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Written Answer by Mrs Josephine Teo, Minister for Manpower, to Parliamentary Question on downward revision of IPA salaries

Employment practices Foreign manpower

NOTICE PAPER NO. 1236 OF 2018 FOR THE SITTING ON 9 JULY 2018
QUESTION NO. 913 FOR WRITTEN ANSWER

MP: Mr Louis Ng Kok Kwang

To ask the Minister for Manpower in each of the past three years (a) how many employers have informed the Ministry in writing of modifications to the salary terms for a Work Permit holder to less favourable terms than declared and stated in their in-principle approval letter; (b) how many employers have been fined for not having done so; (c) how many notices of salary reduction have been issued to workers; and (d) on what grounds does the Ministry determine whether a salary reduction can be allowed.

Answer

  1. When applying for Work Permits (WPs), employers are required to declare key salary terms, including the basic and fixed monthly salary, offered to prospective Work Permit Holders (WPHs). Since 2011, these terms have been reflected in the In-Principle Approval (IPA) letter, which is available in the WPHs’ native languages, and must be sent by the employer to the worker in his home country prior to the worker’s departure to Singapore. This ensures that the worker is fully aware and accepts the terms of conditions before leaving his home country.
  2. In some cases, employers may discover that the WPH’s performance falls below what is expected, and thus cannot justify paying the agreed salary. Instead of terminating the WPH’s contract, MOM allows employers to revise the salary downwards, provided they have obtained the worker’s written agreement and have notified MOM of the revision. In the past three years, MOM was notified of salary reductions affecting less than 2 percent of non-domestic WPHs per year.
  3. We have taken action against employers who reduced salaries without informing MOM or obtaining the WPH’s written consent. In the first half of 2018, a total of $105,000 in Administrative Financial Penalties were imposed on 17 errant employers.
  4. Notwithstanding these safeguards, we have been monitoring salary disputes involving IPA salary reduction. The proportion of WPH salary claims which involve IPA salary reductions was stable at about 7% over the last 3 years, but increased to about 11% in the second half of last year.
  5. Since February 2018, when mediating salary disputes, the Tripartite Alliance for Dispute Management (TADM) has insisted that employers provide documented evidence that the worker has consented to any salary reduction. TADM no longer allows for arguments from employers that the worker had provided tacit or verbal consent. In addition, MOM is considering the possibility of disallowing downward salary revisions altogether. While this will provide workers with more certainty of their wage for the entire duration of their stay in Singapore, it could also lead to possible early termination of employment even when the worker is willing to accept a lower wage. We will thus consult with relevant stakeholders to determine the best step forward.