48 Nihal workers left high and dry, and MOM’s ‘softly, softly’ role

None of the workers has gotten any real satisfaction. Nada. Worse yet, it was hardly an unusual case; it’s becoming all too common for migrant workers to be left high and dry after their employers fail to pay the agreed salaries and the Ministry of Manpower’s dispute resolution system either grinds too slowly, or grinds to a halt.

Workers from two related Nihal companies started coming to TWC2 for help in late 2017 over salary non-payment. It’s now mid-2018, the case is dragging on, and most of them remain without work or income.

As will be pointed out below, the problem was needlessly aggravated by MOM’s own regulatory framework — giving employers excessive power over termination and repatriation of workers — and lack of attention to recruitment costs. The people bearing the brunt of this weak system are the migrant workers.

On 24 May 2018, Today newspaper wrote about the Nihal employees. Extracts from the published story are included here. As often is the case in Singapore it is de rigeur to lead the story with a headline that hails the government for doing something about the problem even if concrete results are elusive.

Today newspaper, 24 May 2018, by Kelly Ng

MOM investigating firm that owes 48 workers tens of thousands of dollars

Link to the original Today news story

Mr Faruk Oman [sic] thought he could finally provide for his family of six in Bangladesh after landing a job with Singapore contracting firm Nihal Enterprise in February last year.

As a “higher skilled” worker in the construction sector, he was to be paid S$1,600 monthly.

But the 34-year-old was only ever paid a fraction of the promised salary and, in December 2017 and January this year, he said he was made to sign blank salary vouchers, rendering his work — which involved cleaning, excavation and equipment repairs — unpaid.

Unfortunately, what the news story doesn’t explain is how the employer can make an employee sign blank salary vouchers. Didn’t the workers resist? TWC2 is concerned that readers of the Today article might blame the workers for their own predicament.

Actually, making employees sign blank vouchers is hardly unusual too. The Nihal men who came to TWC2 for help related that the boss told them that if they refused to sign the blank salary vouchers they would be promptly terminated from their jobs and repatriated. When workers have paid thousands of dollars to recruiters, losing their jobs would be a financial disaster. This especially as they had not even been properly paid since starting work. How would they repay friends and relatives from whom they had borrowed money to pay recruiters’ fees? Rationally, it was better to sign the vouchers as asked by the boss and hope that he would eventually come through with salaries, than to burn one’s bridges by resisting.

As Faruk Omar explained to the reporter,

Asked why he did not seek help from the authorities earlier, despite being underpaid for close to a year, Mr Faruk said: “The boss kept telling us this is a big company and has resources, and we should take the (smaller amounts of) money first.”

He filed his complaint in January and has been unemployed since.

[snip]

“I paid S$7,000 to come to Singapore, borrowed from relatives and banks. If I go back to Bangladesh now, how do I give them this money? If my company cannot give me what I have earned, what do I do? What can I do,” Mr Faruk lamented.

The trouble is, by staying on the job, the men were simply giving away labour for free when the employer might have no intention of paying. MOM regularly advises migrant workers to lodge complaints as soon as possible rather than persist in hope. It is good advice, except that it is MOM that created the ecosystem that enables employers to threaten immediate termination and repatriation.

It is also MOM that should be doing something to eliminate recruiters’ exorbitant fees, thus lessening the men’s vulnerability to such threats, but this appears to be barely on MOM’s radar, going by the lack of action in this regard.

It would be more effective if MOM set about rectifying the ecosystem than just be preachy.

The news article continues:

Mr Faruk is one of 48 foreign workers who have lodged complaints against Nihal Enterprise and Nihal Construction, both held by parent company Nihal Group, between January and April this year for defaulting on their salaries.

The Manpower Ministry (MOM) has suspended Nihal Group’s work pass privileges and investigations are ongoing, said a spokesman in response to TODAY’s queries.

To date, only nine of these employees have been paid following “successful mediation” under the Tripartite Alliance for Dispute Management launched last year.

That term! It’s a bit of Orwellian-speak so beloved of our bureaucracy. From the many cases TWC2 has dealt with, we’ve observed that any “settlement” that is more than zero dollars is counted by MOM as “successful” — and in any event, it’s only nine employees out of 48. TWC2’s General Manager was quick to explain to the reporter:

While mediation is assessed to be successful, it is likely that most of the workers will have to settle for smaller sums than what they are owed, said Mr Ethan Guo, general manager of non-government organisation Transient Workers Count Too (TWC2), which has been helping with the bulk of the workers’ claims.

Mr Faruk, for one, has so far only managed to claw back about S$2,000, less than a-tenth of the S$23,000 (including overtime hours) is owed him, according to the terms of his contract.

The workers TWC2 is helping are owed amounts ranging from S$2,732 to S$24,986.

Strictly speaking, the workers’ cases aren’t over yet. TWC2 expects that their claims will be heard at the Employment Claims Tribunal. Whether this produces any better result is too early to say.

Deeper in the news story, there is a discussion of the promised salary rate. Perhaps due to the constraints of word length, it’s a bit short on detail. Moreover, there was considerable variation among the 48 workers which would have made it difficult for the reporter. We’ll try to fill the blanks here.

Today newspaper wrote:

“TWC2 has observed a number of companies that hire workers at this $1,600 rate, but have no intention of actually paying their workers this amount,” said Mr Guo, adding that employers often hire higher skilled workers to benefit from lower levies.

According to the pay slips of several Nihal workers seen by TODAY, they were paid only a quarter of the promised rate each month.

First of all, we need to explain the basis for the claim of “promised rate”. It’s a little unfortunate that some readers might be left wondering if it was merely verbal and contestable, since the newspaper story did not explain the source.

In actual fact, all the Nihal workers relied on a document with an MOM letterhead as the basis for the promised salary. This document is called the In-principle Approval for Work Permit (IPA); it is generated by MOM to inform both the employer and employee that the application for a Work Permit is successful. More importantly, the IPA contains details of basic monthly salary, deductions, allowances, etc. These details would have been submitted by the employer to MOM in the Work permit application.

As a record of the terms of the job offered to (and accepted by) the foreign worker, it is as clear as day.

In Faruk Omar’s case, his IPA clearly stated a basic monthly salary of $1,600.

However, not all the workers had the same basic salary in their respective IPAs. Some had lower salaries, probably in reflection of their skills and experience.

Some of the workers with lower basic salaries were paid their basic salaries, but not their overtime. Thus, their salary claims were mostly about overtime pay.  Other workers like Faruk never even got their full basic salaries, let alone overtime pay. They were paid dribs and drabs over the first few months.

Furthermore, some workers had been with Nihal longer; others joined more recently. Consequently, the claim amounts varied considerably from one worker to another.

The reporter tried to get a response from the directors of the Nihal companies.

Nihal Construction and Nihal Enterprise are housed at Ubi Techpark along Ubi Crescent.

Nihal Construction was incorporated in August 2015 while Nihal Enterprise was incorporated in May the following year, according to records from the Accounting and Corporate Regulatory Authority.

The records listed Kulvinder Singh Bajaj and Birbal Singh Bajaj as directors of Nihal Group, while Angad Singh Harbans Singh is the director of Nihal Construction and Nihal Enterprise.

Contacted on a mobile number provided by the workers, a member of Nihal’s management team, who identified himself only as Mr Singh, claimed his ex-employees had inflated their claims.

While he acknowledged that some of them were indeed underpaid for working overtime due to miscalculations by payroll staff who have since been dismissed, Mr Singh accused the foreign workers of ganging up to “rip him off”.

This is a poor attempt at explaining themselves. The workers’ claims were based on documented IPAs and for work done; they were hardly demanding extortionate and unfounded amounts. Mr Singh should not be using an expression that may well be turned on him.

There is one more element of this case worth mentioning: From what the workers told us, neither of the Nihal companies had any construction contracts in hand. Instead the workers said they were supplied to other contractors. MOM supposedly has an elaborate system for determining foreign worker quotas for construction companies, so how did the Nihal companies get to acquire so many Work Permits and hire so many workers?

TWC2 notes that MOM told the reporter that the ministry is “investigating”, although there is no clear statement what infringement is being investigated. or how determined the inquiry is. We expect that it should be for a violation of Section 34 of the Employment Act which makes it a criminal offence not to pay salary on time. The penalty is a fine between $3,000 and $15,000 or imprisonment up to six months or both — for each employee not paid. Nor can directors of a company hide behind a corporate veil. Section 113A of the Act holds “officer(s)” of the company (a term which includes directors) equally culpable.

It should be said however that based on TWC2’s observations, the vast majority of the thousands of salary non-payment cases annually do not result in prosecution. This track record is not encouraging.

In this particular case, it is possible that MOM is waiting for the cases to first be heard by the Employment Claims Tribunal. If the Tribunal finds in employees’ favour, we would expect MOM to launch prosecution. If they don’t, it would be very curious indeed.