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In 2009, over 1,500 local workers filed Employment Act claims against their employers, covering a range of issues such as salary arrears, notice pay, overtime pay, and contractual provisions.
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More than $1.5 million was recovered for these 1,500 workers. While the Labour Court issued orders for payments to be made to 900 workers, 600 reached out-of-court settlements with their ex-employers after the Ministry's intervention. 85% of all workers had an outcome to their claims within two weeks from the first hearing.
Salary Arrears Top Violations under Employment Act
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Salary arrears is the most common Employment Act violation, reported by 78% of the workers.
Case 1: Financial Difficulty is no Excuse for Non-payment of Salary
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Vertex Global Holdings Pte Ltd owed an employee in arrears for about 2.5 months since the employee started work in August 2009. At the Labour Court inquiry, the company's excuse was that it faced cashflow problems due to non- payment from their main contractor. The Labour Court did not accept this explanation and ordered the company to settle the arrears amounting to $2,820. The amount was fully paid up.
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MOM reminds employers that they must take their legal obligation to pay salaries as seriously as other financial commitments. Financial difficulty is no excuse for choosing to pay salaries last.
Poor Human Resource Practices Contribute to Poorly Managed Terminations
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MOM has also observed that a significant number of Labour Court cases (23%) involve situations where the termination of employment was poorly managed.
Case 2: Withholding Notice Salary as "Punishment"
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An employee of Formula 1 Furniche Pte Ltd tendered his notice of resignation, and served out his 4 week notice period. However, the company refused to pay for part of that notice period (for work done from 1 to 23 September 2009), because it claimed the employee had not handed over his work properly.
- The Labour Court found that the 4 week notice period was sufficient for handing over of duties, and if the employer was dissatisfied with the non-performance of the employee, it should have dealt with this specifically, rather than penalise the employee by withholding his salary. The Labour Court ordered the company to pay the worker the full claim of $913.04.
Case 3: Terminating worker's employment, but treating worker as if he was dismissed
- In September 2009, Worldex Pte Ltd terminated the services of a Sales Consultant, as his work performance fell below expectations. Under the contract, 2 weeks' notice was to be given, or salary paid in lieu of notice. Worldex opted for the Sales Consultant to immediately cease work, but refused to pay him salary of $461.50 in lieu of notice. Its reason for doing so was that the Sales Consultant's work performance fell below expectations.
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The Labour Court ruled against Worldex and ordered it to pay the Sales Consultant $713.45 for 3 weeks of unpaid salary. Worldex had not dismissed the employee, but terminated the employment. Hence, notice should be given or salaries in lieu of the notice paid. If it wished to dismiss the Sales Consultant, it should have convened a proper hearing, and determine whether the sales consultant had committed such serious acts of misconduct as to warrant dismissal from the company. Worldex could not claim to be terminating the employment, while at the same time, in refusing to pay the salary, act as if the employee had been dismissed.
Case 4: Employment Act applies even in absence of a written contract
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In this case, a cook employed by VP Food Pte Ltd had his employment terminated after working for three days. The agreed wage was $1,700 per month (or $78.46 per day). He was given $100 for the three days of work, instead of $235.38. He was also not paid salary in lieu of termination.
- The employer claimed that payment was refused because the worker had harassed him over the partial salary payment, thus causing him distress. He also argued that there was no written employment contract. No notice period was specified and thus, no notice pay was payable.
- The Labour Court rejected his explanation. The employer felt distress because he failed to pay the worker his salary. He could not possibly use this reason to justify not paying the salary. The Labour Court also rejected the claim that no notice pay was payable. The Employment Act sets out a minimum notice period of 1 day for employment period less than 26 weeks.
MOM Advisory: Employers have to pay salaries promptly and manage Termination responsibly
- Salary arrears and notice pay claims typically arise when an employment relationship ends. When ending an employment relationship, employers have to ensure that the termination of employment is carried out in a responsible manner. Both employers and employees have to abide by the notice period agreed in the employment contracts or the provisions laid down in the Employment Act, if there is no agreement for notice period on termination.
- Employees' salaries also must be paid promptly at all times even when they are serving termination notice. Employers should also note that poor job performance does not give them the right to deny payment of salaries or notice pay to an employee.
- Ms Jeanette Har, Director of the Labour Relations and Workplaces Division said, "The majority of employers in Singapore are responsible and have good human resource practices. The number of local workers who filed employment claims with the Labour Court has remained stable and despite the downturn, MOM did not see an increase in claims from local workers. In 2009, the Labour Court heard 1,524 employment claim cases from local workers, compared to 1,609 in 2008. The cases highlighted illustrated the common mistakes that some employers make when dealing with salary and termination issues. We urge employers to take note of these errors and put in place measures to ensure that such malpractices do not happen in their workplaces. While the sums involved may not be large, they are important to the individual concerned. It is also not worth employer's while to have a labour dispute over a small and simple matter that could have been resolved with common sense and respect for the law."
- Workers with employment claims and employment issues can approach the Ministry for advice and assistance. They can call the MOM hotline at 6438 5122 or email mom_lrd@mom.gov.sg.