More education on unfair employment contracts needed: Zainal Sapari

SINGAPORE — More should be done to educate workers on employment contracts, and such engagement could even start in Singapore’s tertiary institutions, said National Trades Union Congress (NTUC) assistant secretary-general Zainal Sapari.

Zainal, who is also a Member of Parliament of Pasir Ris-Punggol GRC, had written a blog post on LabourBeat, an online portal on the Singapore labour scene, on the three types of unfair employment contract clauses to look out for in the current Singapore work environment.

He was responding to a recent report by CNA on the Tripartite Alliance for Dispute Management (TADM) recovering $29 million in owed wages, and resolving 85 per cent of salary claims within two months, from 1 April 2017 to 31 December 2018.

“Due to the challenging business environment, there are employers who may resort to underhand practices or tactics to address the problems they are facing, but to the possible detriment of the workers,” Zainal wrote.

“Some employers have included in employment contracts certain clauses that may not be fair to the workers, perhaps to address staff attrition, recoup losses they incurred due to liquidated damages, or protect their business interest.

“Regardless, including unfair clauses is unethical as they abuse the vulnerable position the workers might be in.”

Three types of unfair clauses

He listed three types of unfair clauses:

• Liquidated damages borne by workers: Zainal said that, in outsourced service industries such as cleaning and security, it is a standard practice for service buyers to reflect the liquidated damages payable for non-performance issues in the contract. However, some service providers may resort to passing the cost of liquidated damages to the workers, given the narrow profit margins they are getting.
  
  However, according to the Ministry of Manpower (MOM), salary deductions for liquidated damages should not be made even if consent has been obtained from the employees, as it is not to the benefit of the employee. If reported to TADM, employers must reimburse deductions arising from liquidated damages to the employees.
  
  Still, Zainal wrote that some employers get away with it because vulnerable, low-wage workers are unaware of their rights or are afraid to report their employers for fear of losing their rice bowls.

• Penalties and conditions for termination of contract: Zainal cited a real-life example of a trainer earning a basic monthly salary of $2,000. The trainer’s employment contract contained a clause stating that if the contract was terminated within one year, he was liable to pay the company a penalty of $50 per calendar day from the date of the termination notice till the one-year term. This was regardless of whether the termination was initiated by the employer or employee.
  
  ”This could amount to a few thousand dollars if the trainer wanted to cease working for the company and take up a better job offer,” he wrote.
  
  “What is even more incredulous is the penalty is payable even if the termination was initiated by the employer! Are such clauses in the employment contract even legal? Under Contract Law, is it enforceable in court?
  
  ”Do workers even have the financial means to challenge such unfair employment clauses if the case is brought before the court? What is the position of our court on such unfair clauses if the employer refused to resolve it during mediation at TADM and insist on going to court?”
  
  Zainal proposes that tripartite partners should come to an understanding or draw out some guidelines against unfair clauses in employment contracts, to discourage companies from including such clauses to intimidate the workers into compliance.

• Non-compete/Restraint of Trade Clauses: The “Restraint of Trade” clause, which aims to protect a company’s interest by preventing senior-management employees from competing with the company after they leave, is being used by some employers even on rank-and-file workers, said Zainal.
  
  ”Workers who were not properly advised of their legal rights would likely bend to the unreasonable demands of an employer with substantially more resources,” he wrote.
  
  ”As such, there is an urgent need for the tripartite partners to provide greater clarity and guidance on fair and proper contracting practices.”

How to curb unethical contract practices

Zainal raised two suggestions to curb such unethical contract practices:

• MOM could consider a “cooling off period’ of up to five working days to allow workers to rescind the employment contract they have signed, without penalty.

• MOM or TADM could also consider starting a watch list of companies found or reported to have unfair clauses in their employment contracts. Administrative penalties should be imposed on companies on this watch list.

For now, the tripartite partners have published online a set of guidelines on employment terms, and the Tripartite Alliance for Fair and Progressive Employment Practices has an advisory through its website on how to getting employment contracts right.

For NTUC union members, help is available via the TADM@NTUC, the NTUC U Care Centre or their respective unions.

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