Are non-paying employers able to hire more new workers?

Foreign workers have no clue whether their employers have failed to pay others’ salaries before they were hired

On 6 February 2017, then-Minister for Manpower Lim Swee Say assured Parliament that in cases where employers have failed to pay salaries, “All these companies have been debarred from hiring foreign workers until they comply with the Labour Court orders.” Unfortunately, it is not clear from his preceding words what “all” really means. Does it mean all companies that have been found to have failed to pay salaries, or only those companies that continued not to pay after the Labour Court found against them? Probably, it means the latter.

But TWC2 has noticed that many salary cases do not make it to the Employment Claims Tribunal (the successor to the Labour Court), and yet are not resolved through mediation either. We wonder whether the Ministry of Manpower (MOM) applies the debarment to these employers too. We think they should because the fact of the matter is that the employees remained unpaid. Employers should never be allowed to get away with it.

For good measure, the minister also told Parliament that “if you are a director of a company, and you have contributed to the non-payment of salary, the debarment applies to this director as well. So, this director can go on to open and start a new company, the debarment will follow him to the new company until he pays up the outstanding salary to the ex-employees.”

The policy of debarment has been mentioned a few more times by ministry officials since that February 2017 statement in parliament.

TWC2 has limited means to monitor if this policy is fully applied. The data we collect from our cases cannot demonstrate the positive (i.e. that the policy is in effect); we can only say whether there are examples that indicate the negative (i.e. that the policy is not applied).

Method

Looking at salary cases that have come to us for help since 2015 — over 3,200 cases from about 1,400 employers — we can collate them by employer name. Then we can sort them by the date that each salary case came to our attention.

If, after a salary case has come to our attention, we also see the company hiring new workers, it will suggest that this employer has not been debarred from getting new Work Permits.

Of course, as mentioned above, that may well be because the company had complied with court orders and paid up the early salary-case employees, so going by MOM’s stated policy, no debarment would have been applied. We don’t have the data as to how the early cases were resolved, especially when “resolved” can have so many meanings. Looking at our cases through the years, we have reason to believe that MOM uses the term “resolved” to include instances where the employer only paid a fraction of what he owed the employee — a definition which TWC2 considers astonishingly forgiving.

Results from our data mining

Out of the approximately 1,400 employers, we found 30 companies (206 workers or cases) that met this criterion: These employers had repeated salary cases, where the later cases involved men who joined the company AFTER at least one earlier salary case had surfaced. This suggests that MOM approved new Work Permits for these employers despite a record of salary violation.

We thought about presenting the entire table here in this post, but we realised it would be a mass of numbers and dates that would be hard to read. Instead we will highlight note-worthy examples.

A total of twelve men from a company called Hua Teng Builders Pte Ltd registered with TWC2 over salary issues between October 2016 and May 2019. Five of these men joined Hua Teng in April 2017 or later, i.e. more than six months after the first two salary cases (Alim and Uddin M) appeared in October 2016.

We have four salary cases from a company called Hoe Guan Design Pte Ltd. The first case (Nazmu) appeared in August 2017. The other three cases appeared in December 2018 and February 2019. But two of these three (Hossa and Hussa) were hired in December 2017 and May 2018 respectively, four months and nine months after the first salary case had appeared.

Then we have a large cluster of cases from three companies with similar names, all starting with “SBM”. We believe the companies are related. The first salary case appeared in September 2015, followed by eight more in December that year. In other words, we came to know of nine salary cases in 2015 alone. Eighteen more salary cases would later come to us for help in 2016 – 2018. Of these eighteen, fifteen were hired between February and November 2016, i.e. five to fourteen months after the first case appeared.

Why was SBM allowed to hire so many more foreign workers in 2016 when nine salary claims had been made against it in 2015?

It is worth stating here that when a worker shows up at TWC2 complaining of not being paid, he is unlikely to be the only employee not paid. It would be very unusual for a company to pay all its employees except for one. So, even if just one man registers with us, it can be taken that the rest of the company’s workforce is also not being paid — only that these other workers are either not lodging salary complaints yet or not seeking help from TWC2.

In other words, the real numbers of affected workers are usually much larger than TWC2’s figures show.

Overall picture

Our data isn’t water-tight enough to say with certainty what this means as far as MOM’s application of stated policy is. Even if we assume that MOM is earnest in its policies, there can be several explanations for the anomalies we have found. Perhaps,

Nonetheless, the big picture should not be lost. Having started with a database of over 3,200 salary cases and 1,400 employers, it should be noted that the number of suspect cases found (30 employers, 206 cases) is relatively small. The great majority of employers didn’t re-offend, but we don’t know how many of them didn’t re-offend because

• they had gone out of business (a common reason for not paying salaries) and thus weren’t around to re-offend, or
• they were really debarred by MOM.

What we can say is that there is no tsunami of cases where employers are seen to be hiring new Work Permit holders after not paying earlier workers. A tsunami would strongly indicate that MOM was not applying the policy it set for itself. We don’t see that from our analysis, but we do see enough cases to make us wonder how comprehensively the stated policy is applied.