MOM takes fewer than 10% of salary-non-payment employers to court

Posted by on November 27, 2015 in Articles, Facts, research, analysis, News, News Flash

For the record, we place here the relevant part of the Parliamentary minutes from the sitting of Monday, 11 May 2015.

Sanctions against employers who withhold wages for foreign employees

Mr Hri Kumar Nair asked the Minister for Manpower whether the Ministry will consider stronger sanctions against employers who fail to pay, or wrongfully withhold, wages, whether to local or foreign employees.

Mr Lim Swee Say : The Employment Act (EA) protects both local and foreign workers against salary non-payment. Under the law, employers are required to pay their employees within seven days after the end of the salary period. Failure to do so is an offence and employers are liable upon conviction to a fine or imprisonment or both.

Besides prosecution, MOM can take a range of enforcement actions including issuing warning and imposing fines. These employers will also have their privilege to hire foreign workers suspended.

In the most recent amendments to the Employment Act (2014), we raised the penalties for failure to pay salaries. We introduced mandatory minimum fines of $3,000 for the first-time offender and $6,000 for repeat offenders. We also introduced higher maximum fines for both first-timer, from $5,000 to $15,000, and for repeat offenders, from $10,000 to $30,000. At the same time, we enhanced MOM’s enforcement and investigatory powers, granting employment inspectors the power to arrest any person believed to be guilty of failing to pay salary, as well as the power to enter workplaces to conduct inspections.

MOM has stepped up our enforcement efforts since 2014. MOM now investigates every salary-related claim for employees covered under the Employment Act. We take a particularly serious view of employers who wilfully refuse to pay. Last year, MOM took action against 645 employers for salary-related offences. Forty-nine employers were prosecuted for severe breaches. This is four times more than the number in 2013.

We therefore urge workers who have not been paid their salaries or feel that their wages have been wrongfully withheld to come forward early to MOM or their unions for assistance.

Mr Hri Kumar Nair (Bishan-Toa Payoh) : I thank the Minister for the answer. I have two supplementary questions. Could the Minister let us know what is the number of pending cases with the MOM on unpaid salaries? Second, are there any mechanisms to help the employee in salary dispute case where there is a dispute as to whether payments are made, for example, requiring the employer to pay the monies into MOM for safeguarding funds, so that at the end of the dispute, the employee can be assured that there will be monies there for him to receive payment?

Mr Lim Swee Say : Mdm Speaker, of the 645 cases prosecuted last year, most of them were issued advisory or warning orders, and 49 employers, as I mentioned earlier, were prosecuted in the court. This is the action taken against employers. At the same time, employers were also taken to the Labour Court to settle the payment to the workers. For that, last year, we cleared about 1,630 cases. And of these cases, two-thirds of the workers were able to receive full payment at the order of the Labour Court. However, one-third of them, due to financial difficulties faced by the companies, received either partial payment or, in some cases, no payment.

We investigated further into those employers who were not able to make full payment and we discovered that 80% of the employers were able to make full payment but 20% of them, were unable to pay due to financial difficulties and, in some cases, even closing down of business. As a result, there was no recourse for the workers and for the Labour Court to recover the payment.

We take this seriously. Our sympathies are with the workers because they work hard for the money. MOM is doing two things: firstly, those workers who are not covered under the Employment Act, today when they face a problem of salary non-payment, they have to take civil action which can be protracted and costly. By the end of this year, we will be setting up the Employment Claim Tribunal so that workers, including the managers, executives, even CEOs, who are earning more than $4,500 and not covered under the Employment Act, will be able to have access to the Employment Claim Tribunal. At the same time, in order to reduce and minimise the number of cases whereby the employers are not able to make any payment due to financial difficulties, MOM, together with the tripartite partners, is looking into how we can enhance the protection for the workers in a more holistic manner.

editorial_comment

Of the statements made by Lim Swee Say above, the following bear emphasis:

He did not reveal how many workers lodged complaints with MOM in 2014 regarding unpaid salaries, involving how many employers. Even if he had, it would have been necessary to segregate the number of workers by category — how many were non-Malaysian, non-domestic Work Permit holders? Without this number, it is not possible to draw meaning from the figure “Last year, MOM took action against 645 employers for salary-related offences.”

It is therefore unknown how many employers face no regulatory action.

Out of 645 against whom some action was taken (including mere advisories) only 49 were prosecuted in court. This is less than eight percent. Lim did not explain why such a low figure.

“[T]wo-thirds of the workers were able to receive full payment at the order of the Labour Court” — this is vastly different from observations by TWC2. By our estimate, only a small minority of workers with Labour Court Orders in their favour over salary arrears received full payment. The great majority of cases saw employers ignoring the orders and MOM doing little more to help. The difference in numbers may be due to the fact that Lim Swee Say did not segregate foreign workers’ cases out from his numbers. Foreign workers face repatriation when MOM deems the case “closed” (which it does once a Labour Court Order is issued even if no payment is actually made). Unlike Singaporean employees, they are severely disadvantaged in persistently following their claims through.

“As a result, there was no recourse for the workers and for the Labour Court to recover the payment. ….  By the end of this year, we will be setting up the Employment Claim Tribunal” — based on the outline proposal, the ECT provides no recourse to recover payment either.

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
means.

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