High Court overrules MOM Labour Court on overtime pay

Posted by on March 9, 2014 in Articles, Facts, research, analysis, News, News Flash

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In a noteworthy decision, the High Court ruled that the Ministry of Manpower’s Assistant Commissioner for Labour misapprehended the law, applying it wrongly.

The latter (also known informally as the Labour Court) had ruled in favour of the employer VGP Corp Ltd. But the High Court, in a written decision released on 31 December 2013, overturned the Labour Court’s ruling. The High Court decision can be seen by clicking the icon at right.

monteverde_high_courtThe key facts of the case are as follows:

1. Employee Cynthia Monteverde, a boutique supervisor, worked for VGP from August 2010 to 17 August 2012. Her last drawn basic salary was $1,900 a month.

2. The Philippines national worked 60 hours a week, as required under the employment contract which stated that she was “required to work a maximum of sixty (60) hours per week subject to the outlet’s roster”.

3. Since she lodged her claim for overtime pay with MOM only on 3 July 2013, all claims prior to end June 2012 were considered invalid, under Section 115 (2) of the Employment Act, which says:

The Commissioner shall not inquire into any dispute in respect of matters arising earlier than one year from the date of lodging a claim

(However, it does not seem to preclude a separate civil suit by the employee against the employer for earlier periods — TWC2)

4. Thus, the case only centred around the 96 extra hours worked in July and August 2012.

At the Labour Court, the Assistant Commissioner for Labour ruled that since Monteverde had agreed in her contract to work 60 hours a week, then the 16 hours between the 44th and 60th hour were inside her basic salary. But he also ruled that the inclusion was only with respect to the basic rate of pay. Since the law required 1.5 times the rate of pay for hours over 44, the employer had to pay her 0.5 times the basic rate of pay for these 96 hours. He calculated the amount owed to be $479.

The High Court has now said the Labour Commissioner “had erred”, ruling that $1,900 was her basic rate of pay for 44 hours a week, in accordance with the Employment Act. Trying to make it 60 hours a week, as written in the contract, was illegal, since such a clause violated Section 8 of the Employment Act itself, which says:

8. Every term of a contract of service which provides a condition of service which is less favourable to an employee than any of the conditions of service prescribed by this Act shall be illegal, null and void to the extent that it is so less favourable.

Therefore, the 96 extra hours she worked had to be paid for separately. The employer and Labour Court were wrong to say that part-payment for these 96 hours was already included within her basic salary. Thus, the employer owes her $1,435.

VGO was defended by lawyers Charles Phua and Loh Ling Wei at the High Court while Ms Monteverde represented herself with the help of a friend.

The case was reported in the Straits Times on 7 January 2014.

 

TWC2 is an organization that is dedicated to assisting low-wage migrant workers when they are in difficulty. We are motivated by a sense of fairness and humanity, though our caseload often exceeds our
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