SINGAPORE - Some employers include unfair clauses in employment contracts, abusing the vulnerable position the workers might be in, said labour MP Zainal Sapari in a blog post on Wednesday (Oct 30).
He called for more education on such contracts for both employers and employees, and suggested the Ministry of Manpower (MOM) or Tripartite Alliance for Dispute Management consider starting a watchlist of companies found to have unfair clauses in these contracts.
Administrative penalties should be imposed on them, he said, adding that MOM could consider a cooling-off period of say, up to five working days to allow workers to rescind an employment contract they have signed, without penalty.
"Due to the challenging business environment, there are employers who may resort to underhand practices or tactics to address the problems they are facing, but to the possible detriment of the workers," Mr Zainal, who is a National Trades Union Congress assistant secretary-general, said in his post on NTUC blog LabourBeat.
"Workers who were not properly advised of their legal rights would likely bend to the unreasonable demands of an employer with substantially more resources. As such, there is an urgent need for the tripartite partners to provide greater clarity and guidance on fair and proper contracting practices," he added.
Mr Zainal said he has come across three main types of unethical clauses: requiring workers to pay liquidated damages incurred by the company, requiring compensation when the contract is terminated, and excessive non-competitive or restraint of trade clauses.
The first is often found in outsourced services such as cleaning and security, where companies have to pay liquidated damages if they do not fulfil terms of contract with the service buyers. These damages are often reflected in employment contracts, and some employers resort to passing on the cost to workers.
Although the MOM website states that salary deductions for liquidated damages must not be made even if employees had given their consent, some vulnerable, low-wage workers are unaware of their rights or are afraid to report their employers for fear of losing their rice bowls, said Mr Zainal.
An example of the second type of clauses is a trainer earning a basic pay of $2,000 a month, and whose contract states that if he quits his job before a year is up he would have to pay his employer a penalty of $50 per calendar day from the date of termination notice until the one-year term - regardless of whether he or the employer initiated the termination.
Finally, for non-competitive clauses, Mr Zainal said he had come across a fresh graduate offered a job paying a good salary, but the contract had a clause that required her to pay $100,00 in liquidated damages if she resigned and moved to another company in the same industry.
If the case went to court, the clause is likely to be held invalid as $100,000 seems excessive and may be deemed to be a penalty clause, he added.
But it would be a painful and mentally draining process for workers to challenge the employer in court, he said.
One security agency also used the "restraint of trade" clause - which is meant to prevent senior managers from competing with the company after they leave - on rank-and-file workers.
It said a security officer found to be working for another agency within four months of leaving the company would be taken to court. Unfortunately, when the matter went to court, the security officers were not represented by legal counsel and did not contest the employer's claim.
"If the worker had challenged the claim, most likely the courts would stop such restraint of trade clauses from being imposed on non-critical or rank-and-file employees. The law is on the workers' side in this aspect but, the only thing is that workers must take it to the courts if challenged by their employer, which, unfortunately, many low-wage or vulnerable workers are not prone to doing," said Mr Zainal.