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Written Answer by Mr Tharman Shanmugaratnam, Deputy Prime Minister & Minister for Finance and Minister for Manpower, to Parliamentary Question on Wage Claims by Foreign and Local Workers of Companies Facing Insolvency


Ms Sylvia Lim: To ask the Deputy Prime Minister and Minister for Manpower with regard to employers facing insolvency who have a mix of local and foreign employees (a) whether the employer is usually required to settle all wage claims by foreign employees before they are repatriated; and (b) whether local workers' wage-related claims are thereby jeopardised as local workers typically file their claims only when the businesses are liquidated.

Mr Tharman Shanmugaratnam:

Laws are in place to ensure that employers resolve wage claims filed by any of their workers, regardless of nationality. Under the Employment Act, employers are required to pay the salaries of both their local and foreign workers within seven days after the end of the salary period. Workers with unpaid salaries may file their claims with the Labour Court. The Court does not differentiate between local and foreign workers in the recovery of salary arrears.

Failure to pay salaries on time, for both local and foreign workers, constitutes a serious offence. Errant employers may be liable upon conviction to a fine of up to $5,000, or imprisonment of up to six months, or both. In 2011, 22 employers were convicted of salary-related offences under the Employment Act. MOM will not hesitate to prosecute such employers in future, and help recover the salary arrears through the Courts.

In cases where employers have become insolvent and their companies are undergoing liquidation, the Companies Act provides for apportionment of the unpaid salaries for workers. It does not differentiate between local and foreign workers. Unpaid salaries of workers will be accorded higher priority over claims by other unsecured creditors. We advise local and foreign workers alike who lodge salary claims with MOM to also file their claims with the appointed liquidator, who is required to give such claims priority.

MOM is committed to protecting the employment rights and interests of workers, including ensuring prompt salary payment. The Ministry encourages all employees to seek assistance on unpaid wages, as soon as possible, before companies reach the stage of liquidation. From our experience, the majority of local workers do indeed file their claims before this happens.