Home » Indicators » Signing on the dotted line: examining operational indicators of trafficking. Part 2: Contract Substitution

Signing on the dotted line: examining operational indicators of trafficking. Part 2: Contract Substitution

We are pleased to welcome the second part of our guest post by John Gee (TWC2) analyzing employment contracts.  In this post, he looks at the issue of contract substitution and makes some important recommendations on the treatment of migrant workers in Singapore.

Part 2: Contract substitution

The first part of this post considered cases where a country of origin contract was used to employ workers on terms disadvantageous to them when compared to the legal requirements of a destination country. The opposite occurs too, when a home country government attempts to use contracts to secure better conditions for its nationals in a destination country than they might obtain under that country’s laws and regulations. In this instance, employers may resort to contract substitution to nullify the home country government’s intent.

In contract substitution, a formal contract is signed by an employer to present to those seeking to enforce its provisions, frequently a home country government’s embassy. This appears to bind the employer to comply with those terms. The employer signs because he believes that he must do so to obtain a worker.  However, a separate contract is signed between employer and worker with terms less favourable to the worker, and it is this contract that actually sets the conditions of employment.

In Singapore, this describes a practice often used towards Filipina domestic workers. No country besides the Philippines has attempted to enforce its own standard contract for migrant workers within Singapore, although Indonesia appears to be taking steps in that direction. The preferred option of the Philippines government would be a bilateral agreement between Philippines and Singapore on the terms of employment of its nationals, but Singapore is wary of establishing any such agreement with other states. It may see such bilateral agreements as a likely source of heavier costs and obligations in order for Singapore to meet the priorities of another state, with no obvious countervailing advantage for Singapore and its citizens.

The Philippines’ standard contract for its citizens working overseas prescribes minimum working conditions, including provisions for weekly rest days and for a minimum salary of US$400 or local equivalent (about S$600) – which immediately presents a problem as Singapore does not have a minimum wage. The Philippines government wants employers to sign this standard contract when taking on a Filipino national as an employee; officially, unless this happens, the employer cannot hire the worker. This does not conflict with Singapore law, in that it seeks to establish employment conditions for Filipino nationals that are better than those set forth in the Employment Act: if it attempted to establish inferior conditions, that would go against the protective intent of Singapore’s labour legislation. [See Article 8 of the Employment Act; Domestic workers are specifically excluded from coverage by the Employment Act, but there are strong grounds for holding that the principle set forth in this clause holds good for them]

This should mean that it would be possible to enforce the standard contract in Singapore through legal action. However, domestic workers are unlikely to have the financial means to institute such legal actions, and if they did, the status of alternative contracts could be contested.  Employees might expect to find their integrity challenged, given that they signed another contract and appeared willing to abide by its terms.

In addition, Singapore’s government would not take kindly to another state seeking to secure favourable terms for its own nationals. Here, the sovereignty argument comes into play: the government of an independent state cannot reasonably be expected to cede the power to legislate for people under its jurisdiction to another state, even if those people are citizens of this latter state.

Furthermore, the Philippines would not wish to push enforcement of the standard contract in the face of a resistant Singapore government; this would likely lead to a panicked reaction among many employers in Singapore, a large proportion of whom might choose to dismiss their Filipina domestic workers or terminate their employment at the end of a two year contract, to take on a worker from a country that did not seek to enforce similar standards for its nationals. This is a political issue as well as a legal one, and both the Philippines and Singapore governments might prefer to avoid a clash over contracts.

Frustration of Enforcement Through Collusion

The biggest single group of Filipino employees in Singapore are employed as domestic workers. Worldwide, domestic workers are amongst the workers with the lowest pay and least favourable conditions. The Philippines government probably has the most developed programmes and policies for migrant workers going overseas. It has sought to secure better wages and conditions for them out of a mixture of enlightened concern, electoral accountability and interest in promoting greater remittance income.

The Philippines has attempted to secure compliance with its standard contract through its embassies. When workers renew passports or contracts, embassies ask to see the existing employment contract and evidence of compliance with it, without which they will not cooperate with the worker or employer. The workers know that their employers would not retain them if they (or the embassy on their behalf) asserted their right to the terms set forth in the Philippines’ standard contract, and that the employers can fire them at will. Under Article 9 of the Employment of Foreign Manpower Act, an employer is not required to offer any reason for terminating the employment of a worker and can do so at will, providing that outstanding salary payments and medical expenses are settled. Therefore, workers customarily cooperate with their employers in presenting that contract as a faithful representation of their employment conditions.

The ‘real’ contract – the substitute that provides the essential reference points for both parties during the employment period – will most likely be compliant with Singapore law, but not contain the more advantageous protections and entitlements of the Philippines document.

Workers are well-aware that the Philippines standard contract provides better terms for them, but are willing to collude with agents and employers in presenting false documentation because they fear that the alternative is to lose their employment opportunity in Singapore. This collusion occurs as a result of the disparity in power between the parties and the desperation of the workers for employment on terms that, disadvantageous as they are, still provide an income that compares favourably with what they might reasonably expect to earn in their home country. It takes both employer and worker one step away from lives lived under normal laws and regulations into a shady area of evasion and duplicity that tends to characterize the employment of a sizeable proportion of migrant workers globally, rendering the workers prone to exploitation and hamstrung in seeking legal redress.

The immediate consequence is that workers gain or maintain employment by accepting a lower level of protection and payment at local market rates (perhaps S$100 less than the Philippines’ contract calls for) and employers gain more favourable terms for themselves. Neither party may give much thought to the fact that they have been dishonest and have attempted to frustrate the implementation of legal measures instituted by the Philippines government.

Given Singapore’s unwillingness to support the enforcement of the Philippines’ standard contract, there is an impasse over this issue. The problem may persist until Singapore’s own terms of employment, whether contained in the agency industry standard contract, other measures or resulting from the operation of ‘market forces’ (such as demand for workers exceeding supply so much that it drives up salaries above S$600 and encourages the negotiation of improved terms for workers), change markedly.

Do these cases have anything to do with trafficking?

The abuse of contracts as shown by the case of the Chinese contracts clearly involves an attempt to exercise a degree of coercive control over workers to make them work in disadvantageous conditions.  Elements in the two cases locate them in that murky area of dishonesty and illegality where trafficking is also to be found.

Yet it might be more fruitful to consider the experience of labour migration as a continuum that extends from the well-remunerated professionals welcomed by many states to disempowered, coerced and deceived people transported into virtual slavery. Somewhere on that continuum, the features that can be indicators of trafficking, such as contract substitution and the imposition of unduly onerous contracts, start popping up with greater frequency, and that should be enough to set anyone thinking, “This shouldn’t happen.”

Abuse of contract and contract substitution are tools of worker exploitation, but to solely say that they break laws and are unethical does not resolve these problems.

Abuse of contract may be tackled by increased regulatory and punitive means; there would be enough public sympathy for measures against what are recognised as unfair practices. In addition, Singapore contractors who sometimes see their tenders undercut by foreign firms, using oppressive contracts to operate with a cut-price labour force, might welcome a reform from which they stand to benefit.

Similar arguments do not apply to the issue of contract substitution. There is a sizeable, vocal and influential sector of the public in Singapore that would perceive any move to enforce the Philippines standard contract as a fundamental threat to its way of life, especially after the recent introduction of a mandatory weekly day off for domestic workers as of 1 January 2013. The outrage expressed by some employers over this issue despite the measure being phased in and containing a ‘get out’ clause that allows employers and workers to agree on the workers giving up days off in return for financial compensation – an agreement that would likely be forthcoming from indebted workers uncertain of their job security if they do not comply with employers’ and agencies’ wishes. Moreover, Filipina domestic workers themselves may not put their hearts into seeking the enforcement of terms that might put them out of work. For these reasons, market forces, notably a decline in numbers of women ready to work in Singapore on the prevailing terms, are likely to provide the greatest impetus towards the implementation of the provisions of the Philippines standard contract.

This is not to say that those seeking change should give up on the effort, and trust to the inexorable force of the market, but they ought to be flexible and realistic about how they go about it. Rather than specifically targeting enforcement of the Philippines standard contract in Singapore as a goal, they might more effectively work to achieve the sort of objectives that the drafters of that contract had in mind, and that are already established as worthwhile aims among NGOs working with migrants, migrants themselves and sectors of the Singapore public. They should do so for domestic workers regardless of nationality; to the benefit of all and the disadvantage of none.

It should also be recognised that the most effective means to counter abuse of migrant workers whether through contractual means or any other is through their empowerment. As radical as this might sound in the Singapore context, it can simply mean the introduction of measures that allow migrant workers to speak up without fear: to accept that they should have a right of appeal against arbitrary dismissal, to allow them to change employers if treated abusively by their existing employers, to remain in Singapore if employment is terminated before the expected expiry of their existing contracts to seek and take another job, to be able to call upon the relevant Singapore unions to intervene on their behalf. None of these changes require a fundamental revision of Singapore’s work permit system, but together they could help to overcome the various forms of contract abuse and produce the more equitable conditions of employment to which migrant workers aspire and that the conscientious in their home governments promote.

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3 Comments

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

  2. […] 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 protection of rights with […]

  3. Middlemen | says:

    […] arrange travel documents and visas, secure contracts – perhaps using coercion, deception or substitution – facilitate training and, in some cases, manage workers on-site. Agents may not be based in the […]

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