out not only an employee's monthly base salary but also additional payments such as fixed allowances and/or variable performance bonuses.

If the ministry does not address this issue, a situation may arise in which professionals employed in a managerial capacity find their Employment Pass rejected upon renewal.

Matthew Ong