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Extracted from the Hansard (Parliamentary reports), for the record:
Parliamentary sitting of 29 February 2016:
Mr Chen Show Mao asked the Minister for Manpower (a) how many complaints of unauthorised salary deductions have been registered every year from 2010 to 2015; and (b) in how many of these cases are the complaints found to have been justified.
Mr Lim Swee Say: MOM received and investigated an average of 50 complaints per year from 2010 to 2015 involving allegations of unauthorised salary deductions under the Employment Act (EA). About a third of these cases were found to have contravened the EA following MOM’s investigations.
Minister for Manpower Lim Swee Say limited his reply to unauthorised salary deductions under the Employment Act. This may account for the relatively small number of 50 complaints per year.
Under the Employment Act, Section 27 lists the authorised deductions, thus:
27.—(1) The following deductions may be made from the salary of an employee:
(a) deductions for absence from work;
(b) deductions for damage to or loss of goods expressly entrusted to an employee for custody or for loss of money for which an employee is required to account, where the damage or loss is directly attributable to his neglect or default;
(c) deductions for the actual cost of meals supplied by the employer at the request of the employee;
(d) deductions for house accommodation supplied by the employer;
(e) deductions for such amenities and services supplied by the employer as the Commissioner may authorise;
(f) deductions for recovery of advances or loans or for adjustment of over-payments of salary;
(g) [Deleted by Act 26 of 2013 wef 01/04/2014]
(h) deductions of contributions payable by an employer on behalf of an employee under and in accordance with the provisions of the Central Provident Fund Act (Cap. 36);
(i) deductions made at the request of the employee for the purpose of a superannuation scheme or provident fund or any other scheme which is lawfully established for the benefit of the employee and is approved by the Commissioner;
(j) deductions made with the written consent of the employee and paid by the employer to any cooperative society registered under any written law for the time being in force in respect of subscriptions, entrance fees, instalments of loans, interest and other dues payable by the employee to such society; and
(k) any other deductions which may be approved from time to time by the Minister.
(2) For the purposes of subsection (1)(e), “services” does not include the supply of tools and raw materials required for the purposes of employment.
The preceding Section 26 makes it illegal to make unauthorised deductions.
The reality is completely different from Lim Swee Say’s figure. Large numbers of foreign workers continue to suffer a monthly deduction, often termed “savings money”. Typically, $30 – $100 is deducted from the worker’s salary, with the promise that the total deducted will be given to him when he has completed his term of service and is repatriated.
On the one hand, it can be argued that since the money is intended to be returned to the worker eventually, it isn’t a deduction. However, there is no guarantee that it will be paid back to him.
Another way to see it is as a short-payment of salary. The Employment Act requires that salary (other than overtime pay) should be paid by the 7th day after the salary month. Overtime pay should be paid by the 14th day. Holding back $30 – $100 is effectively an offence, being non-payment of a portion of salary by due date.
Lim Swee Say, by not including this widespread practice in his answer, completely understates the problem.
That said, it is also true that the tens or hundreds of thousands (by TWC2’s estimate) of workers who suffer “savings money” deductions seldom lodge complaints with MOM unless their financial situation gets dire (e.g. not paid for several months). But this only shows how workers perceive that “savings money” is normal practice, sanctioned by MOM.
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