MOM keeps eye on companies at risk of salary defaults

Singapore

EMPLOYERS who are seen to be at higher risk of defaulting on salaries will have to tell the Ministry of Manpower (MOM) whether they have been paying salaries on time.

MOM has sent out about 200 letters every quarter this year to such employers. They were identified by indicators such as late payment of foreign worker levies and being in financial difficulty. If an employer reports that he is up to date in salary payments but his workers later file claims, the employer can be penalised for making false declarations.

A total of 123 salary arrears cases were found in a pilot run last year in four construction firms before workers turned to the Tripartite Alliance for Dispute Management (TADM) for help. Some S$300,000 in salary arrears was recovered.

Beside physical inspections, the more pro-active approach is one of the new enforcement strategies that MOM has taken to raise compliance with the Employment Act, according to the new Employment Standards Report released on Friday.

Another is to give more weight to workers' claims in a dispute, if the employer does not keep or produce legally required records. Employers with less severe breaches are required to attend corrective clinics on the Employment Act and rectify their lapses.

"Paying salary to employees correctly and in a timely manner is a basic responsibility of any employer," said Christine Loh, director of the Employment Standards Enforcement Department at MOM, in a media release on the report by MOM and TADM.

She said MOM would continue to raise awareness of good employment practices among employers and educate employees on their rights. It would also look at improving enforcement and dispute management mechanisms to address various workplace issues and raise Singapore's employment standards.

MOM adopts a three-pronged approach to tackle employment issues: education, rectification and enforcement.

According to the report, between April 1, 2017 (when TADM was started) and end-2018, salary claims by local employees against employers fell from 1.55 claims per 1,000 employees in 2017 to 1.43 claims per 1,000 employees in 2018 - thanks partly to good business conditions, especially in the manufacturing and services sectors where the bulk of the claims came from.

For foreign employees, most of them construction workers, salary claims picked up in the same period from 4.41 claims per 1,000 employees in 2017 to 4.45 claims per 1,000 employees - three times that of local employees - as the construction sector continued its decline, says the report.

Overall there were 2.42 salary claims per 1,000 employees last year, down from 2.49 claims per 1,000 employees in 2017.

Salary claims accounted for 87 per cent or 14,757 of the 17,038 employment claims and appeals lodged with MOM and TADM from April 1, 2017 to Dec 31, 2018.

Of the salary claims lodged, 85 per cent were settled within two months at TADM. The remaining complex claims were resolved between two and six months.

Most of the salary claims - 88 per cent - were fully recovered, totalling S$29 million. About half of the remaining claims were partially recovered.

"Early reporting of arrears is critical to the prospects of full recovery," the report says. For settlement agreements and orders by Employment Claims Tribunals (ECTs) made in favour of employees, the average sum owed to the claimants who fully recovered salaries from their employers was about S$4,400 - lower than those who received partial or no payment, which was about S$6,900.

The bulk of the overall claims filed in 2017 and 2018 - 82 per cent - were claims for basic salary. Basic salary made up 70 per cent of local employees' claims and 90 per cent of foreign employees' claims.

Claims for salary for overtime work, work on rest days and public holidays also accounted for 59 per cent of foreign employees' claims. Only 14 per cent of local employees filed such claims.