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Obligations of Employers of Foreign Workers Tweaked

Change in Security Bond Conditions; Higher Cover for Medical Costs

The Ministry of Manpower (MOM) has reviewed the obligations placed on employers of foreign workers, and will be making changes to the security bond and medical insurance requirements.

Increased Coverage for Medical Costs

2.   Employers are responsible for the cost of medical care of their foreign workers. Since 1 January 2008, all employers are required to purchase and maintain medical insurance with a minimum coverage of $5,000 for S Pass and Work Permit holders (including Foreign Domestic Workers). This requirement was implemented in tandem with the Ministry of Health's withdrawal of healthcare subsidies for foreigners. Insurance helps employers better manage the medical costs of their foreign workers through risk-pooling.

3.   From 1 January 2010, MOM will increase the minimum insurance coverage from $5,000 a year to $15,000 a year. Increasing coverage will help to reduce employers' exposure to large hospital bills.

4.   The new requirement will apply to new insurance policies taken up on or after 1 Jan 2010, or upon renewal of current insurance policies on or after 1 Jan 2010.

Change in Security Bond Conditions


5.   All employers of non-Malaysian Work Permit holders, including Foreign Domestic Workers, are required to furnish a $5,000 Security Bond. The security bond conditions continue to be an important means by which we ensure a well-managed foreign workforce, with good employment standards. It is important to ensure that this mechanism continues to be relevant, and is effective in addressing key employment issues. MOM has reviewed the security bond conditions and they will be amended as follows:

- To address the issue of salary arrears faced by foreign workers, a new Security Bond condition will be introduced to require employers to pay their foreign workers' salaries promptly1.

- In cases where the foreign worker absconds, only half of the Security Bond ($2,500), instead of the entire bond of $5,000, will be forfeited, so long as the employer has made reasonable efforts to locate the worker.

- Remove employers' liability if the worker himself / herself has violated their obligation under work permit conditions (such as those relating to marriage with a resident or pregnancy), employers will only be required to: (i) inform the foreign workers that they are required to comply with the Work Permit conditions; and (ii) report to the relevant authorities if they are aware that their foreign workers are not complying with Work Permit conditions. Previously, employers could lose the security deposit if the foreign worker breached the condition, despite the employer's efforts to manage his worker's behaviour.

These changes will benefit responsible employers. The new and revised Security Bond conditions can be found in Annex A. The key Security Bond conditions slated for removal can be found in Annex B.

6.   The new security bond conditions will apply to non-Malaysian foreign workers who:

a. have been issued with work permits on or after 1 January 2010 or;
b. are renewing work permits on or after 1 January 2010.

7.   More information on the changes for security bond and medical insurance requirements are available on our website. Employers can also call the MOM Contact Centre at (65) 6438 5122.

1Please refer to Annex A for more details on the revised conditions.

Annex A - FWMISB Press Release (250909).pdf
Annex B - FWMISB Press Release (250909).pdf
Annex C - FWMISB Press Release (250909).pdf