28 November, 2017
Introduction
Under Singapore law, there is a prohibition against providing false information in a work pass application. Employers would therefore need to be aware of their obligation to ensure that all information given in any work pass application is factually accurate. There is, however, a need to be particularly mindful when it comes to stating the employee's fixed monthly salary1 in the work pass application and the potential implications of doing so.
Committing to paying the fixed monthly salary that is stated in the work pass applications
Currently, under the Employment of Foreign Manpower (Work Passes) Regulations, employers are subject to the following obligations in declaring and paying the fixed monthly salary1 of their foreign employees:
- Work Permit Holders: Employers should pay the foreign employee the amount declared as the fixed monthly salary in the work pass application unless (i) this amount had been reduced with the foreign employee's written agreement and (ii) the proposed salary reduction had been notified to the Controller of Work Passes (the Controller) in writing;
- S-Pass and Employment Pass Holders: Employers who intend to reduce the fixed monthly salary of the foreign employee below what was declared in the work pass application must obtain prior approval from the Controller. Note that the Controller may determine that the proposed salary reduction will result in the employee ceasing to be eligible for an S-Pass or Employment Pass (as applicable) and require the employer to obtain a different work pass for the employee before the salary reduction can be implemented.
In a recent Singapore High Court decision, Liu Huaixi v Haniffa Pte Ltd [2017] SGHC 270 ("Liu Huaixi v Haniffa"), the court went one step further to hold that an employee's fixed monthly salary as stated in the in-principle approval (the "IPA") letter received from the Ministry of Manpower (which reflects the salary amount submitted in the work pass application) would constitute prima facie evidence of the employee's basic monthly salary.2
In the event of a dispute, it would then be up to the employer to demonstrate why the actual monthly salary is a different (typically, lower) figure. Showing that there is a written employment contract stipulating a lower salary figure would not be sufficient for displacing the prima facie position established by the IPA letter. Even if there was such an employment contract, the burden would lie on the employer to establish why the IPA figure does not reflect the true salary. Note that short of admitting that the employer had provided false information in the work pass application (and thereby attracting various consequences including possible criminal penalties), it would be extremely difficult for the employer to justify the IPA figure being inconsistent with the actual salary of the employee. The court in Liu Huaixi v Haniffa raised a hypothetical example of the employer adducing evidence to prove that the sum stated in the IPA letter was different from the amount declared by the employer in the work pass application due to an error made in the IPA letter by the Ministry of Manpower.
In Liu Huaixi v Haniffa, the employer had failed to displace the prima facie position that the employee's fixed monthly salary was as stated in the IPA letter and was therefore bound by this figure.3
Conclusion
Going forward, employers should be extremely careful when declaring the fixed monthly salary that will be paid to their foreign employees and should avoid the temptation to inflate salary figures for the sake of increasing the likelihood of obtaining work pass approvals.
Before submitting any salary figures in a work pass application, the employer should confirm with absolute certainty that the salary figure is accurate and consistent with what will be paid to the employee.
Before making any downward revisions to a foreign employee's salary, the employer should also be aware of the regulatory steps that it will be required to comply with before it can implement the downward revision as well as the potential consequences of implementing such a revision.
1"Fixed monthly salary" refers to the total of an employee's (i) basic monthly salary and (ii) fixed monthly allowances.
2See Liu Huaixi v Haniffa Pte Ltd [2017] SGHC 270 at [33].
3See Liu Huaixi v Haniffa Pte Ltd [2017] SGHC 270 at [34].
For further information, please contact:
Celeste Ang, Baker & McKenzie.Wong & Leow
celeste.ang@bakermckenzie.com