Vast majority of foreign workers with salary short-payment or non-payment won’t see their employers ‘taken to task’

On 26 April 2021, the Ministry of Manpower (MOM) said that our article “How did 5,000 salary claims a year become 1,400 over five years?” was inaccurate. They said in their statement:

Claim: According to the Employment Standards Reports published in the last two years, there were over 5,000 salary claims involving foreign employees a year. This differs from Second Minister for Manpower, Dr Tan See Leng’s Committee of Supply 2021 Parliament speech in paragraph 52, which mentioned that about 1,400 foreign employees were affected over a five-year period from 2015 to 2019.

Fact: Second Minister for Manpower did not underrepresent the number of salary claims affecting foreign employees in Parliament. The two figures stated in the TWC2 article refer to different data sets.

The 1,400 figure which Dr Tan cited referred to the number of foreign employees affected by employers who were taken to task by MOM for not paying their workers the declared salaries to MOM.

On the other hand, the 5,000 figure inferred by TWC2 based on the salary claims incidence rate in the Employment Standards Reports referred to all the salary disputes lodged by foreign employees at the Tripartite Alliance for Dispute Management (TADM). For example, this would include cases of miscalculation of salaries where the employers made good of the salary arrears even without any enforcement action by MOM.

It’s good that they have clarified the meaning of the numbers, but a closer reading of what Tan See Leng was saying, and reiterated by the above, raises more questions!

Simply put: there were more than 5,000 salary claims filed by foreign employees a year, yet only about 280 saw their employers taken to task. Why so few?

(1,400 affected employees over five years gives an average of 280 per year).

The preceding questions in parliament

This is what we know so far:

1. As seen from the above, MOM does not dispute that there were over 5,000 salary claims involving foreign employees a year.

2. At the parliamentary sitting of 2 February 2021, Member of Parliament Leong Mun Wai asked: “with regard to cases of underpayment of foreign employees’ salaries (a) how many of these cases have been discovered since 2010; (b) what are the main methods used to effect such underpayments; and (c) whether employment agencies are involved in any of these violations.

3. On the same day, Member of Parliament Faisal Manap asked: “in each year of the past five years, how many cases of firms underpaying its foreign staff have been detected.”

4. Manpower Minister Josephine Teo replied to the above questions saying, “Between 2010 and 2014, an average of 60 employers per year were taken to task for underpaying their foreign employees’ salaries. MOM stepped up education efforts to encourage foreign employees to report salary irregularities. We also improved detection capabilities. As a result, between 2015 and 2019, about 190 employers per year were taken to task.”

It is interesting that the members of parliament were asking for the number of cases of underpayment of foreign employees that were discovered and detected, but the minister’s reply was about the number of employers taken to task. Did it not occur to the minister that the members of parliament might have been asking about the incidence rate, rather than the number of apprehensions for infringement of the law?

A month later, on 2 March 2021, Leader of the Opposition Pritam Singh said:

The Ministry of Manpower, arising from parliamentary questions filed by Workers Party MP Mr Faisal Manap and PSP NCMP Leong Mun Wai, recently confirmed that about 190 employers were found underpaying their foreign employees every year between 2015 and 2019. That total corresponds to close to one thousand employers over a five-year period. The total number of foreign workers who were underpaid was not disclosed, nor were any details of restitution made to these workers disclosed as well. Can the minister make these details known?

Although Pritam Singh referenced Leong Mun Wai’s and Faisal Manap’s questions about (what appears to be) the incidence rate, he also mentioned the figure of 190 employers a year taken to task — perhaps taking the accuracy of this number vis-a-vis his fellow MPs’ questions in good faith. In this context, when Singh asked for the total number of foreign workers who were underpaid, it could be argued that he was asking how many workers were affected by the 190 employers a year who had been taken to task by MOM.

In this light, MOM’s clarification that the misdeeds of these “close to one thousand employers” (more accurately, 950 employers) over five years impacted 1,400 workers would be correct.

But it fails to resolve the disconnect between the February numbers given by Josephine Teo and the February questions by Leong Mun Wai and Faisal Manap.

Second Minister for Manpower Tan See Leng might have compounded the confusion (3 March 2021). Tan paraphrased the question that had been put to him by saying, “Mr Singh asked for the details of the number of migrant workers who were unpaid and the details of restitution made.” Yet, the next sentences from Tan were that “Between 2015 and 2019, 950 errant employers were caught for not paying the foreign employees their contractual fixed monthly salary or inflating the salaries with no intention of paying them the amount that has been declared. There were about 1,400 foreign employees affected in these cases.”

But there really were 5,000 cases of underpayment of foreign employees a year

Perhaps, the different numbers can be squared thus: Of the 5,000 salary claims filed by foreign workers a year — which likely means 25,000 over five years [see footnote 1]– the great majority did not involve underpayment of salaries (false claims?). Perhaps only 1,400 workers actually suffered underpayment.

But this hypothesis is easily dismissed. The Employment Standards Report itself says,

Of the salary claims lodged between 1 January 2019 and 30 June 2020, 90% of employees successfully recovered their salaries fully at TADM or the Employment Claims Tribunals (ECT). About half of the remaining employees partially recovered their salaries.

(Employment Standards Report, 2019 – 2020, page 5, paragraph 9).

In other words, the vast majority of claims were genuine, with demonstrated shortfalls which employers had to make good.

Less spin, more plain English, please

We see MOM constantly trying to bring the debate back to the figure of 1,400 affected employees over five years, rather than the 5,000-per-year figure. One wonders why MOM is trying so hard to avoid acknowledging that the vast majority of (ultimately successful) claims were also instances of underpayment. If they were not underpayment, yet employers had to make good, then what were they in plain English?

MOM makes an allusion to honest mistakes on employers’ part, by saying in the statement quoted at the top of this page that the 5,000-a-year number “would include cases of miscalculation of salaries where the employers made good of the salary arrears even without any enforcement action by MOM.”

But let’s look again at the numbers.

• About 5,000 claims filed by foreign workers a year;
• 95% received full or partial restitution, said TADM (Tripartite Alliance for Dispute Management) in its Employment Standards report;
• Therefore at least 95% were genuine claims;
• Over five years, this would mean something like 25,000 largely genuine salary claims [again, see footnote 1];
• Over five years, MOM took employers to task in cases affecting 1,400 workers.

One way to understand this low percentage may be to read carefully what’s said in the statement at the top of this page — “where the employers made good of the salary arrears even without any enforcement action by MOM.” This suggests that any case where MOM didn’t have to wield the big stick would not quite count as underpayment.

The law, in our opinion, does not see it that way. The only issue may be whether there is mens rea — intent to cheat the employee — not whether the employer finally makes restitution after being confronted with the evidence.

Any intention to cheat should be enough to attract penalties

Therefore, a good question worth asking might be this: Of over 5,000 salary claims filed by foreign employees each year, how many were initially resisted by employers at the start of mediation? Looking at how employers respond when faced with claims, not at how the cases conclude, is a better way to divine the original intent of employers.

Intent to underpay was likely the point that the members of parliament were trying to get at. In other words, how widespread is the problem?

Consider this too: If these cases were genuinely honest mistakes, why weren’t the shortfalls in salary immediately rectified by the payroll departments when employees first raised the issue with their employers? Why did workers find themselves having to file formal claims at MOM and TADM to get restitution?

Among those of us not born yesterday, we can well imagine that some employers might “try their luck” at underpaying, hoping that workers would not have the gumption to file claims. But when notified of claims, then the bosses’ strategy would be to first mount a defence, but concede if the evidence gets too strong against them.

If this is the calculated gamble by such employers — and the numbers suggest so to us — then MOM’s aversion to recognising this reality and their attempts at downplaying the problem by selective use of numbers only serve to encourage such behaviour. Employers can calculate that if lucky, they will get away with it, and if workers file claims, then they pay up — no more than they’d anyway have to pay in salaries.  This gambit is all upside and no downside — thanks to MOM’s operational policy.

1. Is it safe to multiply foreign workers’ 5,000 salary claims a year by five years to get to a rough total of 25,000 claims over five years? Is the annual rate relatively constant?

Whilst it is possible to derive this 5,000-figure from the Employment Standards Report 2019/2020 for the years 2018 and 2019, we’ve not been able to find published figures for previous years.

However, we have then-Manpower Minister Lim Swee Say telling parliament on 6 February 2017 that “MOM received about 9,000 salary-related claims involving some 4,500 employers in 2016”. This figure almost surely includes local and foreign employees. However, going by the ratio from 2018 and 2019, where some 60% of salary claims were filed by foreign employees, that means there were about 5,400 salary claims by foreign employees in 2016 — a figure similar to the rates seen in recent years.

It thus appears reasonable to assume that the number of salary claims filed by foreign workers is relatively constant one year to the next.

Of course, it would be best if MOM were more diligent about publishing statistics.