Foreign employee in Singapore challenges practice of using a fixed allowance to cover all overtime work
Singapore's High Court has ruled that employers cannot use fixed monthly allowances to absorb or cap overtime pay for foreign workers, clarifying that overtime must be paid based on actual hours worked at the declared rate.
Justice Philip Jeyaretnam allowed an appeal by a work permit holder employed as a packer, who had sought overtime payments from his former employer after leaving the company in August 2023.
The employee, an Indian national on a work permit, had no separate written employment contract. The only documented terms were set out in the In‑Principle Approval Letter (IPA) issued with his work pass.
The IPA recorded a basic monthly salary of S$1,000, fixed monthly allowances of S$200 for "Housing, Amenities and Services," and S$300 under "Others". It also stated that his overtime rate was S$7.87 per hour.
The employer treated the S$300 "Others" allowance as a fixed monthly payment for all overtime, regardless of the number of extra hours worked. If the employee worked 20 hours or 40 hours of overtime, he would still receive only S$300.
The case reached the High Court after the Employment Claims Tribunal (ECT) partially allowed the employee's claim for unpaid overtime.
However, the ECT ordered that the overtime payable be offset against the fixed S$300 monthly "Others" allowance, which the employer's payslips had described as "Overtime."...
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