Too often, workers’ complaints about kickbacks have been dismissed as unprovven

It was encouraging earlier this month to see a series of postings on the Ministry of Manpower’s Facebook page highlighting to employers of foreign workers that taking kickbacks from employees is an offence.

TWC2 has been highlighting the cancer of high recruitment costs and kickbacks for years. Yet, we have often seen complaints lodged by workers dismissed as unsubstantiated. For example, the two cases documented by the Straits Times in their video “Migrant Burden ” (the link can be found in our article Straits Times’ Migrant Burden: background and commentary) ultimately left both workers, John Peter Ayyavu and Hossain, dissatisfied. Their employers were not prosecuted. Ayyavu’s employer, however, had some administrative sanctions applied against him, but Hossain’s employer, to the best of our knowledge — MOM isn’t very transparent especially when they have nothing to boast about — got off completely.

So, while it is good to see MOM put out these messages on Facebook, we will want to see how effective they really are in making a broad difference. For now, we believe a degree of skepticism is warranted, as we have seen in previous cases how MOM ties its own hands by applying narrow definitions. Too many complaints lodged by workers ultimately go nowhere.

This article will discuss where the key strictures are.

At TWC2, we generally use the term “recruitment cost” to encompass everything that migrant workers find themselves having to pay in order to secure their jobs. Some are justifiable, e.g. getting their own passports; others are subject to negotiation, e.g. which party pays for airfare — which is why we are careful to speak of high recruitment cost being the problem and not necessarily all recruitment cost.

High recruitment costs put migrant workers in financially precarious positions since, having paid large sums to “buy” their jobs, they can ill afford to lose them. They thus become vulnerable to abuse and exploitation by unscrupulous employers and this is a slippery slope to modern slavery.

We are thus encouraged that the Ministry of Manpower (MOM) appears, through its recent social media postings, to be paying more attention to this cancer.

Each posting on MOM’s Facebook page contains four digital posters. One of the posters in the 8 January posting lists the kinds of demands that would be considered kickbacks:

Whilst intended to provide clarity, the above poster is also limiting. In TWC2’s experience with casework, foreign workers are seldom told what specific cost the payment that is demanded is meant for. It is enough that they are made to understand (often in implicit rather than explicit ways) that unless the amount is paid, the job will be taken away.

It is thus important that MOM states clearly that any demand for payment, whether or not linked to any of the above costs, is illegal once the worker is given the impression that his job depends on paying up.

In this connection, we highlight the words in legislation. The relevant sentence in the Employment of Foreign Manpower Act is quite broad, making it clear that any payment demanded from a worker “in connection” with the employment is a criminal offence.

Except as the Controller specifies otherwise in writing, an employer shall not demand or receive any sum or other benefit from any employment agency or person in connection with the employment or change in employment of the foreign employee.

Employment of Foreign Manpower Act >> Employment of Foreign Manpower (Work Passes) Regulations 2012 >> First Schedule >> Section 5.

The law is obviously not as limited as the above poster may suggest.

Who is ‘employer’?

The above-imaged poster is also limiting in another way, and in this instance, it springs from the way it says “It is illegal for employers to demand…”

In most cases when a worker tells us about a demand for a kickback, he would also describe how the demand came through an intermediary. This could be the manager or foreman in company. As far as the worker is concerned, the effect is the same: pay up or lose the job.

Unfortunately, we have often seen cases where MOM wants the worker to prove that it is the employer who demanded and received the payment, using a narrow meaning of the word “employer”. Or the boss, when questioned by MOM, flatly denies he had anything to do with it, leaving the blame perhaps with the manager or supervisor. TWC2’s experience is that MOM accepts such denials, which suggests that MOM’s investigation protocol excludes managers, supervisors and other company officials from the meaning of “employer” unless it can be proven that the subordinate really was acting on the instructions of the boss – which in the main will be hard to prove.

If MOM continues to adopt such a narrow definition, then the practice will never be stamped out, and all these social media posts can be dismissed as “just for show”.

It is thus important to define a kickback in ways that bring within scope the actions of intermediaries and other parties who are not strictly the employer. We should take the view that so long as the worker has reason to believe that the demand is linked to his getting or keeping a job, whichever party it may be who is issuing that demand, it should be illegal. The only exception would be a legitimate fee charged by a licensed employment agent and documented with an invoice.

However, the actual words of the legislation may be unhelpful. Arguably, such a broad meaning of “employer” is not sustained by the actual words in the law.

Quoting the relevant sentence again,

Except as the Controller specifies otherwise in writing, an employer shall not demand or receive…

It would be best to formalise an interpretation to this line to expand the meaning of “employer” to include any company official, or even any other person whom the worker has reason to believe is capable of seriously jeopardising his employment either because this person has influence over the employer or this person has been delegated control over the employment of the foreign worker by the employer.

For example, we’ve heard of instances where the boss’ wife or son is the one making the demand for payment. The worker tells us that neither the wife nor son has any position in the company, but the worker knows he would be foolish to dismiss their demands.

The legalised (?) kickback

There is one practice that TWC2 has highlighted before (see our article What does “monthly deduction for others” actually mean?) which we have argued is illegal, and yet is endorsed by MOM. We’re referring to the “Monthly deduction for others” that is stated in the document known as the In-Principle Approval for a Work Permit (IPA).

Here is an example of an IPA with an amount shown for “Monthly deduction for others” – the exact purpose or justification for “others” being left unexplained. Being able to pinpoint the purpose of any deduction is important because the general thrust of the law is that there must be a knowable benefit to the worker to justify each and every deduction.

Section 26 of the Employment Act says that no deduction is to be made by an employer from the salary of an employee, unless the deduction is authorised by the Act itself, ordered by a court or required by the income tax authorities.

Section 27(1) then lists the authorised deductions.

However, subsection 27(1)(i) allows that any deduction “made with the employee’s written consent” is also an authorised deduction, and on the face of it, if a worker had agreed to an IPA then he might be considered to have consented to it.

A closer examination of the way IPAs are generated will reveal the flaw behind such reasoning. Migrant workers have no role to play in the application or approval of an IPA. As far as we know, MOM’s IPA processing system does not ask prospective workers for their consent to the IPA prior to approval. In fact, workers do not even get a chance to see any of the salary terms submitted by employers to MOM in the application form. It is thus difficult to see how, just by having it stated on the finalised IPA, the document ever constitutes the “written consent” that the Employment Act requires to make a deduction “authorised”.

In any case, subsection 27(1)(i) has to be read in conjunction with Sections 27(1A) and (1B), which permits the employee to withdraw his written consent at any time and prohibits employers from penalising employees for withdrawing.

In reality, migrant workers have no cost-free way of withdrawing consent for this deduction stated in their IPAs. They would expect to be terminated if they even tried. Seen in this light, this “Monthly deduction for others”, even if shown on an MOM document, cannot be an authorised deduction within the meaning of the Employment Act and is illegal.

And since workers can expect to lose their jobs the moment they try to withdraw their consent for the “Monthly deduction for others”, then this deduction is in effect a kickback that they have to pay monthly to keep their jobs. How can MOM condone this?

We argue once again that this item in the IPA form should be removed.

Used to cheat the government

Employers also use the “Monthly deduction for others” to reduce their liabilities for the monthly foreign levy. MOM grants a reduced levy to encourage employers to hire and retain higher-skilled workers (known as “R1” workers). One of several ways a worker can be classed as an R1 worker is to have six years’ experience and to be paid a fixed monthly salary of at least $1,600.

TWC2 has seen employers issue IPAs that state fixed monthly salaries of $1,600 or higher in order to enjoy the concessional levy, but then slash the worker’s actual salary (obviously “fixed” does not quite mean fixed) through a massive “Monthly deduction for others”. Both the Singapore government and the worker can be said to have been cheated, yet MOM appears to endorse the practice through its IPAs.

See the example described in our article Another worker with exploitative salary structure in IPA ‘approved’ by MOM. This worker, Kairul, had his fixed monthly salary of $1,600 shrunk to an actual salary of $800 a month.