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Ministry of Manpower to Ban Employers from Cutting Wages of Work Permit Holders

In response to the cases of foreign workers being short-changed by employers who reduce their wages without their informed consent, the Ministry of Manpower (MOM) is now exploring the possibility of getting rid of the option of downward salary revisions.

In Singapore, the law currently allows an employer to lower a worker’s basic monthly pay to an amount that is lesser than what is stated in the in-principle approval (IPA) letter – a document which is similar to a contract and which contains all relevant employment information agreed upon by both parties, and is issued to the worker even before arriving in Singapore for work.

MOM to Bar Employers from Reducing the Wages of Work Permit Holders

In a written statement on this matter, the Minister of Manpower, Josephine Teo, explained that her ministry had already fined around 17 employers who have violated the law by cutting their workers’ wages without getting their consent or sending a notice to the MOM, during the first half of the year.

Since 2011, the Ministry of Manpower has been requiring employers to declare key salary terms offered to their worker prospects through IPA letters. The employers are then required to send in these letters to the workers’ home countries, in their respective native languages, before they can be brought in for work in Singapore. Through this process, workers are duly informed and made aware of the terms and conditions of their work before they formally accept the job offer and depart for Singapore.

Starting February this year, the Tripartite Alliance for Dispute Management no longer acknowledges arguments backed by the worker’s implied or verbal consent when it comes to mediating salary disputes, shared Ms. Teo.

On the matter, the Minister of State for Manpower, Zaqy Mohamad warned the ministry of the consequences of banning downward revisions of wages as the setup was “originally intended to give foreign workers an opportunity to continue employment in instances where their performance does not meet what is expected.”

However, if salaries cannot be decreased even with mutual consent, foreign workers who do not have the required skill set or those underperforming on the job will have no other choice but to go back home. At present, the setup would allow some foreign workers to take a lower salary which commensurate to their skill level, which some would prefer over being repatriated, shared Mr Zaqy.

In an important decision ruling presided by Justice Lee Seiu Kin last year, the High Court decided that in the absence of any other written document such as a contract, the IPA letters are to be used as basis in determining how much a worker is to be compensated. And in the occasion that a worker receives a monthly salary that is less than the amount stated in the IPA, the burden of explanation would fall on the employer’s shoulders to show why the agreed figure stated in the IPA does not reflect the worker’s actual salary.