MOM to ban cutting wages of foreign workers

The Ministry of Manpower is considering banning employers from lowering wages of foreign workers, said minister Josephine Teo.

This comes after an increase in cases of employers short changing staff salaries without written consent from the worker. MOM has fined a total of $105,000 against 17 errant employers for reducing salaries without informing MOM or obtaining consent from the worker.

When applying for work permits, employers are required to state key salary terms, including the basic and fixed monthly salary, and notify the foreign worker before they leave their home country.

Teo shared that in some cases, employers may discover that the worker’s performance falls below expectations and cannot justify paying the agreed salary.

Instead of terminating the contract, MOM allows employers to revise the salary to a lower amount, provided there is written agreement with the worker and MOM is notified of the change.

MOM and the Tripartite Alliance for Dispute Management (TADM) no longer allows employers to argue salary dispute cases using evidence of verbal consent from the worker. Since February this year, Teo said that when mediating such cases, TADM has insisted on seeing documented evidence of consent for any salary reduction.

Despite these safeguards, MOM continues to receive complaints on salary claims, which is why it is considering banning the procedure completely.

“MOM is considering the possibility of disallowing downward salary revisions altogether,” Teo said.

“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.”

In a Facebook post, minister of state for manpower Zaqy Mohamed said the ministry must “carefully consider the trade-off” of implementing a total ban on the practice of cutting wages.

The current option was “originally intended to give foreign workers an opportunity to continue employment in instances where their performance does not meet what is expected”, said Zaqy. He acknowledged, however, that the practice has been abused.

But if salaries cannot be reduced even with mutual consent, then foreign workers who do not fully meet the skills required for the job would be sent back to their home countries.

Currently, some foreign workers may “prefer to take a lower salary to commensurate with his skill level” instead of being repatriated, he said.

The ministry will consult with relevant stakeholders to determine the best step forward.