NON-PAYMENT OF CPF TO CONTRACT WORKERS

NON-PAYMENT OF CPF TO CONTRACT WORKERS

43.

Mdm Halimah Yacob asked the Minister for Manpower what measures has the Ministry taken to ensure compliance by employers who do not pay CPF to their contract workers and to enhance these workers' social safety net.

Dr Ng Eng Hen: Under the CPF Act, all employers must contribute towards the employee’s CPF if the latter is paid more than $50 a month, and this includes contract workers or those who are hired on an adhoc basis. For formal employees the default rate* by employers is very low - it has fallen from 0.72% in 2004 to 0.56% in 2006.

For contract workers, monitoring of CPF payments is more difficult, especially if the contract workers themselves collude with the employers to avoid paying their employee CPF. CPF Board regularly audits employers’ CPF payments and wage records, especially if they belong to high-default industries such as cleaning contractors and security agencies. Defaulting employers have to pay a penalty interest on late contributions. Employers convicted of non-payment of arrears will have to pay a court fine in addition to the arrears and interest.

These measures have been effective in helping CPF members recover contributions owed to them. In 2006, 97% of the dollar amounts owing were paid up within 3 months of recovery actions being initiated, and 99% within 12 months of recovery actions. The remaining 1% was filed with liquidators or the Official Assignee where the Board would press on with its claims.

MOM also regularly engages employers through briefings and dialogue sessions and through its publications educates employers about their obligation to pay CPF promptly, and workers on their rights regarding CPF contributions.

Finally, CPF Board encourages employees to check their CPF contributions regularly by making available tools such as SMS, the CPF Board website, as well as on AXS machines. If the CPF contributions have not been paid correctly, they should inform the Board.

• The default rate refers to the percentage of active employers who default on CPF payments for two consecutive months.