$370m in wage support wrongly paid out to firms

Error affects 5,400 companies; money expected to be recovered within the year

An excess of $370 million in wage support was erroneously paid out last year, after the Government used the wrong dates to determine the amount to be disbursed to some 5,400 companies.

The same error also resulted in an excess of $1.2 million being paid out in foreign worker levy waivers and rebates to 360 companies.

Announcing the erroneous Jobs Support Scheme (JSS) and levy waiver and rebate payments yesterday, the Ministries of Trade and Industry (MTI), Finance (MOF), and Manpower (MOM) said the mistake was discovered in November last year when the Inland Revenue Authority of Singapore (Iras) found anomalies in its regular processing checks on the JSS.

At the same time, Iras had also had calls from several businesses which received extra JSS payouts.

This sparked an investigation, which eventually traced the overpayments to an error in the compilation and processing of the reopening dates used to calculate how much in JSS payouts a company should get.

The JSS, first introduced in February last year, provides subsidies for wage costs based on the sector a company is in.

During the circuit breaker from April to June, all companies were given the highest tier of subsidies.

How long they were paid this enhanced subsidy depended on how long they had to remain shut.

The mistakes occurred in applications submitted by companies in the construction, marine and process sectors. These companies had to seek permission to restart projects, and would include their subcontractors, clients and other partners in their applications.

Because of errors in compiling the information, the dates for when projects would restart were taken as the reopening dates for all the companies named in the applications. As a result, some companies were deemed to have been closed longer than they actually were, and received higher wage subsidies.

MTI, which was tasked with coordinating the shutdown and reopening of workplaces, received 1.8 million applications by companies wanting to resume business after the circuit breaker ended.

The ministries said in a statement: "As the processes for the resumption of business activities had to be implemented at short notice, MTI used existing systems and manual processes to grant approvals for businesses to reopen.

"Unfortunately, in so doing, mistakes were made with the reopening dates and concomitantly the JSS payouts and foreign worker levy waiver and rebates payable."

Among the companies affected, fewer than 100 larger firms account for $200 million of the overpayment, said the ministries.

For more than two-thirds of the companies, the excess payout would have been less than $10,000, they added.

The ministries also said they expect to recover all the overpaid monies within the year.

About $140 million of the JSS overpayment will be offset against future payments, and another $200 million will be returned by companies that promised to do so after being contacted by MTI.

The remaining $30 million is spread out over 1,000 companies, and the Government will work with the companies on repayment, said the ministries.

Meanwhile, the foreign worker levy waiver will be automatically offset from the future levy bill of businesses.

The mistake had also resulted in some companies being underpaid for JSS and foreign worker levy waivers, the ministries said.

Some 1,000 businesses were found to be eligible for additional JSS payouts, amounting to $5.5 million, and the sums due will be credited by the end of this month.

About 1,200 businesses are also entitled to additional foreign worker levy waivers, totalling $6 million, which will be credited to the businesses directly.

To prevent future mistakes, MTI has worked with MOF, MOM and Iras to fix the processes and put in additional checks to detect possible errors, the ministries said.

An external auditor has also been hired to conduct a thorough check on the reopening dates used in the computation of JSS payouts, they added.

MP Liang Eng Hwa, who heads the Government Parliamentary Committee on Finance and Trade and Industry, noted that the JSS had helped scores of companies, but added: "Besides rectifying the errors, I hope that the agencies can tighten up processes and checks, and also conduct thorough checks and audits on other newer schemes for possible errors."

The ministries said affected companies do not have to take any action for now, and will be notified via letters and e-mails. They will also be contacted by MTI and MOM of any actions required by next month.

From tomorrow, companies can log in using their CorpPass on https://go.gov.sg/reopeningdate to check if they are affected.

A version of this article appeared in the print edition of The Straits Times on April 09, 2021, with the headline '$370m in wage support wrongly paid out to firms'. Subscribe