Singapore is a party to the UN Palermo Protocol and should be enforcing its standards

Contract substitution is when an employer makes a migrant worker sign a new contract after the latter has started work  or after he/she has arrived in Singapore. That is the moment when the worker is most vulnerable, because in many cases, the worker might have paid a significant sum to the recruiter – or sometimes, to the supervisor, manager or boss in the company – for the job. Even if the worker had not paid for his recruitment, there is the risk of social shame if he were to lose the job and return home so soon after going abroad to work. The family’s financial hopes had been pinned on him.

Typically, the new contract that the worker is made to sign has worse terms of employment than the original contract. (The original contract might be entirely verbal.)

In Singapore, where the employer has the complete freedom to cancel a migrant worker’s Work Permit at any time without need for cause and to refuse consent for transferring to another job, the pressure on a worker to sign a substituted contract is virtually impossible to resist. In this sense, the laws of Singapore, giving employers such freedom, can be said to enable contract substitution.

The International Labour Organisation (ILO) and the International Organisation for Migration (IOM) consider contract substitution as an indicator of forced labour, and governments are supposed to be actively stamping it out.

Two examples

In recent weeks, two men came to TWC2 reporting that they had been made to sign substituted contracts. The new documents contained terms which differed adversely from the In-Principle Approval (IPA) they had relied on when they first took up their jobs.

In the first example, the worker said that after signing the substituted contract, he was made to work two Sundays a month without pay to do housekeeping at the company’s factory or workshop. The contract very cleverly phrased it as “encourage” him to “volunteer”, but anyone who knows anything about the circumstances of migrant workers in Singapore can easily see an implied threat of permit cancellation and loss of the job should he not “volunteer”.

Effectively, he has been forced to provide free labour to the employer for these extra hours.

In the next example, the substituted contract reduced a worker’s salary by $150 a month. The man who reported the matter to us said that in his IPA, the employer was supposed to provide accommodation and that the IPA said there would be no salary deduction for housing. Now out of the blue, the employer wanted to reduce  his salary by $150 on the guise of housing co-payment. He also said that all workers in the company had been made to sign similar substituted contracts.

In this instance, the worker’s story was that the employer had told him and his workmates that if they completed their contracts, the $150 per month would be returned to them. But if one looked closely at the paragraph in question, there is no mention of such refund.

Even if the promise of a refund was sincere, it would be illegal. Under the Employment Act, no employer may defer payment of due salaries. To cut a worker’s salary by $150 each month, and then to return the sum later would be the same as deferred payment of salary.

Should the workers later complain to the authorities that no refund was made, the employer would almost surely deny that there was ever any verbal promise of a refund, because to admit that such a verbal promise was made would be tantamount to admitting to an offence of deferred payment under the Employment Act.

Therefore it would be extremely difficult for workers to recover the $150 monthly deductions.

Not uncommon

Contract substitution is depressingly widespread, and even in Singapore, TWC2 sees cases every now and then. Contract Substitution: A means of enslaving the most vulnerable, a (2018?) paper by Sarah Beech, University of Texas at Austin, estimated that:

Contract substitution, the process of overriding a contract and replacing it with a harsher, “substituted” one, is a dominant practice in nearly 161 countries. That is, more than 2.4 million victims of forced labor have been trafficked across the world market due to practices like contract substitution.

Another Singapore example can also be found in an international 2017 publication, Policy Brief #4 “Zero tolerance on contract substitution” by the Open Working Group on Labour Migration and Development.

There is a real danger that complaining to the authorities may produce no meaningful remedy. Unless the authorities and the justice system see contract substitution as a suspicious attempt at forced labour, there is a risk that they will simply assume that the worker’s signature was freely obtained and thus the employment contract would be valid. Failure to take into account the economic vulnerability of the worker can make a mockery of justice.

Yet, even if the contracts are overturned and employers ordered to make restitution – payment for Sunday work in example 1, and return of salary deductions in example 2 – they still would not make for meaningful solutions. That is because the employers will still be free to fire the workers who will then suffer repatriation, a period of unemployment with its loss of income, and the prospect of having to pay huge sums again to get another job.

These latter consequences are straightforward results of Singapore’s policy where workers have no right to transfer to another job, and Singapore’s failure to eliminate high recruitment costs imposed on workers. Without effective action on these two fronts, Singapore can be said to abet the threats issued by employers of punitive consequences should workers not agree to the substituted contracts. That the two workers who brought the matter to our attention are still hesitating about whether it would be wise to file a complaint with the Ministry of Manpower shows us how little confidence they have that they will obtain meaningful remedies.

Exploitation of vulnerability

Singapore acceded to the United Nations Protocol to Prevent, Suppress and Punish Trafficking in Persons on 28 September 2015. This is commonly known as the Palermo Protocol.

Singapore also ratified the ASEAN Convention against Trafficking in Persons in January 2016.

Building on these international instruments, the United Nations has developed a set of indicators for detection of trafficking in persons. By itself a single indicator is not proof, but a cluster of indicators should be cause of investigation. A simple PDF document listing the indicators can be found here. Our two examples above appear to check a number of these indicators, including:

General indicators

  • Believe that they must work against their will
  • Feel that they cannot leave (their situation)
  • Be unable to negotiate working conditions
  • Have acted on the basis of false promises

Labour exploitation

  • Have no choice of accommodation
  • Be disciplined through fines
  • There is evidence that labour laws are being breached.

The United Nations has a further Guidance Note on ‘abuse of a position of vulnerability’. Abuse of a position of vulnerability for the purposes of exploitation is an overarching indicator of trafficking and forced labour. In the Note, it is explained that

Circumstantial vulnerability may relate to a person’s unemployment or economic destitution

Thus, any employer leveraging a worker’s economic precarity to demand unfair terms in a substituted contract is clearly abusing the worker’s position of vulnerability.

The Note cautions that a position of vulnerability alone

will not constitute a means of trafficking in persons unless that situation of vulnerability has also been abused to the extent that the victim’s consent is negated.

However, in our examples, we can see how the workers felt they had no choice but to sign the substituted contracts. Their free consent had been negated by their vulnerable position. They were all too aware that if they didn’t sign, they would almost surely lose their jobs and be sent home, which would mean a period of unemployment and loss of income, and a worrying prospect of having to pay large sums to get a new job.

Solutions

One solution lies in having standard contracts for low-wage migrant workers. As argued by Sarah Beech in Contract Substitution: A means of enslaving the most vulnerable,

However, improvements are divulging in both the public and private sphere. More countries are starting to require “standard contracts,” for all incoming labor migrants. Such contracts force recruiting companies to agree to minimum wages, time off, and basic work necessities for their clients. These unchangeable, “standard” contracts subsequently make the recruiting companies accountable for any infringements or transgressions they commit.

(It should be noted that ‘recruiting companies’ above does not only mean recruiting agents. The term also includes companies that hire and employ migrant workers.)

In the Singapore context, however, even standard contracts may not be enough. As explained above, the power wielded by employers is power given to them by the Singapore government: to fire workers at will and deny workers the right to look for transfer jobs. There is also the failure of our authorities to effectively combat high recruitment costs. Solutions must therefore include changes on these fronts as well. Otherwise, Singapore cannot be said to be doing enough and living up to our international obligations to suppress human trafficking and forced labour.

See also an earlier article from 2017 Contract substitution made easier by ministry? describing a case of contract substitution through abuse of the Ministry of Manpower’s online Work Permit system.