News

Everything About the Wrong Wage Support Paid to S’pore Companies by the Government

2021-04-08 , 6:11 pm

Everyone makes mistakes.

This includes me, my dog, and the government.

When my dog and I make mistakes, the worst that can happen is that one of us poops on the carpet. (Yes, I said one of us).

But when an error occurs in a government organisation, it can have much more serious consequences.

$370 Million in Wage Support Wrongly Paid Out to Companies

Around 5,400 companies here are about to be very disappointed.

The authorities have discovered that these companies were wrongly overpaid in wage support under the Jobs Support Scheme (JSS).

How much? S$370 million.

The overpayments occurred in October last year, owing to computing errors.

Despite the large amount, the overpayments made up just 6% of the total amount paid out under the JSS last October.

Only 3.6% of all companies that received payouts were affected, amounting to around 5,400 firms.

These are businesses that chiefly support projects in the construction, marine and process sector, and tourism sector.

The computing error also led to $1.2 million being erroneously paid out in foreign worker levy waivers and rebates to 360 companies.

So, how the heck did this happen?

Discrepancies in Reopening Dates

Much like many of our problems now, it all started with the circuit breaker last year.

Most businesses were allowed to reopen with a phased approach after that dreaded lockdown period ended.

But firms in the construction, marine and process sector and tourism sector could only reopen with permission from the Ministry of Trade and Industry (MTI).

In their applications to restart projects, the companies would include their subcontractors, clients, and other partners.

The error occurred when the dates for the restarting of the projects were taken as the reopening dates for all the companies.

Why is this a problem?

Well, as you know, the JSS provides subsidies for wage costs. How long firms were paid this subsidy depended on how long they had to remain closed.

So, due to the error with the dates, some companies were erroneously believed to have been closed longer than they actually were.

As a result, these firms received higher wage subsidies.

As MTI explained: “As the processes for the resumption of business activities had to be implemented at short notice, MTI used existing systems and manual processes to grant approvals for businesses to reopen.

“Unfortunately, in so doing, mistakes were made with the reopening dates and concomitantly the JSS payouts and foreign worker levy/waiver payable.

“The error meant that these companies were deemed to have been closed for a longer period of time, and thus allocated a higher JSS payout.”

How Did the Authorities Discover the Errors?

Fortunately, the Inland Revenue Authority of Singapore (IRAS) carries out regular processing checks on the JSS.

In one of their checks in November last year, IRAS detected some anomalies.

Some rather honest businesses also called IRAS up to inform them that they had received extra JSS payouts.

It was only in Dec 2020 that the authorities found out that the cause of the overpayments were discrepancies in companies’ reopening dates.

Once IRAS informed MTI of their findings, the latter launched an “extensive investigation” with other agencies.

What Now?

So, what’s going to happen to all that excess money?

Well, the authorities plan to recover the money in two ways:

Automatic offsets from subsequent JSS payouts
Companies returning the excess payments

For the first method, IRAS will offset the excess amount against the firms’ future JSS payouts.

The government will recover S$140 million this way.

Another $200 million will be recovered after affected firms are contacted by MTI and informed of the computing error so they can return the excess payment.

If future JSS payouts are insufficient to offset the overpayments, the authorities will inform affected businesses of any outstanding excess amount and the firms will return it after their final JSS payout.

Businesses that need to return excess payments can also opt for an instalment payment arrangement.

Affected firms that wish to return to excess funds now may do so through IRAS. Instructions will be included in the letters to the affected businesses.

More Businesses Found to Be Eligible for JSS Payouts

In addition, around 1,000 businesses were found to be eligible for additional JSS payouts. They will receive a total of $5.5 million at the end of April.

Another 1,200 businesses were also found to be entitled to additional foreign worker levy waivers, amounting to $6 million. This will be credited to the businesses immediately.

To prevent this error from happening again, MTI said it has worked with the Ministry of Finance, Ministry of Manpower, and IRAS to rectify the processes and implement additional checks to detect possible errors in the future.

An external auditor was also engaged to carry out a “thorough check” of the reopening dates used in the computation of JSS payouts.

Like I said, everyone makes mistakes.

Featured Image: joyfull / Shutterstock.com