Significance: Singapore High Court rules that monthly salary amount stated in Ministry of Manpower’s (MOM’s) in-principle approval (IPA) letter to a foreign worker is indicative of worker’s salary where written employment contract is absent.

The Court in this case ordered department store company Haniffa to pay $6,500 for salary and payment in-lieu of termination notice to PRC worker Liu Huaixi who had worked as a warehouse assistant and supermarket storekeeper.

The IPA letter issued by MOM had stated that Liu would receive a basic monthly salary of $1,100. Generally, such IPA letters are issued on the basis of the employer’s declaration to MOM as to the expected monthly salary amount.

However, Liu was given in this case a salary of $680. The employer claimed that there was an oral contract, but the evidence was scant and the Court rejected finding such an oral contract.

Justice Lee Sieu Kin noted former Labour Minister Tan Chuan-Jin’s parliamentary speech on IPA letters and stated at [25]-[31] that the IPA letter is intended to keep foreign workers informed of their salary components in clear terms. When applying to the MOM for a work permit, the employer is required to declare the foreign worker’s basic monthly salary, allowances, and deductions. This is one of the bases upon which the MOM approves (or rejects) the application. The second policy objective is to shift more responsibilities of employing foreign workers onto the employers. The reason why IPA duties are added to employers is to broaden their scope of their responsibilities, and in the process, to allow employees to rely less on middlemen. An employer is required to declare the actual basic monthly salary of the foreign worker in applying for a work permit and to maintain the payment of such sum for the duration of that employment unless modified in accordance with the Employment Regulations. Given the statutory intent of the IPA, the court would take as factual an employer’s declaration of the basic monthly salary in the IPA because he must be presumed to be truthful when he made the declaration.

The Court also stated at [33]: “Indeed, I would go so far as to state that even if there was a written contract of employment which provides for a monthly basic salary of less than the sum stated in the IPA, the burden would lie on the employer to show why the IPA figure does not reflect the true salary. For example, the employer may adduce evidence to prove that the sum stated in the IPA is different from the amount declared by him in the application for the work permit and somehow an error had been made in the IPA by MOM. Or the employer can admit that he had made a false declaration in the work permit application, thereby attracting other consequences for himself”.

Comment: It is needless to say that employers should be truthful in making declarations in their applications for work permits to MOM. For a long time prior to this case, it was unclear what the status of IPA letters is in salary disputes. From my volunteering work with migrant worker NGOs, I have heard anecdotally that in many cases in the (former) labour courts, the IPA letter was sometimes treated as neither here nor there.

Now it is made clear that the IPA letters have evidential effect and arguably almost quasi-contractual effect. Of course, this is where there is no written employment contract, or good evidence of a binding oral employment contract. In any case, MOM regulations now require that key employment terms are in writing. This is helpful for foreign workers. At the end of the day, the starting point for justice and fairness has to be in clear expectations on all parties, and the clarity of these expectations (assuming there is no intentional exploitation, misrepresentation or otherwise) is best brought out where there are clear written documents which every party understood and signed on.

It is hoped that this decision will go some way to promoting clarity and certainty for employers and foreign workers. I hope also that black sheep employers will not now try to force foreign workers to sign on documents (e.g. to agree to lower the salary only after arriving in Singapore) the workers would likely disagree on but have no bargaining power to say no to.  I think it is important that workers should in such cases collate evidence of such instances if they are ever forced into them. For example, record the conversation with the employer where they voice our their objection and the employer pressures them to sign the documents anywhere and threatens to repatriate them if they do not.