In-Principle Approval: uses and abuses 2011 – 2018, part 2

Part 2: Salary terms

Very few of the migrant workers from India and Bangladesh working in non-domestic sectors have written employment contracts. Contracts are more common with workers from China, but typically these contracts are signed in their home country between the agent and the worker. TWC2 noticed that Ministry of Manpower (MOM) officers often took the position that for jurisdictional reasons, contracts signed in a foreign country are not enforceable in Singapore. However, the High Court, in Xuyi Building Engineering v Li Aidong and another [2010] SGHC 236, had clouded the matter by taking into account a contract signed in China.

Notwithstanding the Xuyi judgement, for nearly all Bangladeshi and Indian workers (the bulk of TWC2’s caseload) the only useful document that details the salary, deductions and allowances is the In-Principle Approval for a Work Permit (“IPA”). From early on, MOM maintained that the IPA is not a contract. This may be technically correct, but being the only document that has those details, workers naturally began referring to it in disputes. For an explanation of IPA as a document and process, please see the footnote.

Regulatory confusion

That led to several years of regulatory hesitancy. While workers began to insist on referring to the IPA terms, MOM officers were left, by TWC2’s observation, with no meaningful guidance from their own ministry so long as the ministry insisted that IPAs were not contracts. That said, TWC2 noticed that most of the time, MOM officers (including those working within the office of the Commissioner of Labour, popularly known as the “Labour Court”) did refer to it, if not exclusively.

The problem was that in the absence of top-down guidance or the convention of precedence, there was no consistency as to how much weight to give to the IPA. Consequently, the years leading up to 2017 when salary claims moved over to the Employment Claims Tribunal saw a mish-mash of divergent decisions in salary disputes. Some Assistant Commissioners of Labour, when presiding over the Labour Court, made decisions that relied on IPAs more than others.

So long as there was no consistency in Labour Court decisions, with many decisions ignoring the IPA as basis for salary calculation, many employers merrily used a lower rate of pay for salary computation. Bosses seemed to have sufficient confidence that the Labour Court would endorse the lower rates of pay should the matter come up.

A 2013 article on this website shows how blatantly employers ignored IPA salaries: Over a year, the difference between $18 and $25 adds up to a lot of money.

In several cases that TWC2 helped workers with, MOM and Labour Court officers took the view that if a worker had accepted several months of salary at a lower pay rate, then it signalled that he had agreed to the lower rate and the IPA rate would be irrelevant. This kind of reasoning completely ignored the inferior bargaining power of workers in the face of employers’ law-given freedom to terminate employment at will and repatriate the men. Returning home would mean facing huge unpaid debts that they had incurred for agent fees. Naturally, accepting the short-rate on payday was better than being made to go home. But that didn’t mean that they freely and willingly agreed to modification of contract. Coercive circumstances should be taken into account when making judgements.

Despite this argument, in several cases that TWC2 saw, the Labour Court set aside the IPA-stated salaries in favour of employers’ arbitrarily-lowered salaries.

Amid the mess, the question still boiled down to ‘what should be the correct salary?’ There would never be consistency and fairness in decisions unless a standard method was laid down to determine the correct salary. On this point, we would not get clarity till late 2017, and even then, not from MOM. This point will be addressed further down.

Adding to the mess: opacity, forgery and witnesses with conflicts of interests

Meanwhile, the situation was made worse as Labour Court decisions were not delivered in written form with reasons, except in exceptional circumstances, and therefore it was nearly impossible to discern the grounds of decision in most cases.

Nor were Labour Courts bound by any rules of evidence. TWC2 handled a number of cases wherein employers submitted as evidence documents bearing signatures purported to be the workers’. These signatures, workers immediately denounced as forged. The suspicious documents were often payslips allegedly showing that salaries had been paid (with counterfeit employee signatures acknowledging receipt) or substitute contracts that employees had never seen before, wherein their salaries were lowered, and also with counterfeit employee signatures. In several cases that TWC2 assisted with, third-party handwriting experts provided supporting reports casting doubt on the veracity of these signatures. Yet the Labour Courts admitted these highly suspicious documents into evidence, leading to decisions adverse to workers.

As well, employers could call on other workers to testify to support the employer’s case at Labour Court hearings. The stunning conflict of interest there was not recognised. These ‘witnesses’ were also subject to the coercive power of employers to terminate them at will and be repatriated. TWC2 noticed that Labour Courts were not troubled by these circumstances.

Widening purpose of the IPA and refusal to provide reprint

In short, what was happening was that workers with underpaid or unpaid salaries began to rely on the IPA as evidence of promised salaries, but MOM resisted this particular use of the IPA. Despite this, as far as TWC2 could see, MOM provided no other route to establishing what correct salaries were in each case. Its own officers were left all at sea.

A further complication was when a worker either misplaced his IPA, or his employer took away his IPA soon after commencing employment. Typically, he would be able to remember what the salary was on the IPA, and when he felt shortpaid, he would ask MOM for a copy of the original IPA in order to support his salary claim.

For years, MOM’s response was to refuse to provide copies. No reason was ever given. They just seemed bull headed. Eventually TWC2 figured out the most likely reason why they refused to provide copies: the software that MOM used for the IPA probably did not allow for reprints. Perhaps MOM officers felt this reason was even more embarrassing than merely being stubborn; thus the refusal to explain why they would not accede to workers’ requests.

It should be noted that even when the IPA is freshly authorised as a document, MOM does not print a hard copy. As explained in the footnote, the IPA is printed by the employer or agent from an electronic link sent to this party. That was a clue that it wasn’t so much a refusal but a plain technical inability to generate a copy (though the refusal to explain themselves is no less inexcusable). We soon began to joke around TWC2, “They’re still looking for the Reprint button!” It would take years before MOM figured out a work-around, which we will discuss in Part 4.

Through all those years, workers who couldn’t produce their original copy of the IPA were disadvantaged in pursuing their salary claims even more than they were already disadvantaged by the almost capricious Labour Court process. This didn’t seem to move MOM very much, which may explain why it took them so long to come up with a work-around. It’s possible that due to the ideological position that the IPA was not a contract, officials therefore did not consider its presence or absence germane to salary disputes – never mind reality.

High Court ruling changed everything

Then, in November 2017 a High Court judgement changed the game. Reversing a decision by the Labour Court, the High Court in Liu Huaixi v Haniffa Pte Ltd [2017] SGHC 270 (para 33) decided that

Given the statutory framework of the IPA, the amount stated in it would constitute prima facie evidence of the basic monthly salary of the employee.

Not only did that change the landscape in deciding salary cases, it also put a spotlight on MOM’s refusal to provide reprints of IPAs to workers who do not have them, sometimes through no fault of their own (e.g. forcibly taken away by employers). Refusal could well be construed as an unreasonable action on MOM’s part that thwarts justice.

In any case, employers, as unsure as workers as to how the Labour Court would decide cases, had also begun to “play safe”. Just in case a particular Assistant Commissioner of Labour might give weight to IPAs in his decision, some employers felt it better to have IPAs reflect the salary they wished to pay rather than what they promised the employee. How to do that? This will be discussed in Part 3.

The IPA process is almost entirely online. When an employer wishes to employ a foreign worker, he or his licensed employment agent logs into MOM’s system to make an application for a work permit for this worker. A host of details, including salary details, has to be provided.

If MOM approves the application, the employer or his agent can then print two versions of the IPA in paper form. One version is for the employer and the other is for the employee. The key details including those items listed above are the same, but there are some details that only show up in the employer’s copy, such as the amount in monthly levy, but not in the employee’s copy. And vice versa.

The employer or his licensed agent is supposed to send the employee’s copy to the prospective worker, so that he has it in hand when arriving at Changi airport. He needs to show it to immigration.