Home » Indicators » Signing on the dotted line: examining operational indicators of trafficking. Part 1: Contract Abuse

Signing on the dotted line: examining operational indicators of trafficking. Part 1: Contract Abuse

Our first guest post comes from John Gee, Immediate Past President of TWC2, an organisation committed to the provision of fair treatment to migrant workers in Singapore.  He has researched and authored a number of key reports on migrant worker issues, including the problems faced in accessing justice.  His two-part post for TTRP provides a robust analysis of contract issues.  Often an opaque and misunderstood process, the implications for migrant workers can be serious.  

There’s an arms race in the management of migrant labour. Whenever measures are brought in by states to counter the abuse and exploitation of migrant workers, some employers who benefit from the status quo find new ways to subvert those measures. Abuse of contract and contract substitution are two means by which they do so.

Employment contracts are perceived to protect the rights and interests of employers and workers, to regulate the relationship between the two and ensure fairness. In some countries, there are standard contracts in different sectors of the economy. Singapore has one for domestic workers, who, unlike most other migrant workers, are not covered by the protections of the country’s Employment Act and unlike other workers, normally work alone on their employers’ premises (though this contract was agreed by agency accrediting bodies, rather than instituted under state law, with consequences for enforceability).

At a minimum, a contract must be compliant with the laws of the country in which it is to be applied. This normally means the one where a worker will be employed; contacts cannot override domestic law and make legal something that is illegal. Article 8 of Singapore’s Employment Act is consistent with international legal norms in stating that:

Every term of a contract of service which provides a condition of service which is less favourable to an employee than any of the conditions of service prescribed by this Act shall be illegal, null and void to the extent that it is so less favourable.

Thus, a person might sign a contract that states he agrees to work a 14-hour day, every day, if required to do so – potentially around 420 hours a month. However, the Employment Act’s Article 38.5 limits monthly overtime to 72 hours (on top of a 44-hour work week), thus not allowing workers to perform more than approximately 248 hours of work in any one month (depending on the length of the month and how many working days fall within it). This would clearly render the disadvantageous contract term null and void.

A contract should set out clearly, in a language that is understood by both of the contracting parties, the terms of a worker’s employment, including hours, pay, duties to be performed, holiday entitlement and other terms. This should mean that the worker has the option of deciding whether or not to accept employment on the stipulated terms. If it is presented early enough in the recruitment process, the worker should be able to refuse to take on a job before spending a significant amount of money on recruiter fees, agency fees, training, and other costs that would result in a level of investment (most probably, debts) that would make it hard to back out of accepting a job. This therefore empowers a worker to make an informed decision on employment.

Once employed, the contract should serve as a reference point for employer and worker and as a fall back for recourse to mediation or legal action should one or the other believe that the terms first agreed upon are being infringed by the other party. When a contract is drawn up under the jurisdiction of the country within which its provisions are to be applied (say, a contract drawn up in Singapore for Singaporean employees), its legal status and the legality of its terms may be easily determined and tested. Although, enforcement may be quite another issue, depending upon the zeal of state authorities to uphold the law (in the case of contracts drafted under state law) or the ability of the parties concerned to secure legal advice and representation (in the case of private contracts).

It’s a different story when a contract is drawn up within the state of origin of a worker who will be employed elsewhere (e.g. a Thai contract for a Thai national to be utilized in Singapore). This practice may be intended to thwart the intentions of the laws in the country of destination, such as in cases in which that country’s legislation extends protections superior to those of the country of origin, and are seen to disadvantage home country parties interested in profiting from their fellow nationals’ placement. More typically, it may simply take no account of destination country legislation, being designed to confer an advantage upon a home country keen to receive remittance income, and to home country recruiters, anxious to ensure that their candidates for jobs abroad are ‘competitive’ and will be taken on in preference to others.

There are two main circumstances in which misuse of contracts occurs in the Singapore context, in one of which the prevailing legal usage operates to the advantage of migrant workers, and in the other, to their disadvantage.

Abuse of Contract

In 2008, Transient Workers Count Too (TWC2) and the Humanitarian Organisation for Migration Economics (HOME) encountered several cases of Chinese workers who were in dispute with the Chinese construction companies that employed them on projects in Singapore. One of the main bones of contention was the companies’ insistence on paying workers three months in arrears. Their explanation was that it took some time to work out exactly how much the workers should be paid, but this did not appear credible, since the vast majority of enterprises worldwide (including within China) manage to pay workers their due every week or month, without delay.

The real reason seemed to be that deferred payment was primarily a way of controlling the workers. They would not seek a job elsewhere or otherwise leave the companies’ employ while they had salary payments outstanding. In their defence, the companies argued that the workers had signed contracts in which they agreed to accept deferred payment.

The workers themselves said that they had been given no choice. The original terms of their employment in Singapore seemed appealing and, on that basis, they had signed up to work here. Then, as they were about to board the plane that brought them over, they were presented with a contract that they were told they had to sign or otherwise they would have no job. Contract terms varied between companies, but a couple included deferred salary payments, as well as other curious terms. One contract we saw said that:

[W]hilst in Singapore, the worker cannot make any public commentary that hurts the interests of the employer. He must not create trouble and tarnish the reputation of the employer by complaining to various departments and ministries of the Singapore government, failing which, the employer reserves the right to demand the worker to pay for any fees incurred by the employer, such as transportation fees (SGD$100 per trip) or for the attendance of meetings (SGD$300 per meeting) to address these complaints.

This was intended to frustrate attempts by workers to report illegal actions by the company or to lodge legitimate complaints, as workers are entitled to do under Singapore law.

It was TWC2’s case that contract provisions that violate Singapore’s laws could not be upheld, and that such provisions should be deemed invalid and inoperative. In accordance with Article 20 of the Employment Act, workers must be paid within a week of the relevant employment period (essentially, at the end of each month), they must be able to take complaints to the competent authorities without fear of punishment and they must be able to retain their work permits and passports.

Evidently, the prevailing legal view upheld the precedence of Singapore law over a foreign contract and the workers were subsequently paid their basic salary at the end of each month.

In this instance, contracts devised in the workers’ home country by their employers or at their employers’ bidding, were clearly intended to impose terms that were highly exploitative and to prevent resistance. It is not the case that laws and contracts in migrant workers’ home countries are necessarily more protective of their rights than those in countries of destination. Where the interests of labour recruiters and companies coincide with a state’s overarching concern for profiting from the labour of its nationals abroad, workers may be obliged to accept employment on severely disadvantageous terms; in this case, a more enlightened labour regime in their destination countries may be to their advantage.

This consideration should make NGOs and activists for migrant rights wary of assuming that the enforcement of home country terms within a destination country would be to the advantage of migrant workers: it may not be so.

In addition, even when a home country seeks to enforce contract terms that are to the advantage of its migrant workers, this may also pose difficulties if it appears to challenge the authority of the government of a destination country over labour conditions within the country’s borders, as the second instalment of this article will discuss.

[Part 2: Contract Substitution, follows next week]

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7 Comments

  1. […] first part of this post considered cases where a country of origin contract was used to employ workers on […]

  2. […] publications. Posts range from their response to the United States Trafficking in Persons Report to guest contributions from experts working in the field.  Baer and Parkes believe there is plenty of work for TTRP to do given the […]

  3. […] in exploitative labor. In Singapore, for example, where might unscrupulous (yet unglamorous) recruitment agencies fit in to this tidy model? Drawing illegal or unfavorable contractual obligations to vulnerable […]

  4. […] which should take into account fraudulent and coercive aspects of contract abuse, as noted in previous posts by […]

  5. […] on one day alone).  John Gee, of TWC2, wrote a two-part post on employment contracts, looking at contract abuse and contract substitution, while Melissa Ditmore and Juhu Thukral focused on accountability and the […]

  6. Middlemen | says:

    […] “scout” or headhunt, arrange travel documents and visas, secure contracts – perhaps using coercion, deception or substitution – facilitate training and, in some cases, manage workers on-site. […]

  7. […] indicators often affect the lives and livelihoods of low-wage migrant workers in Singapore, such as exploitative recruitment practices, employer abuse and withholding wages, coupled with threats of deportation. Such indicators are […]

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