Briefing on Changes to Employment of Foreign Manpower Act (EFMA) Background

Transcription

1 Briefing on Changes to Employment of Foreign Manpower Act (EFMA) 26 Sept 2012 Briefing to SBF and SNEF 1 Background In thelast fewyears,mom hasbeentakingmeasured stepsto tighten work pass framework to Moderate the inflow and raise the quality of foreign manpower Enhance productivity Ensure Singaporeans remain at the core of our workforce However, some errant employers bypass work pass framework and hire foreign workers they should not be entitled to Failtopaytruecostsofhiringtheworkers Erode employment opportunities for Singaporeans Gain unfair advantage over law-abiding competitors 2 1

2 Errant Employers Bypassing Work Pass Framework Work Pass Tightening Measures Higher levies Tighter levy tiers Lower dependency ratio ceilings Higher S Pass and EP qualifying salaries Tighter EP qualifying criteria Bypassing Work Pass Framework Recover additional levies from workers Use local phantom workers Illegally employ workers Inflate salaries & pay lower salaries Submit forged educational certificates MOM encountering more complex cases as syndicates devise new methods to counter enforcement approaches 3 Changes to EFMA to Ensure Compliance with Work Pass Framework COMPLEMENT PROSECUTION Summary of EFMA Changes ENHANCE DETERRENCE FACILITATE ENFORCEMENT Establish administrative penalty regime Appoint Commissioners for Foreign Manpower Create new EFMA contraventions Raise penalties Include new presumption clauses Enhance investigatory powers EFMAchangeswillenableMOMto Step up enforcement Enhance deterrence Ensure Singaporeans remain at core of workforce 4 2

3 Changes to EFMA to Ensure Compliance with Work Pass Framework COMPLEMENT PROSECUTION ENHANCE DETERRENCE FACILITATE ENFORCEMENT Establish administrative penalty regime Appoint Commissioners for Foreign Manpower Create new EFMA contraventions Raise penalties Include new presumption clauses Enhance investigatory powers 5 New Administrative Penalty Regime Current EFMA All offences categorisedas criminal offences Enforced via prosecution in the courts Revised EFMA EFMA admin infringements come under administrative penalty regime Commissioners for Foreign Manpower enforce admin infringements Court process is timeintensive Penalties consist of fines and jail terms Administrative action e.g. debarment from hiring foreign workers Admin penalty process will be faster Max administrative financial penalty of $20,000 and no jail term Administrative action e.g. debarment from hiring foreign workers, compliance with Commissioner s directions 6 3

4 Criminal Offences Still Prosecuted in Court Criminal Offences 1. Cause direct harm/abuse to foreign worker 2. Criminal activity outside work pass framework 3. Financial penalties/admin action will not deter infringements Repatriation responsibilities Non-payment of salaries Upkeep and maintenance of foreign workers Offences committed by foreign workers Max fine of $10,000 and/or 12 mthsjail and/or debarment from hiring foreign workers Admin Infringements 1. No direct harm or abuse to workers 2. Not a criminal activity outside work pass framework 3. Financial penalties/ admin action enough to deter, without requiring jail terms Inform Controller of cancellation of Work Permit E-payment of salaries for S Pass Purchase medical insurance, send worker for medical examination, etc Max administrative financial penalty of $10,000 and/or debarment from hiring foreign workers 7 Commissioners for Foreign Manpower Minister will appoint Commissioners for Foreign Manpower to administer administrative penalty regime A new independent Appeal Board will be set up Consists of 3 members, and Chairperson must be qualified to be Judge of the Supreme Court Modeled after existing appeal boards, e.g. Appeal Board under Competition Commission of Singapore 8 4

5 Changes to EFMA to Ensure Compliance with Work Pass Framework COMPLEMENT PROSECUTION ENHANCE DETERRENCE FACILITATE ENFORCEMENT Establish administrative penalty regime Appoint Commissioners for Foreign Manpower Create new EFMA contraventions Raise penalties Include new presumption clauses Enhance investigatory powers 9 Create New EFMA Contraventions No change to key employer responsibilities Currently, some serious breaches of the work pass regime and offences that cause harm and abuse to workers are enforced under broader EFMA offences such as Contravention of Work Pass conditions False declaration of information to Controller or employment inspector MOM will create new stand-alone contraventions in Main Act Raise signature Increase penalties 10 5

6 1. Illegal Labour Importation of Foreign Labour Syndicates circumvent immigration laws on employing illegal immigrants Set up shell companies and recruit foreign workers on legal work passes, without providing employment or upkeep and maintenance Workers incur debts to come to Singapore, but are forced to seek illegal employment on their own Syndicates profit by exploiting work pass regime and impose costs on society MOM will create illegal labourimportation of foreign labouras a new criminal offence and impose penalties pegged to Immigration Act offence of employing illegal immigrants Maximum fine of $6,000, minimum jail term of 6 months, up to 2 years Caning for shell company employers of more than 5 foreign workers Submission of Forged Certificates Entry criteria for S Pass and Employment Pass holders includes relevant educational qualifications Some foreign workers circumvent work pass entry criteria Submit forged educational certificates Feign ignorance of these educational certificates MOM will create submission of forged certificates as a new criminal offence, and increase penalties to enhance deterrence Maximum $20,000 fine and/or 2 years jail Errant employers or employment agencies that submit forged certificates on behalf of workers can be charged with abetment 12 6

7 3. Use of Phantom Local Workers Some errant employers circumvent dependency ratio ceilings by using phantom local workers and securing higher quota for Work Permit and S Pass holders Other errant employers hire phantom workers to reduce their foreign worker levy bills MOM will create the use of phantom local workers to inflate foreign worker quota as a new administrative infringement Maximum $20,000 administrative financial penalty, coupled with administrative action, e.g. debarment from hiring foreign workers Phantom workers linked to shell company syndicates will be prosecuted under illegal labour importation offence Receipt of Employment Kickbacks Foreign workers pay fees to middlemen ranging from $2,000 to S$10,000 per worker to secure jobs in Singapore, including kickbacks to errant employers Severely disadvantage locals who try to get the same jobs Subject foreign workers to heavy debts MOM will create receipt of employment kickbacks as a new criminal offence, and increase penalties to enhance deterrence Maximum $30,000 fine and/or 2 years jail 14 7

8 5. Recovery of Employment Costs To lower their costs, errant employers resort to illegally recovering employment costs from foreign workers E.g. foreign worker levies, security deposits, insurance etc. MOM will create recovery of employment costs as new administrative infringement and enforce under administrative penalty regime E.g. FW levies, security deposit, medical insurance premiums, etc. Maximum $20,000 administrative financial penalty, coupled with administrative action, e.g. debarment from hiring foreign workers Commissioners for Foreign Manpower can direct employers to compensate affected workers Failure to comply with Commissioners directions will be subject to prosecution - max $10,000 fine, and/or 12 months jail 15 Changes to Work Pass Conditions No changes to key employer responsibilities But, work pass conditions within Employment of Foreign Manpower Regulations will be updated with more explicit requirements, to provide greater clarity on employers responsibilities 16 8

9 1. Salary Fraud involving S Pass / Employment Pass Errant employers fail to comply with S Pass and Employment Pass (EP) fixed monthly salary criteria after obtaining work pass Reduce fixed monthly salaries during employment, without informing Controller of Work Passes Create new work pass regulatory condition: Employers that wish to reduce fixed monthly salary of S Pass and Employment Pass holders will be required to submit a request to Controller of Work Passes for re-assessment of work pass eligibility Failure to comply will be subject to maximum administrative financial penalty of $10,000 * MOM will consider waiving this requirement during downturns 17 1a. Update Definition of Fixed Monthly Salary Fixed monthly salary is the main proxy of a foreign employee s economic contribution Some employers not familiar with what salary components can be included Update definition of fixed monthly salary to clarify it consists of only basic monthly salary and fixed monthly allowances The allowances are considered fixed if: Payable amount does not vary from month to month E.g. Payable regardless of employee/company performance, or whether employee takes medical or personal leave Examples of fixed allowances are: Food/Housing/Transport Skills (e.g. For language proficiency, or technical certification) But cannotinclude variable payments such as bonus, overtime or commission 18 9

10 1a. Illustration of Fixed Monthly Salary Basic Salary Fixed Monthly Allowances Variable Allowances Bonus/Annual Wage Supplement Commissions Overtime Pay Reimbursements Gratuity/Retirement/Retrenchment Benefits Contributions by Employer to Pension/Provident Funds Can be counted in Fixed Monthly Salary? Pre- and Post-Employment Conditions Currently, Minister may prescribe work pass conditions that generally apply during the validity of the work pass MOM is proposing to amend Employment of Foreign Manpower Regulations to allow for Minister to impose pre-and post-employment conditions 20 10

11 2(a) Pre-Employment Conditions MOM reviewed In-Principle Approval (IPA) letters for non-domestic Work Permit holders Translated into native languages Ensure workers are kept informed of employment terms and discouraged from paying excessive fees for consideration for employment, based on false or inflated salaries, prior to departure However, errant employers and employment agencies deliberately send English translations of IPA letters or send only parts of IPA letters without employment terms MOM will impose a new pre-employment regulatory condition to explicitly require employers to ensure entire IPA letter in native language, where available, is sent to worker prior to departure Failure to comply will be subject to maximum administrative financial penalty of $10,000 Errant employment agencies will also be taken to task 21 2(b) Post-Employment Conditions Employers are responsible for upkeep and maintenance of workers during their stay in Singapore However, some errant employers fail to provide upkeep for workers awaiting resolution of statutory claims e.g. salary arrears, work injury compensation MOM will impose a new post-employment condition to explicitly require employers to upkeep and maintain workers awaiting resolution of statutory claims Failure to comply will be subject to maximum fine of $10,000 and/or 12 months jail Complements security bond regime 22 11

12 Changes to EFMA to Ensure Compliance with Work Pass Framework COMPLEMENT PROSECUTION ENHANCE DETERRENCE FACILITATE ENFORCEMENT Establish administrative penalty regime Appoint Commissioners for Foreign Manpower Create new EFMA contraventions Raise penalties Include new presumption clauses Enhance investigatory powers 23 No 1 Examples of Increases to EFMA Penalties EFMA Offence S5(1) Illegal employment Current Penalties Max $15,000 fine and/or 12 mthsjail Levy recovery for period of illegal employment Repeat offender (individual) Max $15,000 fine and min 1 mth jail, max 12 mths jail Revised Penalties Min $5,000 fine, up to $30,000 and/or max 12 mths jail Replace levy recovery with min fines Repeat offender (individual) Min $10,000 fine, max $30,000 and min 1 mth jail, max 12 mths jail Repeat offender (company) Repeat offender (company) Max $30,000 fine Min $20,000 fine, up to $60,

13 Examples of Increases to EFMA Penalties No EFMA Contraventions Current Penalties Revised Penalties 2 S5(3) Employment of foreign worker not in accordance with work pass conditions Max $5,000 fine Max $10,000 fine 3 4 S9(1) Failure to terminate employment upon receiving Controller s notification S22(1)(a) Breach of Work Pass conditions [Criminal offence] Max $5,000 fine Max $5,000 fine and/or 6 mthsjail Max $10,000 AFP Max $10,000 fine and/or 12 mths jail 5 S22(1)(c ) Obstruction of employment inspector Max $5,000 fine and/or 6 mthsjail Max $10,000 fine and/or 12 mths jail 25 Examples of Increases to EFMA Penalties No EFMA Contraventions Current Penalties Revised Penalties 6 22(1)(d) False declaration Max $15,000 fine and/or 12 mths jail Max $20,000 fine and/or 24 mthsjail 7 S22(1)(e) -Sells, forges or unlawfully alters work pass or inprinciple approval Max $15,000 fine and/or 12 mths jail Max $20,000 fine and/or 24 mthsjail 8 S25(2) Contravention of Work Pass regulatory conditions [Admin Infringement] - Max $10,000 AFP 26 13

14 Changes to EFMA to Ensure Compliance with Work Pass Framework COMPLEMENT PROSECUTION ENHANCE DETERRENCE FACILITATE ENFORCEMENT Establish administrative penalty regime Appoint Commissioners for Foreign Manpower Create new EFMA contraventions Raise penalties Include new presumption clauses Enhance investigatory powers 27 Rebuttable Presumption Clause Employment Kickbacks Workers pay up to S$10,000 to secure jobs, including paying kickbacks to employers Severely disadvantage locals in getting jobs in favourof foreign workers Subject foreign workers to debt servitude Payments usually made in cash, no paper trail, severely constrains MOM s enforcement efforts MOM will presume that any monies collected from foreign workers are collected as consideration for employment, i.e. employment kickbacks Presumption can be rebutted, on balance of probabilities, if the purpose of collection can be accounted for E.g. Legitimate salary deductions 28 14

15 Rebuttable Presumption Clause Corporate Persons Offences such as failure to pay salaries are usually committed under close purview of corporate officers Corporate officers often deny knowledge of EFMA contraventions even though it falls under his direct purview E.g. Claiming ignorance of failure to pay salaries even when the officer oversees salary payments To ensure effective enforcement, MOM will presume that corporate officers who are primarily responsible and fail to exercise reasonable supervision, have knowledge of contravention Corporate officers can rebut the presumption, on balance of probabilities, by proving that they have exercised reasonable supervision to avoid commission of EFMA contravention E.g. Put in place procedures to ensure prompt salary payments 29 Rebuttable Presumption Clause Submission of Forged Certificates Foreign workers have submitted forged educational certificates and feigned ignorance of submission To ensure effective enforcement, MOM will presume that foreign worker knew that educational qualification provided in his own work pass application was false MOM will take extra measures to identify workers that are not culpable and take enforcement action on culpable party instead, e.g. the errant employer or employment agency Administrative measures for worker to verify his certificate when processing his work pass card Worker can rebut presumption, on balance of probabilities, by proving he had no knowledge of submission of forged qualifications o E.g. Employment agency submitted on his behalf without his knowledge 30 15

16 Changes to EFMA to Ensure Compliance with Work Pass Framework COMPLEMENT PROSECUTION ENHANCE DETERRENCE FACILITATE ENFORCEMENT Establish administrative penalty regime Appoint Commissioners for Foreign Manpower Create new EFMA contraventions Raise penalties Include new presumption clauses Enhance investigatory powers 31 Enhanced Investigatory Powers No Enhanced Powers Details Power to enter & inspect business premises where work pass applications are made, or place of work or accommodation of foreign worker, to conduct audits, at any reasonable time Power to enter & search premise by force, if there is reasonable belief of EFMA breaches Power to take video and voice recordings during investigations and use recordings as evidence in court Employers to produce all employees to best of employers abilities, to assist in investigations Facilitate upstream audits to assess authenticity of work pass applications and weed out shell companies Facilitate arrest of resistant suspects and gather physical evidence Facilitate enforcement in cases where employers fabricate facts or claimed they were coerced into confession Extend existing power to request employers to produce foreign workers, to locals, as latter are essential for phantom worker cases 32 16

17 Enhanced Investigatory Powers Employers and other stakeholders requested that MOM minimisedisruptions caused to businesses during investigations Ensure proper training of Commissioners for Foreign Manpower and employment inspectors Commissioners for Foreign Manpower and employment inspectors will exercise their expanded investigatory powers judiciously and not cause unnecessary disruption to businesses All Commissioners for Foreign Manpower and employment inspectors will be properly trained and inspection operations will require prior authorisation 33 In summary, EFMA changes will Remove an impediment to sustainable and inclusive growth by Ensuring employers pay for true costs of hiring foreign workers Creating level playing field for law-abiding employers Ensuring Singaporeans remain at core of the workforce Stemming worst abuses against foreign workers We will do so by: Imposing administrative financial penalties to disgorge illegal profits gained from exploiting the work pass framework Stepping up enforcement action more expeditiously and effectively Enhancing deterrence against EFMA contraventions 34 17

18 Timeline for Changes to EFMA EFMA changes will be implemented this year For more details on EFMA changes, please visit (click on Foreign Manpower > Amendments to the EFMA) Phase 2 EFMA Changes -further review to ensure fair balance of rights and responsibilities between employers and workers Studying issues such as mandating electronic payments for work pass holders and written itemised pay slips, etc MOM will be conducting stakeholder consultations Concurrently reviewing Employment Act, consultations later 35 Q&A 36 18

19 Thank you 37 19