The Second Reading Speech for Employment of Foreign Manpower (Amendment) Bill by Mr Tan Chuan-Jin, Acting Minister for Manpower and Senior Minister of State for National Development, 11 September 2012, 3:00 PM, Parliament

Background

1. Sir, the Employment of Foreign Manpower Act (EFMA) prescribes the responsibilities and obligations pertaining to the employment of foreign workers and we last amended the EFMA in 2007.
2. In the last few years, my Ministry has taken steps to moderate the inflow and raise the quality of foreign manpower in Singapore. We want to shift from a labour-driven to a productivity-driven growth model. Our intent is to ensure that we support decent and sustainable economic growth that will create good jobs and wages for Singaporeans, and to ensure that our Singaporeans remain at the core of our workforce. The adjustments we have made to our employment framework and regulations are aimed at supporting this intent.
3. Employers in Singapore are by and large responsible, but there are those who seek to profit by circumventing our work pass framework. As we further tighten the policies on the hiring and retention of foreign manpower, we can expect errant employers to try harder to get around the rules. This is where we are not lacking in creativity. For example, we have found some declaring higher salaries than they are actually paying their foreign workers, asking foreign workers to foot their own levies and insurance premiums, or contributing CPF to locals that do not really exist or are not actively in their employment in order to meet the required ratio of local to foreign workers, and submitting forged certificates to qualify for skilled work passes.
4. Singaporeans ultimately suffer when employers fail to pay the true costs of hiring foreign manpower or hiring foreign manpower that they are not entitled to. Local workers will lose out on employment opportunities. Honest employers who play by the rules are also unfairly disadvantaged. Besides errant employers, syndicates also profit from setting up sham operations to illegally import and supply foreign workers who otherwise should not be here. Syndicates have devised increasingly complex schemes to get round our enforcement approaches. Such operations exploit foreign workers, and they cost our locals employment opportunities and cost us resources to assist stranded workers.
5. Sir, the proposed amendments to the Employment of Foreign Manpower Act will enhance the government’s ability to ensure the integrity of our work pass framework. Recognising that EFMA contraventions range widely from administrative infringements to criminal offences, these amendments will introduce a calibrated and appropriate response to different types of contraventions. In totality, the changes will allow my Ministry to step up enforcement actions against errant employers, errant foreign workers and syndicates more expeditiously and more effectively, and thereby enhancing deterrence against EFMA contraventions, which ultimately hurt Singaporeans.
6. We have made the amendments along three broad thrusts. Firstly, MOM will establish an administrative penalty regime to enforce administrative infringements to complement our prosecution efforts. We will impose significant administrative financial penalties and administrative actions, such as debarment from applying for and renewing work passes. The purpose is to deter employers from exploiting the work pass framework for financial gain. Secondly, to enhance deterrence, MOM will introduce new EFMA contraventions and increase penalties commensurate with potential profits gained from the abuse of the system. Third, to facilitate enforcement against common contraventions and syndicate operations of increasing complexity, MOM will include new presumption clauses and expand our investigatory powers.
   
   Establish administrative penalty regime to complement criminal prosecution
   
7. So let me first start with the first set of amendments.
   
   Classification of criminal offences and administrative infringements
   
8. All EFMA contraventions are currently classified as criminal offences. These range from breaches which are really often administrative in nature - for instance, the failure to pay S Pass holders via GIRO, to the more egregious and clearly criminal offences which harm workers, such as non-payment of salaries and the collection of employment kickbacks. At present, this criminal process can be lengthy and consume prosecutorial and court resources. So therefore we need to take swifter action against administrative infringements rather than going down the criminal offence route, and ensure that penalties are more severe and at the same time commensurate with the impact of the contravention. Employers who are trying to profit by getting round our work pass rules must be made to disgorge their ill-gotten gains through imposing sufficiently high financial penalties and debarring them from applying for and renewing foreign work passes. This would be more effective than prosecuting them in court via the criminal route.
9. We have therefore strengthened the process by differentiating EFMA administrative infringements from criminal offences. This is not a weakening of the process, rather it is about making it more effective. Some existing EFMA offences will be newly classified as administrative infringements under the new administrative penalty regime. Let me describe some examples of these in detail later.
10. We used three principles to determine which infringements to classify as administrative infringements and which to regard as criminal offences. First, administrative infringements do not cause direct harm or abuse to workers. Where workers are harmed or abused, it is still important to retain the possibility of custodial sentencing. Second, these infringements would not have been regarded as criminal activities outside the work pass framework. Third, administrative infringements are those for which administrative financial penalties and administrative actions such as debarment from application of work passes would be effective in deterring errant behaviour. So given that administrative financial penalties have limited effect on the majority of foreign workers, my Ministry will retain all contraventions committed by foreign workers as criminal offences.
    
    Authorise Commissioners for Foreign Manpower to administer administrative penalty regime
    
11. Commissioners for Foreign Manpower will be appointed and authorised to administer the new administrative penalty regime. The Controller of Work Passes can now delegate his powers to authorised officers to administer the regime, under the new section 3(3). These Commissioners will be empowered to impose administrative financial penalties, capped at a maximum of $20,000 per infringement, debar employers from applying and renewing work passes, and give directions to comply. Such directions include orders to rectify breaches, impose performance bonds to ensure compliance with rules and regulations, and direct that compensation be paid by the employer to make good any sums due to an employee.
12. With the establishment of the administrative penalty regime, a new section 25 has been introduced in the Bill. MOM can now prosecute infringers that fail to comply with the Commissioners’ directions, subject to a maximum fine of $10,000, or to a maximum imprisonment term of 12 months, or to both. Unpaid administrative financial penalties will be recovered by the government as civil debts. The Commissioners will now have inquiry powers and allow infringers to submit written representations in response to the Commissioners’ findings. The inquiry process will be directed by the Commissioners and any hearing that may be convened by the Commissioners will be informal in nature, without the presence of legal counsel, to keep the proceedings expeditious and lower costs.
    
    Establish independent Appeal Board
    
13. The Minister for Manpower will be given the power to establish an independent Appeal Board to assess appeals against decisions made by the Commissioners for Foreign Manpower. The Appeal Board will consist of three members. The Chairperson would be someone who is qualified to be a Judge of the Supreme Court and the Appeal Board’s decision is final.
14. Sir, let me emphasise that this move to classify certain infringements as administrative in nature by no means represents a softening in our enforcement approach. Rather, these amendments will allow us to step up enforcement and increase our enforcement effectiveness. We expect the Commissioners for Foreign Manpower to take faster action against infringements. The maximum administrative financial penalty of $20,000 per infringement will be sufficiently high to disgorge illegal economic profits from employers. Together, these moves should allow the government to achieve wider deterrence against errant employers and thereby protect the majority of employers who are fair and responsible employers.
15. Some administrative infringements are also related to criminal offences that preserve the possibility of harsher sentencing for employers who harm or abuse workers. For example, while failing to purchase medical insurance for Work Permit holders is an administrative infringement subject to a maximum administrative financial penalty of $10,000, the failure to bear the costs of upkeep and maintenance of Work Permit holders, including medical treatment, is an offence subject to a maximum fine of $10,000, or to a maximum imprisonment term of 12 months’, or to both. So this approach will allow the government to calibrate its response depending on whether the employer was simply trying to save costs, or whether he was, in any way, neglecting his employment obligations to the foreign worker.
    
    Enhance deterrence against EFMA contraventions
    
    Include explicit provisions for key EFMA contraventions
    
16. I will now move on to the next set of proposed amendments.
17. We intend to raise the signature and better define the elements of serious contraventions. MOM will establish five key stand-alone contraventions, and raise their penalties.
18. First, we will now prosecute syndicates that set up shell businesses and illegally import and supply foreign workers.¹ These syndicates circumvent our immigration laws on employing illegal immigrants. They recruit foreign workers ostensibly on legal work passes, but do not provide actual employment, upkeep and maintenance. Instead, these workers are forced to seek illegal employment on their own. Syndicates have also evolved from setting up pure shell businesses to setting up partial-sham businesses that may employ a few local workers for genuine business operations, while on the side recruiting foreign workers on false promises of employment and supplying them out illegally. MOM will adopt the same penalties for employing illegal immigrants under the Immigration Act and impose them on offenders who illegally import and supply foreign workers. This will include a fine of up to $6,000, a minimum imprisonment term of 6 months, up to 2 years, and mandatory caning for offenders that hire more than 5 foreign workers. Further, the court will confiscate the illegal profits collected from supplying and importing foreign workers. In determining the sum to be confiscated, the court may also separately order compensation to any workers who have suffered harm as a result of the employer having brought them into the country without providing them with proper employment.
19. Second, we will prosecute foreign workers that submit forged educational qualifications to circumvent MOM’s criteria for educational qualifications especially for S Pass and Employment Pass holders.² Offenders will be subject to a maximum fine of $20,000, or to a maximum imprisonment term of 2 years, or to both. Foreign workers have also been known to submit forged educational qualifications and subsequently feign ignorance of the submission, which hampers our enforcement efforts in proving that they had knowledge of the falsehood. Hence we will now presume that a work pass applicant has knowledge of the information provided in his application, including that of the qualifications which have been submitted.³ The burden of proof will now be placed on the errant workers. My Ministry will ensure that enforcement action is targeted at culpable workers. An innocent worker can rebut the presumption by proving that he did not have knowledge of the submission of false qualifications when the declaration was made. For instance, he can prove that the employment agency or employer had submitted the forged certificate on his behalf without his knowledge. And this happens. My Ministry will take action against other culpable parties such as errant employers and employment agents if they have abetted such acts.
20. Third, we will prosecute persons, including employers, supervisors, HR staff, and sub-contractors, that collect monies as consideration for employment from foreign workers. We usually refer to such monies as “employment kickbacks”, which workers are made to pay based on promises of employment. The collection of employment kickbacks increases the foreign workers’ debt burden while disadvantaging Singaporeans in favour of foreign labour. Offenders will be subject to a maximum fine of $30,000, or to a maximum imprisonment term of 2 years, or to both.⁴ The court will confiscate the employment kickbacks collected from foreign workers and return the monies to the State. This is separate from the court’s power to award compensation to workers who have suffered harm from the demand or receipt of kickbacks.
21. We will also introduce a presumption clause to make it easier to enforce against employers who demand employment kickbacks from workers. Currently, employers’ illegal collection of payments from foreign workers is usually made in cash, there’s no paper trail to speak of, and this severely constrains enforcement efforts. We will presume that any monies collected from foreign workers will be deemed as employment kickbacks, unless the purposes for which they were collected can be properly accounted for. The accused can rebut the presumption by showing that they had legitimate reasons for collecting monies from their workers.
22. Fourth, My Ministry will impose a maximum administrative financial penalty of $20,000 on errant employers that illegally recover employment costs from foreign workers.⁵ Under our work pass conditions, employers should be bearing costs such as foreign worker levies, security deposits, medical insurance premiums, etc. Instead, some employers, the errant ones, fail to bear the true costs of hiring foreign workers by recovering these costs from their workers. The Commissioners for Foreign Manpower will be allowed to impose administrative financial penalties on such errant employers to disgorge illegal profits, debar them from applying for and renewing work passes for foreign workers, and impose directions on employers to compensate foreign workers for the recovery of employment costs.
23. Fifth, the government can impose a maximum administrative financial penalty of $20,000 on errant employers that pay CPF to local ‘phantom workers’ to inflate their foreign worker quota, in order to have access to more foreign workers,⁶ which they should not have access to in the first place. The Commissioners for Foreign Manpower will also be allowed to debar employers, and impose directions on employers to mitigate his wrongdoings and prevent recurrence. Although this new contravention attracts administrative penalties, persons who set up shell or partial-sham businesses using local phantom workers to bring foreign workers into Singapore and release them to find their own employment will continue to be dealt with in court. They will be prosecuted under the new illegal labour importation offence, which, as highlighted earlier, carries severe penalties that may include jail time and caning.
24. Although there are essentially no changes to key employer responsibilities, the five standalone contraventions, enhanced penalties and two accompanying presumption clauses will enable us to step up enforcement against errant employers and syndicates and to look after Singaporeans at the same time and to protect the majority of employers who are law-abiding.
    
    Increase penalties
    
25. To further enhance deterrence, we will increase maximum penalties for EFMA contraventions. The penalties have been benchmarked against contraventions of similar nature in the Immigration Act and the Penal Code. They have also been calibrated to ensure that more egregious offences attract higher penalties. Severe offences, such as illegal employment of foreign workers, will be subject to harsh penalties including a minimum fine of $5,000, up to a maximum fine of $30,000, and/or a maximum imprisonment term of 12 months, for first-time offenders. This will also allow the courts to take into account any costs avoided by the employer, including medical and work injury compensation insurance premiums, security deposits and levy payments. Administrative infringements such as the failure to terminate the employment of a foreign worker after receiving notification of the Controller’s revocation of the worker’s work pass, will be subject to a $10,000 administrative financial penalty.⁷
    
    Debarment of associated persons
    
26. I earlier mentioned that errant employers can be debarred from applying for and renewing work passes. However, creativity kicks in again, and to circumvent MOM’s debarment, errant employers have resorted to applying for work passes using the names of other persons that are not debarred, as they continue to run the business behind the scenes. Errant employers also get their associates to set up what appear to be new businesses, and transfer their existing businesses, including their workers, business contracts, and business premises to these associates. They just need to change their signboards. To prevent errant employers from deploying such tactics, the Controller, in the exercise of his discretion, may now debar persons who have acted in concert with or on the direction of a debarred person, or debar associates of debarred persons, who are engaged in a trade or business which is substantially similar to that of the debarred person.
    
    Update Employment of Foreign Manpower Regulations with more explicit requirements
    
27. Aside from the key contraventions, the work pass conditions within the Employment of Foreign Manpower Regulations will be updated with more explicit requirements, to provide greater clarity on employers’ responsibilities. Contraventions of the work pass conditions will likewise be classified as administrative infringements or criminal offences.
28. Currently, the Minister may prescribe conditions that apply during the validity of the work pass. These conditions prescribe in detail the duties pertaining to all aspects of the foreign employee’s entry, work, stay and conduct while employed in Singapore, as well as his departure upon the cessation of employment. To broaden the scope of employers’ responsibilities where necessary, section 29 has been amended to allow the Minister to impose pre- and post-employment conditions under the EFM (Work Passes) Regulations. An example of a pre-employment condition is the requirement for employers to ensure that the entire In-Principle Approval letter in native language is sent to foreign workers prior to their departure, to keep them informed of their actual employment terms and to reduce their reliance on unscrupulous middlemen. An example of a post-employment condition is the requirement for employers to provide upkeep for foreign workers awaiting resolution of statutory claims in Singapore, including claims under the Employment Act and Work Injury Compensation Act.
29. Sir, it is critical that employers are able to meet the criteria for hiring S Pass and Employment Pass holders not only when they apply for the pass but throughout the validity of their work passes. At present, there are no explicit restrictions on the reduction of salary after an S Pass or Employment Pass holder has secured a work pass here. An errant employer could circumvent the salary criteria of our S and Employment Passes by declaring high salaries to secure the work passes and sharply reduce the salaries after the passes have been issued. To close this loophole, we will require all employers who wish to reduce the salaries of his S Pass and Employment Pass holders to submit a request for a re-assessment of their work pass eligibility. This will not prevent employers from reducing the salaries of their foreign workers for legitimate reasons. But all they have to do now is to submit the lower salaries for re-assessment of their eligibility of a work pass. If they are not eligible for their current work passes, the employer may consider downgrading to another work pass type that carries more restrictions, or try harder to recruit a Singaporean. This new requirement will be elaborated in the EFM Regulations.⁸ This requirement will make it harder for errant employers to abuse the work pass framework, and help protect job and wage growth opportunities for Singaporeans. The failure to comply with this regulatory condition will be subject to a maximum administrative financial penalty of $10,000. The Controller of Work Passes may consider waiving this requirement, for example in a general economic downturn where salary reductions may have to be made across the board to help businesses stay afloat.
    
    Facilitate enforcement of EFMA contraventions
    
30. Sir, I will now move on to the last set of proposed amendments. As I mentioned earlier, we have been encountering increasingly complex cases as syndicates devise new modus operandi to thwart enforcement efforts. Hence, we will make amendments to the EFMA that will allow us to take adequate enforcement action against errant employers and undermine syndicated operations.
    
    Include rebuttable presumption clause for corporate persons
    
31. Now, offences such as the failure to pay salaries are usually committed within the purview of corporate officers. However, errant corporate officers often, and almost always, deny knowledge of such contraventions, for example, when an officer overseeing salary payments claims ignorance that salaries were not paid. We will now presume that a corporate officer who is primarily responsible and has failed to exercise reasonable supervision, has acted in neglect and is liable for the respective criminal offence or administrative infringement. The corporate officer can rebut the presumption by proving that he had exercised reasonable supervision to avoid the commission of the contravention, for example, if he had taken all necessary steps to ensure prompt salary payment and safeguard against lapses.
    
    Expand range of investigatory powers
    
32. MOM will have enhanced investigatory powers.⁹ This includes the power to enter and inspect a premise where any work pass application has been made, where a foreign employee is working or accommodated, or any business premises belonging to the employer, at any reasonable time. This will allow MOM to assess the authenticity of the work pass applications, the existence of business operations and to weed out shell businesses during upstream audits. In addition, MOM will be allowed to search a premise by force, if there is reasonable belief of a breach of the EFMA or when a foreigner can be found within the premise. MOM will also have the power to take video and voice recordings during investigations and use the recordings as evidence in Court. Finally, employers may also be asked to produce all employees, both local and foreign, to the best of their ability to assist in investigations. The enhanced range of investigatory powers is largely based on similar powers granted to MOM under the Employment Agencies Act and Workplace Safety and Health Act. So in many senses, this is not new. Employers can be assured that only trained MOM officers are allowed to carry out such operations, as they also do under the other acts. They will exercise these enhanced powers judiciously, only when circumstances require such recourse and taking care to minimize disruptions to genuine business operations.
    
    Conclusion
    
33. Sir, the proposals in this amendment Bill have been refined after consultation with the public, key stakeholders such as employers and non-governmental organisations. Where good suggestions, and there have been many, were raised, we have taken them on board and amended our proposals. Where we have not been able to do so, we have responded comprehensively and transparently as we can with our rationale in our response paper published on REACH. At this juncture, I would like to thank everyone who has really taken their time to give us these very constructive views.
34. The amendments will be effected by the end of this year. We are also committed to ensuring the well-being of workers as well as an equitable balance of rights and responsibilities between employers and workers. Therefore, even as we debate the amendment to the Bill today, we are concurrently undertaking a separate review of this same Act, with a view to rationalise and clarify the employment responsibilities of employers, foreign workers and foreign domestic workers. Just as we have done this round, we will engage stakeholders on the proposed changes. And as mentioned before, we are also going to undertake a review of the Employment Act.
35. Sir, as mentioned, this Bill is meant to go after errant employers, and most of the employers are fair and responsible. It ultimately bolsters our efforts in creating sustainable and inclusive growth in Singapore and ensuring Singaporeans remain at the core of our workforce. It will do so by ensuring employers pay the true costs of hiring foreign workers and creating a level playing field for law-abiding employers. This Bill also seeks to stem the worst abuses against foreign workers. This is in keeping with our values as a society, that we believe all our workers should be treated fairly, decently and with respect regardless of their nationality. Let me close by saying this Bill is about ensuring that Singaporeans remain at the core of our workforce. And this Bill is about the kind of people and society we want to be.

¹ Section 22B – illegal labour importation offence
² Section 22(3) – submission of forged educational qualifications offence
³ Section 15 – presumption clause for work pass applicants
⁴ Section 22A – Collection of employment kickbacks offence
⁵ Section 25(4) – Illegal recovery of employment costs
⁶ Section 25(1) – Contribution of CPF to local employees that are not genuinely employed, resulting in inflation of foreign worker quota
⁷ Section 9(1) - Failure to terminate the employment of a foreign worker after receiving notification of the Controller’s revocation of the worker’s work pass
⁸ Employment Passes consist of the Q1, P2 and P1 passes. The public headline minimum salary threshold amounts are $2,000 for S Pass, $3,000 for Q1 EP, $4,500 for P2 EP and $8,000 for P1 EP. Internal salary thresholds for individual S Pass and EP holders may be higher than the public thresholds as they differ according to the age and educational qualifications of each employee.
⁹ Section 16 – Investigatory powers of authorised officers and employment inspectors