Legal Advice if not covered by Employment Act

[turtonguy]

Hi,

Having served my notice, my company have told me they are withholding my pay for the next 3 months to cover relocation expenses and tax clearance - my tax will never be that high but they've failed to submit the relevant documentation.

I am trying to seek legal advice on this to assess my options as not being paid for 3 months really isn't one!

I have tried the legal aid bureau but due to salary I am not covered by the employment act so they cannot help.

Has anyone encountered a similar situation and can help out/point me in the direction of someone that might?

Thank you.

[AngMoG]

Hi,

Having served my notice, my company have told me they are withholding my pay for the next 3 months to cover relocation expenses and tax clearance - my tax will never be that high but they've failed to submit the relevant documentation.

I am trying to seek legal advice on this to assess my options as not being paid for 3 months really isn't one!

I have tried the legal aid bureau but due to salary I am not covered by the employment act so they cannot help.

Has anyone encountered a similar situation and can help out/point me in the direction of someone that might?

Thank you.

First of all, check your contract and/or company procedures regarding your relocation expenses combined with your resignation. This may fall under a general company expenses clause. Generally, this clause should apply with a time frame (e.g., if you resign within 1 or 2 years after the company having paid for the relocation). Anything unlimited or too generic may have weak legal standing, though that is just my opinion drawing a parallel to how non-competition clauses are handled here. But in general, whatever is written in your contract goes.

The tax is usually much lower than one month's salary here (mine has recently been a good bit less than 1/2 month salary), so withholding one month's salary should be sufficient for that (companies can withhold the last salary until they tax is calculated/paid by the company).

Other than that, I can only advise to read through your contract thoroughly, and maybe let us know the relevant clauses here (don't post the full contract!). Also, look for a lawyer if you think it is worth your while. If I remember correctly, SCT does not handle employment disputes.

[beppi]

Due to IRAS regulations, your employer MUST withhold all salary from the moment you resign (or are fired) until tax clearance is given by IRAS. Then, the company should pay your tax bill and send the remainder of the withheld salary to you (if any). This is to prevent foreigners from leaving without paying their taxes, and the company has no say or choice in this.
IRAS usually clears taxes a few weeks before your departure, after the company has told them what you earned in the entire year (until your departure).
If, because of this, you have a cash flow problem, a temporary personal loan might help. But talking to a lawyer or getting other advice will not.

[turtonguy]

Hi,

Having served my notice, my company have told me they are withholding my pay for the next 3 months to cover relocation expenses and tax clearance - my tax will never be that high but they've failed to submit the relevant documentation.

I am trying to seek legal advice on this to assess my options as not being paid for 3 months really isn't one!

I have tried the legal aid bureau but due to salary I am not covered by the employment act so they cannot help.

Has anyone encountered a similar situation and can help out/point me in the direction of someone that might?

Thank you.

First of all, check your contract and/or company procedures regarding your relocation expenses combined with your resignation. This may fall under a general company expenses clause. Generally, this clause should apply with a time frame (e.g., if you resign within 1 or 2 years after the company having paid for the relocation). Anything unlimited or too generic may have weak legal standing, though that is just my opinion drawing a parallel to how non-competition clauses are handled here. But in general, whatever is written in your contract goes.

The tax is usually much lower than one month's salary here (mine has recently been a good bit less than 1/2 month salary), so withholding one month's salary should be sufficient for that (companies can withhold the last salary until they tax is calculated/paid by the company).

Other than that, I can only advise to read through your contract thoroughly, and maybe let us know the relevant clauses here (don't post the full contract!). Also, look for a lawyer if you think it is worth your while. If I remember correctly, SCT does not handle employment disputes.

Thanks AngMoG.

The requirement to repay relocation expenses was not a surprise to me, what came as a surprise was that they will take it from my last 3 months' wages - essentially leaving me very little for the next 3 months. I've gone through my contract closely and the timeframe/method of repayment is ambiguous.

I agree that I expect my tax to be less than 1/2 months wage, however they are holding more as a 'buffer.'

Unfortunately, given Singapore employment laws (read: lack of) I think they are within their rights to do what they are doing, hence I am looking for legal counsel to see what my options are.

What is SCT?

Thanks

[turtonguy]

Due to IRAS regulations, your employer MUST withhold all salary from the moment you resign (or are fired) until tax clearance is given by IRAS. Then, the company should pay your tax bill and send the remainder of the withheld salary to you (if any). This is to prevent foreigners from leaving without paying their taxes, and the company has no say or choice in this.
IRAS usually clears taxes a few weeks before your departure, after the company has told them what you earned in the entire year (until your departure).
If, because of this, you have a cash flow problem, a temporary personal loan might help. But talking to a lawyer or getting other advice will not.

Thanks Beppi. I have discussed that with IRAS and you are absolutely right (my frustration is that the company have sat on my resignation for over 3 weeks and still not submitted IR21 form). The relocation sum is the bigger point of contention for me, hence my search for legal counsel.

I'm getting the impression there is nothing like a citizens' advice bureau for people not covered by employment act?

Thanks

[AngMoG]

The requirement to repay relocation expenses was not a surprise to me, what came as a surprise was that they will take it from my last 3 months' wages - essentially leaving me very little for the next 3 months. I've gone through my contract closely and the timeframe/method of repayment is ambiguous.

I agree that I expect my tax to be less than 1/2 months wage, however they are holding more as a 'buffer.'

Unfortunately, given Singapore employment laws (read: lack of) I think they are within their rights to do what they are doing, hence I am looking for legal counsel to see what my options are.

What is SCT?

Thanks

SCT = Small Claims Tribunal. Google it.

How high are your relocation expenses in terms of your salary? That would give you an idea how much you are getting back in the end.

Seems the company is within their rights to withhold, even though that really sucks. It does not look like you have much legal recourse, as the company also has no room to maneuver, they have to abide by IRAS rules. They only need to file for tax, btw, in your last month, afaik.

You can only dispute once you get your remainder paid out, if you think what you were paid is not fair.

[Beeroclock]

Bummer.... resigning requires some pre-planning for Foreign Workers in Singapore especially if you have a long notice period, will need to start saving well in advance it seems or face a cash flow crunch!

[ecureilx]

Due to IRAS regulations, your employer MUST withhold all salary from the moment you resign (or are fired) until tax clearance is given by IRAS. Then, the company should pay your tax bill and send the remainder of the withheld salary to you (if any). This is to prevent foreigners from leaving without paying their taxes, and the company has no say or choice in this.
IRAS usually clears taxes a few weeks before your departure, after the company has told them what you earned in the entire year (until your departure).
If, because of this, you have a cash flow problem, a temporary personal loan might help. But talking to a lawyer or getting other advice will not.

withhold all salary ? I remember NOT.

The words from IRAS is in the tune of With-hold last month salary, and commissions, if due, until Tax is cleared.

And, if you have found another job here, and ask nicely, IRAS will issue a memo to the employer, recommending release of the held pay, as the person is in continued employment in Singapore. Been there, done that ..




PS: temporary personal loan? for foreigner minus a job ?? mmmm ..

[turtonguy]

Thank you all for taking the time to reply. Ecureilx I will speak to IRAS again and see if they can issue that memo - my next EP has already been approved in principle so it may be an option. If not, it will be a quiet few months!

One last shot - does anyone know if there is any free/affordable legal service that can assist with queries without them turning into full cases? There are legal clinics in various areas (http://legalclinics.sg - if anyone's interested) but I'm not covered by any of those unfortunately.

Thanks again
Guy

[sundaymorningstaple]

withhold all salary ? I remember NOT.

Maybe you want to go back and reread the Explanatory Notes for completing form IR21 then. Just to keep you up to date and in the loop.....

More specifically.....

4. You are also required to withhold any monies (including overtime pay, leave pay, allowances for transport, entertainment, gratuities and lump sum payments, etc.) due to your employee from the day he notifies you of his intention to cease employment or when you decide to terminate the employment or post the employee to an overseas location. If you are unable to withhold monies, state reason in Section D, item 18. If an employer fails to comply and does not give valid reasons, he may be held liable for the tax that is owing by the employee.

5. Do not release any monies to the employee until tax clearance is given or 30 days after the Comptroller has been notified through the Form IR21, whichever is earlier.

[turtonguy]

withhold all salary ? I remember NOT.

Maybe you want to go back and reread the Explanatory Notes for completing form IR21 then. Just to keep you up to date and in the loop.....

More specifically.....

4. You are also required to withhold any monies (including overtime pay, leave pay, allowances for transport, entertainment, gratuities and lump sum payments, etc.) due to your employee from the day he notifies you of his intention to cease employment or when you decide to terminate the employment or post the employee to an overseas location. If you are unable to withhold monies, state reason in Section D, item 18. If an employer fails to comply and does not give valid reasons, he may be held liable for the tax that is owing by the employee.

5. Do not release any monies to the employee until tax clearance is given or 30 days after the Comptroller has been notified through the Form IR21, whichever is earlier.

Hi,

As I said earlier, I think the company is within their rights to do what they are doing. Given this, I am looking for options based on the fact that they essentially expect me to work for nothing for January and February of next year, which I cannot afford to do.

Thanks everyone for your help, I have ideas, I just need to seek out legal authority to discuss.

Guy

[ecureilx]

Thank you all for taking the time to reply. Ecureilx I will speak to IRAS again and see if they can issue that memo - my next EP has already been approved in principle so it may be an option. If not, it will be a quiet few months!

Note that, still, the employer can insist on clearing your taxes before giving you the balance ... they don't have to listen to IRAS ..

withhold all salary ? I remember NOT.

Maybe you want to go back and reread the Explanatory Notes for completing form IR21 then. Just to keep you up to date and in the loop.....

More specifically.....

4. You are also required to withhold any monies (including overtime pay, leave pay, allowances for transport, entertainment, gratuities and lump sum payments, etc.) due to your employee from the day he notifies you of his intention to cease employment or when you decide to terminate the employment or post the employee to an overseas location. If you are unable to withhold monies, state reason in Section D, item 18. If an employer fails to comply and does not give valid reasons, he may be held liable for the tax that is owing by the employee.

5. Do not release any monies to the employee until tax clearance is given or 30 days after the Comptroller has been notified through the Form IR21, whichever is earlier.

SMS, does that apply when an employer holds 3 months of your pay ?? from what I know, that rule generally applies when you serve 30 days notice ..

What I see here is an employer who is mad or has an angry HR ... or just clueless HR doing things by the book .. even at the maximum tax bracket, will it cross 25 % of the pay (i.e. 3 months pay .. )

[turtonguy]

Thank you all for taking the time to reply. Ecureilx I will speak to IRAS again and see if they can issue that memo - my next EP has already been approved in principle so it may be an option. If not, it will be a quiet few months!

Note that, still, the employer can insist on clearing your taxes before giving you the balance ... they don't have to listen to IRAS ..

withhold all salary ? I remember NOT.

Maybe you want to go back and reread the Explanatory Notes for completing form IR21 then. Just to keep you up to date and in the loop.....

More specifically.....

4. You are also required to withhold any monies (including overtime pay, leave pay, allowances for transport, entertainment, gratuities and lump sum payments, etc.) due to your employee from the day he notifies you of his intention to cease employment or when you decide to terminate the employment or post the employee to an overseas location. If you are unable to withhold monies, state reason in Section D, item 18. If an employer fails to comply and does not give valid reasons, he may be held liable for the tax that is owing by the employee.

5. Do not release any monies to the employee until tax clearance is given or 30 days after the Comptroller has been notified through the Form IR21, whichever is earlier.

SMS, does that apply when an employer holds 3 months of your pay ?? from what I know, that rule generally applies when you serve 30 days notice ..

What I see here is an employer who is mad or has an angry HR ... or just clueless HR doing things by the book .. even at the maximum tax bracket, will it cross 25 % of the pay (i.e. 3 months pay .. )

A fair assessment. A clueless HR supported by a punitive, unflexible corporate process which head of finance refuses to flex. As I said, unfortunately, I think it is all their prerogative because they are the employer and I am a lowly EP holder. No, tax at max possible liability will not even cover half of one month's salary. The bigger issue as I said is the relocation allowance - but contract is ambiguous and therefore employer has the power/right to handle how they choose.

Frustrating.

[ecureilx]

A fair assessment. A clueless HR supported by a punitive, unflexible corporate process which head of finance refuses to flex. As I said, unfortunately, I think it is all their prerogative because they are the employer and I am a lowly EP holder. No, tax at max possible liability will not even cover half of one month's salary. The bigger issue as I said is the relocation allowance - but contract is ambiguous and therefore employer has the power/right to handle how they choose.

Frustrating.

ah .. I see ..

So, try to convince them, if not try to confuse them, if not .. just join the party...

My 2 cents ? don't try to seek legal recourse, as more often, even receptive HR can clam up ..

as I said, even the IRAS recommendation is that, a recommendation. When i was stuck with a low life employer, my pay was far below the quantum for being eligible for tax, but the FC (yes, they did have an FC) held back my last month pay, in line with IRAS recommendation, to hold last month salary .. all cries when unheeded .. even when I asked the logic of holding pay when I was below the minimum for tax ..

I was tempted to demand they repatriate me, in lieu, as employers also are responsible for repatriating foreign workers.. I know, it would have gone further south, if I threw that spanner also into their works ..

[sundaymorningstaple]

SMS, does that apply when an employer holds 3 months of your pay ?? from what I know, that rule generally applies when you serve 30 days notice ..

What I see here is an employer who is mad or has an angry HR ... or just clueless HR doing things by the book .. even at the maximum tax bracket, will it cross 25 % of the pay (i.e. 3 months pay .. )

Yes it applies EVEN IF THE NOTICE REQUIRED IS 6 MONTHS. That is the letter of the law. Are they flexible? Sure. Why not. However, an employer is legally bound by virtue of the IR-21 to act as the IRAS' tax agent. It is the employer that would be shafted with fines if the guy managed to do a runner. Having said that, I don't know too many employers who adhere to that and I've had to file a tax clearance with only two weeks before the departure date (but with a written explanation so they are pretty amenable to work with the employers.

The bottom line is this... You are wrong. It is a fact that IRAS CAN, if they want, insist on this. To tell any poster here anything else is NOT what we do here. At least the OP does understand the scenario even though it is stupid and doesn't make real sense, but we are in Singapore therefore we play by their rules.