Salary Payment for Workers Engaged by Private Vendors in Government Contracts

Mr Desmond Choo asked the Minister for Finance how does the Government ensure that workers engaged for government contracts are paid for their work when either the main contractors or the latter's sub-contractors go into liquidation.

The Senior Minister of State for Finance (Ms Indranee Rajah) (for the Minister for Finance): Mdm Speaker, before contracts are awarded, Government agencies will take into consideration the financial standing of the contractor to ascertain whether he has the necessary resources to fulfil his contractual obligations. During the contract, Government agencies will monitor the contractor's performance. If the contractor faces cash flow difficulties, the Government agency can consider adjusting the payment milestones or delivery schedule.

In the unfortunate event of a contractor going into liquidation, the Government like any service buyer, will rely on the provisions of the law to provide remedy for the affected workers. As the Minister for Manpower has previously shared with this House, when a contractor goes into liquidation, the Companies Act provides for the apportionment of the unpaid salaries for workers. Unpaid salaries of workers will be accorded higher priority over claims by other unsecured creditors. Affected workers can lodge salary claims with the appointed liquidator, who is required to give such claims, priority.

The Minister for Manpower has elaborated in his parliamentary response on other forms of assistance available as well as additional measures being put in place to help affected workers.

Mr Desmond Choo (Tampines): I thank the Senior Minister of State for her comprehensive reply. I was wondering whether the Government can consider under certain circumstances, to establish escrow accounts for certain contracts, so that workers can be protected especially during difficult economic times.

Ms Indranee Rajah: Madam, I thank the Member for his supplementary question. It is not so much a matter of establishing escrow accounts because the scenario painted by the Member is one where you have a main contractor and the employees, and then you have sub-contractors, and they have their employees. Each company will have other creditors as well. So, it is very difficult to say that I put this aside only for the employees, and it is difficult for the Government to do that. If the company itself sets aside monies in a certain escrow account and specifically stipulates that this is for employees, then that is something that the company can do. But it is difficult for the Government to step in and interfere with the contractors' own arrangements of its accounts.

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