Foreign Manpower Regulatory Audits by MOM

Foreign Manpower Regulatory Audits by MOM

The Ministry of Manpower’s Foreign Manpower enforcement divisions are stepping up their audit inspections of private sector employers. Prior to inspections, you may (or may not) receive some fairly innocuous correspondence from the Ministry of Manpower such as a survey form.

The Foreign Manpower enforcement division checks whether foreign to local dependency ratios are being breached by cross-deployment of foreign workers within group companies. This is a criminal offence for which the employer can be charged.

Cross-deployment occurs when an individual working for Company A is found working for Company B.  Even though A and B may be linked by common shareholding, or may even have the same 100% holding company, all work passes only permit an individual to work for one company.  Personalised Employment Passes are not an exception to this rule – despite having flexibility to change employers, they still can only work for one employer at a time.

Audit inspections are usually unannounced.  No prior appointment is made, and no notice is given.  Sometimes these are triggered by complaints to the Ministry of Manpower, but more often it occurs as part of the Ministry’s ongoing policy to protect foreign workers from exploitation and harm, by ensuring that employers obtain proper licences for their workers, and are therefore bound by legal obligations toward their welfare and upkeep.  The Ministry also has the dual obligation of ensuring plentiful employment for local workers, at least for lower wage positions, by imposing strict local to foreign ratios for lower-paid jobs.  For instance, in the service sector (which covers retail and Food & Beverage), the number of foreign employees holding work permits cannot exceed 35% of the total number of employees in that organisation.

If non-compliance is observed during an audit inspection, MOM officers will interview the employees on the spot.  They wear body cameras and the interviews will be recorded.  Subsequently, the management, HR officers and all non-compliant employees will be interviewed by MOM separately at MOM’s offices.  All interviews are conducted with short notice.  It is difficult, very difficult, to “backfill” any non-compliant situation at this point.

Cross-deployment is very common in the private sector at all levels of employee, from top level “C-Suite” executives to work permit holders.  For example, a CEO may be seconded to a group company for a few months while the group company tries to recruit its own CEO.  Another example – a group company who has not maxed out its quota requirements will recruit foreign employees for another group company that can no longer hire foreigners.

Among employers in the private sector, the standard of care varies substantially.  The number of cross-deployments seen anecdotally which have been backed up by intercompany service agreements and/or secondment agreements are low.  Among the employers who have intercompany service agreements, the number of compliant intercompany service agreements with proper supporting documentation (e.g. payslips) is less than 50%.

Regular internal audits are probably the only way to anticipate and survive a regulator’s audit inspection.  Bringing in external counsel to check existing documentation and help with rectification on an annual or one-time basis is also recommended.

For more information on this matter, please feel free to contact Ms Jennifer Chih.