By Bernard Pereira

Pic Credit: TOC
Pic Credit: TOC

Many employers, I suspect, are getting away with blue murder when they misclassify their workers as “Independent Contractors”  instead of “Employees”.

The main reason is obvious: they want to bypass the CPF contribution requirement, in particular, and other fringe benefits due to the worker.

Is the Ministry of Manpower aware of this malpractice? Of course, it is. Will it be taking these unscrupulous employers to task?

On 18 Oct 2013, a Bloomberg report highlighted this malpractice in the US where some companies hired workers and deliberately designated them as “independent contractors” to avoid paying insurance, taxes, fair wages and overtime.

The practice had become so rampant that states from New York to California decided to take steps to crack down on employers who improperly classified their workers or failed to declare their income.

Thirty states instituted laws on worker misclassification, up from 23 in 2010. Tennessee was the latest to follow suit on July 1.

Among the companies that were taken to task in Tennessee, one employer stood out by bucking the trend, Danny Odom, chief operating officer of Odom Construction Systems, Inc.

Odom said he would never misclassify his workers even though the decision put the company of about 225 employees at a disadvantage as the practice would shave about 30 per cent off his labour costs. He testified in support of legislation.

“It’s a principle for us,” Odom said in an interview. “We weren’t willing to stick our heads in the sand. It’s exploiting those guys and we just don’t want to make money off people who are being exploited.”

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Can we find any Odom in Singapore? I doubt it. But one thing is certain: the practice here is getting out of hand, with bosses who care a damn about ethics and morals.

They call it a “contract for service” as opposed to “contract of service” – which is the usual term used in Employment Act agreements handled by the MOM — thus avoiding CPF and all the other perks.  But put them under the microscope, and you will see a minefield of illegalities in clauses in the contract that can spell only one thing: gross injustice to the worker.

There are clauses in many contracts that show stark discrimination against the worker, such as in the Termination section.

Very often, the employer designs the contract to empower him to terminate it without giving any notice (whatever the reason), whereas he makes it mandatory for the worker, if he chooses to terminate (on his own accord), to give two or three months’ notice, even though he might have worked for only a few days. Failure to adhere to this would constitute a breach of contract and render the worker liable to pay compensation.

Will MOM intercede on behalf of the worker if he makes a complaint against his boss? Only if MOM deems that the contract is for an employer-employee relationship, not otherwise. That’s the worker’s only saving grace.

In one recent case, the employer filed a claim for compensation at the Small Claims Tribunal against an employee who merely followed his boss’s request to terminate the contract (after working for only 12 days). He had all the evidence to prove it. He also served a one-day notice, which is the usual Employment Act requirement for any job held for less than 26 weeks.

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However, the employer was banking on the contract that the worker signed, which specified a 60-day notice period. So, did the employer have a case? At the hearing, the Referee – after two earlier attempts to settle failed — decided to discontinue the case, as the contract was not in the ambit of the Employment Act.

Hooray for the worker! But wait. This was just one swallow, not the entire summer. It must be seen as an Entrapment into which, by the employer’s own admission, he had successfully ensnared several workers in his stable. In other words, he could still rip off many more.

Last year, one employer withheld $150 from each employee for the whole year before releasing it – just to make sure he or she didn’t quit midstream. Isn’t this an employment violation? Is the MOM aware?  Ain’t there nobody to stop such abuse?

Another case happened not long ago, where the bosses made their  trainers sign a two-year bond. But they never showed any honesty, integrity or professionalism themselves in carrying out their part of the contract. Mind you, these were 20-something newbies in their first job that they were dealing with.

The bosses promised full training in the contract but, in actuality, they  flogged their employers to death by making them work — sometimes without lunch break – and carry out tasks they had no formal training in – probably as a ruse to make school staff believe they were fully competent for the jobs they were doing. Worse, the bosses also fabricated the trainers’ credentials and qualifications in their promotional flyers.

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The employees were forced to use their own discretion and ingenuity to carry out their tasks to the best of their ability, which was extra work which they had to do at home.

For instance, when they were not trained to do something, they were ordered to “read up a book and conduct a class”. And when one employee called for a meeting with his immediate boss, to deny those company claims about his “abilities”, he got a sack warning.

Enough was enough. A few tendered their resignation letters – bond or no bond. But the bosses took them to court to claim three months’ salary each, according to the contract! Who was there to fight for the worker’s rights?

When one wrote in, pleading for help and intercession, MOM replied:

“….. the terms pertaining to monetary compensation for terminating the contract prematurely is a contractual term and not governed by the Employment Act. Where there are disputes, the civil court will have jurisdiction in deciding the outcome. Therefore we are not in a position to assist you in the civil claim by your ex-employer
for the three months penalty for terminating the contract before 24 months.
You may wish to consult a lawyer for legal advise” (sic)

A 22-year-old at his first job, being asked to engage a lawyer to challenge the bosses in court? Get real!