News: Singapore to put a bar on reducing the wages of employees

Compensation & Benefits

Singapore to put a bar on reducing the wages of employees

The Manpower Ministry of Singapore is considering scrapping the option of downward salary revisions.
Singapore to put a bar on reducing the wages of employees

The Ministry of Manpower (MOM) is planning to restrict employers to reduce a worker's salary to an amount lower than the salary stated in the in-principal approval (IPA) letter to prevent workers' abuse.

The current law allows an employer to decrease a worker's basic monthly salary to an amount lower than that stated in his in-principle approval (IPA) letter. IPA letter is a document which includes salary terms which are agreed upon by both sides before the worker arrives in Singapore.

However, the proposal is still under consideration because if salaries can't be reduced even with mutual consent, then foreign workers who do not fully meet the skills required for the job may then be asked to leave for their home countries. Currently, some foreign workers may prefer to take a lower salary equivalent to their skills instead of being asked to leave.

It was also reported that disputes associated with IPA salary reduction went up 11% in the second half of last year, up from 7% over the previous three years.

Minister for Manpower Josephine Teo stated in media saying, “While the proposed move will provide workers with more certainty of their wage for the entire duration of their stay in Singapore, it could also lead to possible early termination of employment even when the worker is willing to accept a lower wage. We will thus consult with relevant stakeholders to determine the best step forward.”

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Topics: Compensation & Benefits

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