Getting firms to pay salaries on time

When 43-year-old Amanda Soo and her colleagues started receiving late salary payments, they knew something was amiss with their firm.

Ms Soo had been working as an assistant store manager at a retail chain of department stores for three years. There were warning signs that the retail firm was not doing well. With the increasing popularity of e-commerce, brick-and-mortar stores were facing stiff competition and Ms Soo’s retail firm experienced a sharp decline in footfall and loss in revenue for several consecutive months.

To boost morale, the management assured employees that business would pick up during the festive period and that they should continue to work as per usual. Yet, Ms Soo and several other employees suspected that this was far from the truth when they started receiving their salaries late.

This was a major red flag and the affected employees became increasingly sceptical of the firm’s financial health. The retail firm tried to allay their concerns by promising timely payment of owed salaries once the cashflow situation improved.

However, these promises were not kept. In the next few months, Ms Soo and her colleagues continued to accumulate salary arrears. This made Ms Soo decide to leave her job.

She and three other former colleagues also turned to the Tripartite Alliance for Dispute Management (TADM) for help.

Finding a solution

After Ms Soo and her colleagues filed their claims at TADM, a mediator was appointed to help them resolve the dispute with the firm in a fair, amicable and expeditious manner.

Prior to mediation, TADM had established that the retail firm was indeed late in paying salaries to its employees. At the mediation session, the firm’s management was asked to account for the late salary payments. The mediator stressed that it was an employer’s obligation to pay employees’ salaries within seven days after the end of the salary period.

The management explained that the firm was experiencing cashflow difficulties, but was trying to rectify the situation by revamping its business model and downsizing operations. The firm also produced documents to prove its deteriorating financial health.

Notwithstanding that the firm was in financial difficulty, the mediator encouraged the firm to make good on the outstanding salaries and put forward a payment schedule for both parties to consider. Mediation concluded with the firm agreeing to adhere to a strict payment schedule, where salary arrears owed to Ms Soo and her colleagues would be paid back in instalments. This provided a fair outcome agreeable to both parties — the firm was given more time to manage its cashflow issues while all claimants would know when they could expect payment.

While the firm did not appear wilful and was prepared to resolve the salary arrears in a responsible way, the mediator reminded the firm not to delay payment of its workers’ salaries in the future or it may face enforcement measures by the Ministry of Manpower (MOM).

To ensure that the retail firm would adhere to the payment schedule, the mediator oversaw the signing of an official Settlement Agreement (SA) between both parties. TADM also advised Ms Soo and her colleagues to register the SA with the Employment Claims Tribunals (ECT) — once registered, the SA would become an enforceable court order if the firm were to default on its instalments.

Fortunately, the situation did not come to that. TADM monitored the firm closely to see through the scheduled payments to Ms Soo and her colleagues, who eventually received full payment of the owed salaries.

As Ms Soo had left the firm without securing another job, the mediator referred her to the Employment and Employability Institute (e2i), which assisted her in landing a new job.

Disclaimer: This story is inspired by real cases managed by TADM.

TADM provides advisory and mediation services to help employers and employees manage employment disputes, as well as to help self-employed persons manage payment-related disputes amicably. Employers and employees can approach TADM for advice on resolving disputes related to salary or wrongful dismissal, and to file claims related to these matters.

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