Officials to clamp down on fake salary vouchers, but will it work?

Posted by on November 27, 2018 in News, News Flash, Our Stand

The news site TodayOnline reported that the Ministry of Manpower (MOM) “plans to clamp down on employers who abuse salary vouchers — such as by having employees indicate receipt of their wages before they are paid.”

The news story was dated 26 November 2018 (Link).

On the face of it, this sounds like progress. It’s a problem that has bedevilled many workers’ salary claims, based on the cases that TWC2 has seen over the years. TWC2 is glad that, at last, MOM sees it as an issue that needs action.

It isn’t only that employers generate salary vouchers or payslips that indicate payment of salary when in fact they have not paid. More frequently, the salary vouchers contain false information, such as a wrong basic salary, an incorrect number of overtime hours, or the clawing back of “salary advances” that the workers had not taken in the first place.

Take this example of a payslip below. The worker had $173.08  deducted from his salary for “unpaid leave”. But he didn’t take any unpaid leave. This statement on the payslip appears to be an arbitrary deduction to lower his salary. Moreover, there is no mention of overtime pay on it when he said he did work overtime during that month.

See also another instance of fake salary vouchers, as described in our earlier story: Sarkar Robel finds his salary in a time warp.

‘Other evidence’

The ministry told the newspaper that

…between January and October this year, there were about 150 cases that involved disputes over salary vouchers as proof of payment.

In about half the cases, workers’ claims were found to be valid — meaning that the salary vouchers were untruthful. In the other half of cases, “there was no strong evidence to substantiate the workers’ claims,” the ministry said. This is hardly surprising because when companies pay salaries in cash, there is simply no other evidence available.

TWC2 has long argued that this problem can largely be addressed by making it mandatory to pay employees through bank channels. That way, an independently-generated audit trail is available to show how much money passed from employer to employee, and whether the payment was timely or late. This would be the “other evidence” that would go a long way to resolving disputes expeditiously.

Instead, MOM told TodayOnline that they intend to make it a civil contravention for firms to ask employees to indicate receipt of salaries before they are paid, or to sign blank or inaccurate receipts.

Laying down rules is one thing. Proving infringement is quite another. When a company pays salaries (or claims to have paid salaries) in cash, what proof is there? It will boil down to the boss’ word versus the employee’s word. For all practical purposes, the only time when MOM or the prosecutor can make a good case that the vouchers are false is when the employer confesses.

Piling on penalties isn’t going to make employers confess. On the contrary, it’s only going to motivate them to dig their heels in and insist that the vouchers they have prepared are true. It’s not going to help resolve salary cases more quickly.

Getting more evidence is the smarter way to go. Once again we say it should be mandatory to pay salaries through banks.

Superfluous to have a new rule

TWC2 also notes that the new offence isn’t exactly a criminal offence but a “civil contravention”. A “civil contravention” probably means  it will be the kind of thing where bureaucrats act as prosecutor, judge and jury. They say you have infringed a rule and they levy a fine. Much as TWC2 would like the problem of salary mis-documentation dealt it, relying on this route of civil contravention leaves us uneasy from the angle of due process.

Moreover, we are perplexed why there is a need to institute a new rule. There are already sufficient laws to deal with the matter.

The Employment of Foreign Manpower (Work Passes) regulations 2012, Fourth Schedule, Part IV, Section 6 says:

The employer shall maintain a record of the monthly salary paid to the foreign employee and produce the record upon request by any public officer acting in his official capacity.

It should be noted that the above is also classed as a civil contravention should an employer fail to produce the record when so requested, nor does it say that the record must be true and complete. However, what gives it spine is Section 177 of the Penal Code., which makes it a criminal offence:

Whoever, being legally bound to furnish information on any subject to any public servant, as such, furnishes, as true, information on the subject which he knows or has reason to believe to be false, shall be punished with imprisonment for a term which may extend to 6 months, or with fine which may extend to $5,000, or with both; or, if the information which he is legally bound to furnish respects the commission of an offence, or is required for the purpose of preventing the commission of an offence, or in order to the apprehension of an offender, with imprisonment for a term which may extend to 3 years, or with fine, or with both.

Failure to pay correct salary punctually is an offence under the Employment Act (Section 34(1)). So, falsifying payslips to conceal non-payment or underpayment of salary will make the employer liable for the higher penalties in the latter part of the above clause.

The Employment Act’s Section 95(1) is also relevant to the matter of falsified pay records. It says:

An employer must make, and keep for the period prescribed (called in this section the record retention period), employee records containing the prescribed particulars for —
(a) every employee the employer employs; and
(b) every former employee of the employer.

And then, 95(3) adds:

(3)  An employer is taken to have failed to comply with subsection (1) if the employer makes or keeps an employee record that is incomplete or inaccurate, whether or not the employer knew that the record is incomplete or inaccurate.

In short, there is really no need to promulgate a new rule and lay out a new fine. The problem isn’t a lack of rules or legislation. The problem is the difficulty of proving that the vouchers are false when employers are permitted to pay salaries in cash. It is unfortunate therefore that MOM’s intended solution to this problem is misguided and redundant. In the absence of a bank statement — the ‘other evidence’ — it may prove no more effective than the existing laws.

 

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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