Employers Face Suspension for Underpaying Employees
In a recent move, the Ministry of Manpower (MOM) in Singapore has suspended two employers from applying for or renewing work passes. This suspension, resulting from repeated underpayment of retail staff, will remain until the employers rectify the underpayments. Despite multiple engagements from MOM, the employers failed to comply with wage regulations.
Details of the Underpayment
These employers, operating retail shops, underpaid 12 retail employees by approximately $450 per month per person since April 2023. The MOM disclosed this information in a statement on June 6. These cases were identified among 4,100 retail and food services companies inspected from April 2023 to March 2024.
Inspections Follow Progressive Wage Model Implementation
The inspections followed the introduction of the Progressive Wage Model (PWM) for each sector. The PWM, a wage ladder linked to training and productivity improvements, has covered lower-wage retail employees since September 2022. Food services employees have been included since March 2023.
Six-Month Adjustment Period
A six-month adjustment period was given to employers to comply with the new requirements. This period has now ended for all seven sectors and two occupations under the model. In total, the PWM covers 155,000 lower-wage workers.
Compliance and Enforcement
MOM conducted inspections due to the significant number of local full-time workers covered under the PWM in the retail and food services sectors. These sectors employ 87,000 workers. MOM stated, “Most employers inspected are compliant with the PWM requirements. Some were initially unfamiliar with the PWM requirements but rectified the wages after MOM explained the requirements.”
Continuous Enforcement
MOM will continue to enforce PWM compliance through workplace inspections and audits. Employers must provide employment documents for review. The ministry will also collaborate with the labour movement, employers, and public agencies to educate and assist employers in meeting their PWM obligations. This ensures workers receive their rightful wages.
Historical Context and Future Developments
The PWM was first introduced in September 2014 for the cleaning sector. It was extended to security and landscaping sectors in 2016, the lift and escalator maintenance sector in May 2019, and eventually the retail sector. In-house cleaning, security, and landscaping workers have been covered since September 2022.
Wage Requirements for Hiring Foreign Workers
Companies must pay local workers at least a local qualifying salary to hire foreign workers. The current qualifying salary is $1,400 gross monthly for full-time workers and at least $9 per hour for part-time workers. These rates will increase to $1,600 monthly for full-time local workers and $10.50 per hour for part-time local workers starting July 1, 2024.
Expansion to Occupations
In March 2023, progressive wages were extended to administrators and drivers. This marked the first time the model applied to occupations rather than sectors. The waste management sector was the latest to be included under PWM in July 2023.
In Summary
The suspension of work pass privileges for underpaying retail staff highlights MOM’s commitment to enforcing fair wages. As Singapore continues to implement and expand the Progressive Wage Model, businesses must stay compliant to ensure fair treatment of workers.
360 Business Law can assist businesses in navigating Singapore’s employment regulations by providing expert legal advice and ensuring compliance with the Progressive Wage Model (PWM). Our experienced team helps you understand the legal requirements, rectify any underpayment issues, and stay updated with regulatory changes. We offer comprehensive support in managing work pass applications and renewals, ensuring your business operates smoothly and legally within the new framework