EMPLOYERS/EMPLOYEES PROSECUTED FOR NOT MAKING CPF CONTRIBUTIONS

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EMPLOYERS/EMPLOYEES PROSECUTED FOR NOT MAKING CPF CONTRIBUTIONS: 2.

Ms Ellen Lee asked the Minister for Manpower (a) if he will provide an update on the number and percentage of employers who did not make CPF contributions for their employees over the last three years; and (b) what enforcement actions have been taken to reduce the numbers

3.

Mrs Josephine Teo asked the Minister for Manpower (a) how many employers or employees have been prosecuted in 2006 for not making CPF contributions; (b) whether there are employers or employees who have been convicted more than once; and (c) will his Ministry consider removing the mandatory employee contribution for those earning

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less than $1,000 per month so that they can take home more money.

Dr Ng Eng Hen: Sir, can I have your permission to take Question Nos. 2 and 3 together?

Mr Speaker: Yes.

Dr Ng Eng Hen: Sir, the CPF Board monitors and detects each month those employers who are late in their payments. In addition, the Board also regularly audits employers’ CPF payments and wage records, and we do it in a targeted way, because we want to focus on those with high default rates - companies with high default rates such as cleaning contractors and security agencies. Defaulting employers have to pay a penalty interest on their late contributions, on top of the arrears.

As a result of these measures, the average number of employers with outstanding CPF payments owed to their employees for at least two months has fallen from 677 a month in 2004 to 559 in 2005, and now to 549 in 2006. As a proportion of all active employers, this default rate roughly translates to 0.56% for 2006. So it is less than 0.6% for last year.

Last year, we prosecuted 275 cases, and this involved 228 employers which led to convictions. The rest of the cases were either compounded, or resolved by the employers making payment before the court hearing. Employers convicted of non-payment of arrears will have to pay a court fine in addition to the arrears and interest.

The Members have asked whether we prosecute the employees. We do not, because under the CPF Act, the obligation is for the employers to pay the correct CPF contributions to their employees. In other words, even if an employer chooses

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to collude with the employee and not to pay, the Act prescribes the responsibility on employers, and the employer will have to pay up his late contribution and also the contribution of the employee. The employee does get away scot free but, beware, employers who want to collude.

On the issue of removing the mandatory employee’s contributions for those earning less than $1,000 per month, this indeed has been done as announced in the Budget Speech, and we are making it easier for them to contribute less but to get more in terms of Workfare.

Mrs Josephine Teo (Bishan-Toa Payoh): Sir, I would like to ask the Minister that in the light of the recent introduction of Workfare Income Supplement, some employers may want to make contributions to CPF for their employees but starting from now, and some have asked whether an amnesty period can be considered. I would like to know the Ministry's position on this.

Dr Ng Eng Hen: Sir, we will always be gracious judiciously. We are not out after, say, itinerant employees, hawker assistants, coffee shop assistants. These are not the groups that we are going after. We do target those who systemically deprive employees of their CPF. As we have said, we have noted that some of these are cleaning contractors and security agencies.

For those who want to now contribute to CPF, let me welcome them and say that we will take their actions at face value and they need not fear that we will do anything harsh if they do make their contributions.