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Singapore – Ministry Of Manpower Curbs An Employer’s Work Pass Privileges: The Dawn Of A New Era In Employment Practices?

7 January, 2015

 

Legal News & Analysis – Asia Pacific – Singapore – Labour & Employment

 

Introduction


Recently, the Ministry of Manpower (“MOM“) announced that it has curtailed the work pass privileges of Prime Gold International Pte Ltd (“PGI“) for unfairly retrenching Singaporeans and hiring new foreign workers to replace them. This sanction would mean that for 2 years, PGI will be unable to apply for new work passes to employ additional foreign workers.
This case is notable as this is the first time that such a sanction has been imposed by the MOM for engaging in discriminatory employment practices in breach of the Fair Consideration Framework (“FCF“).


Although the press release issued by the MOM (dated 29 December 2014) provided some information relating to the actions taken by PGI which amounted to “unfair retrenchment” of Singaporeans, overall, due to the MOM not being bound to issue grounds of its decisions, it is difficult to discern what actions would cross the threshold from a legitimate retrenchment to an unfair one.


Background


Upon investigation by the MOM pursuant to being approached by PGI’s terminated workers in June 2014, the MOM found that PGI had retrenched 13 Singaporean workers in phases, only to have those vacancies made open to foreign workers. PGI claimed that its Singaporean employees had been retrenched due to job redundancy and the losses that the company was incurring. PGI also highlighted the employees’ unsatisfactory work performance and their lack of relevant qualifications as reasons for their termination.


Issues


The MOM has stated in its official press release that PGI had ‘retrenched Singaporeans unfairly’. In addition, the MOM has stated that PGI’s rationale for retrenching the Singaporean workers was ‘not substantiated’. No further details were provided on how the MOM came to its conclusion. It therefore remains to be seen what the MOM deems to be an ‘unfair retrenchment’ and what level of evidence would be considered as substantiating an employer’s termination decision.


Accordingly, we would emphasise that employers must be careful in ensuring that terminations, when carried out, should not be done in a malicious manner or on a discriminatory basis and should be properly documented. This is especially so in light of what appears to be an increase in the MOM’s vigilance towards investigating such complaints in recent times.


A New Dawn For Employment Practices In Singapore?


This latest sanction by the MOM on PGI comes on the back of a slew of what appears to be greater Singaporean-oriented employment measures. This began with various amendments made to the Singapore Employment Act (Cap. 91) which, according to the MOM, will better protect nearly 450,000 workers; increases in employer contribution rates to the Central Provident Fund, which is a retirement savings plan for Singapore citizens and Permanent Residents; and the implementation of the FCF, which is a government initiative to strengthen the Singaporean core of the workforce.


Conclusion


While more details surrounding the MOM’s decision have not come to light and the MOM itself is not bound to issue detailed reasons for its decision, we would like to highlight that employers should be cognizant of the need to comply with all relevant laws, guidelines and employment practices that are promulgated by the MOM. As a practical matter, this case demonstrates that any disciplinary proceedings taken against employees, including unsatisfactory performance reviews, warning letters and other similar evidence of poor performance, should be properly documented. While this does not guarantee that the MOM will hence find that a termination is ‘substantiated’, it will doubtless go some way towards avoiding problems with producing evidence to support claims of employees’ poor work performance, should the MOM carry out an investigation/audit on the employer pursuant to a terminated employee’s complaints.

 

Baker McKenzie

 

For further information, please contact:

 

Kelvin Poa, Partner, Baker & McKenzie.Wong & Leow

kelvin.poa@bakermckenzie.com

 

Celeste Ang, Principal, Baker & McKenzie.Wong & Leow

celeste.ang@bakermckenzie.com

 

Ng Zhao Yang, Baker & McKenzie.Wong & Leow

zhao.yang.ng@bakermckenzie.com

 

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