MOM tracking companies at risk of salary default

The Manpower Ministry has sent out about 200 letters per quarter this year to employers deemed to be at higher risk of defaulting on salaries.
The Manpower Ministry has sent out about 200 letters per quarter this year to employers deemed to be at higher risk of defaulting on salaries.PHOTO: ST FILE

Move among enforcement strategies to raise compliance with Employment Act

Employers deemed to be at higher risk of defaulting on salaries are now required to declare to the Ministry of Manpower (MOM) whether they have been paying them on time.

The ministry has sent out about 200 letters every quarter this year to employers that were singled out using data analytics - from red flags such as paying foreign worker levies late, or being in financial difficulty.

If the companies declare that they are up to date in salary payments but workers lodge claims later, the companies may be punished for making false declarations.

In a pilot run last year involving 100 construction companies, 123 salary arrears cases were detected in four companies before workers approached the Tripartite Alliance for Dispute Management (TADM) for assistance. Some $300,000 in salary arrears were recovered early.

The move is among new enforcement strategies, besides physical inspections, taken by the MOM to raise compliance with the Employment Act, listed in the inaugural Employment Standards Report released yesterday by the MOM and TADM.

TADM general manager Kandhavel Periyasamy said the response to errant companies is decided on a case-by-case basis.

For instance, with minor offences such as not issuing itemised payslips even though salaries have been paid, MOM may not prevent the company from hiring new foreign workers as that may affect its ability to secure new projects and, thus, the livelihood of its workers.

"If you deliberately try to harm workers, you don't pay their salary, the impact is large, and you will not get away with it," Mr Kandhavel said at a media briefing on Wednesday.

The new report looked at the situation from April 1, 2017, when TADM was started, up to the end of last year. TADM mediates employment disputes before claims are lodged with the Employment Claims Tribunals (ECT).

A total of 17,038 employment claims and appeals were lodged with the MOM and TADM over that period, 87 per cent of which were salary-related.

Overall, 85 per cent of salary claims were concluded within two months. When employers agreed or were ordered to make payment, 88 per cent of employees fully recovered their salaries - $29 million in total - at TADM or ECT.

The incidence of salary claims was similar in both years, at 2.42 per 1,000 employees last year and 2.49 per 1,000 employees in 2017.

But the incidence was much higher among foreign workers. Last year, it was 4.45, compared with 1.43 for local employees.

The situation appears to have improved for locals. The 1.43 figure was lower than the 1.55 in 2017. The report attributes this to good business conditions, particularly in the manufacturing and service sectors, which contributed to the bulk of local salary claims.

The most common type of salary claim lodged by foreign workers from April 2017 to December 2018 was for basic salary, which made up 90 per cent of all salary claims, followed by overtime pay, which was in 59 per cent of claims.

For locals, the biggest problem was also basic salary, which made up 70 per cent of claims. The next most common problem was salary in lieu of notice, which was in 26 per cent of claims.

Early intervention teacher Quek Yi Rong, 23, managed to recover about $2,300 from a previous employer, who had suddenly asked her to leave while she was serving notice.

The employer also demanded two months' salary as compensation as Ms Quek had resigned before one year on the job.

In the end, after mediation, the employer coughed up the overtime pay and final month's salary owed to Ms Quek. "I was really worried for the whole two months, so I was relieved when the mediator finally told me that the employer agreed to pay up," she said.

A version of this article appeared in the print edition of The Straits Times on October 12, 2019, with the headline 'MOM tracking companies at risk of salary default'. Print Edition | Subscribe