In 2016, the Ministry of Manpower (the "MOM") announced its broad policy to build a Singaporean core in the employment landscape. This year, in efforts to contain the spread of COVID-19, stay-at-home orders and lockdowns have been implemented at various levels internationally, resulting in a global economic standstill. While most sectors in Singapore have re-opened for business, economic outlook remains uncertain.
In response, the MOM has accelerated its efforts to strengthen the Singaporean core. As part of these measures, the minimum qualifying salary for two classes of work passes, the Employment Pass and S Pass, were raised during the first half of 2020. In its latest instalment of policy changes, the MOM has announced further tightening of work pass requirements for foreign employees in Singapore.
This client update summarises the key changes in work pass requirements under MOM's press release of 27 August 2020 (the "Announcement").
Brief overview of work passes in Singapore
Broadly speaking, all persons who are not citizens or permanent residents of Singapore are required to obtain a valid work pass before commencing work in Singapore. The main work passes are as follows:
- Employment Pass for eligible foreign professionals, managers and executives;
- EntrePass for eligible foreign entrepreneurs who wish to start a new business in Singapore
- S Pass for eligible mid-level skilled foreigners; and
- Work Permit for Foreign Worker for eligible semi-skilled foreigners in the construction, manufacturing, marine shipyard, process and services sectors.
Changes to Employment Pass
Minimum qualifying salary
The table below sets out the changes made to the minimum qualifying salary of new Employment Pass applicants pursuant to the Announcement. These changes apply regardless of the industry sector in which the applicant intends to work in.
|Category of applicant||Before 1 September 2020||1 September 2020 onwards|
|Older applicants (in their 40s)||Approximately SGD7,800||Approximately SGD9,000|
To address the consistently higher salaries of employees in the financial services sector, new Employment Pass applicants who are seeking work in such sector will also be subject to the following changes:
|Category of applicants in the financial services sector||Before 1 December 2020||1 December 2020 onwards|
|Experienced applicants||Approximately SGD9,000||Approximately SGD10,000|
For existing Employment Pass holders who are seeking to renew their work pass, the foregoing changes will take effect from 1 May 2021.
FCF job advertising requirement
Pursuant to the MOM's Fair Consideration Framework ("FCF"), employers submitting Employment Pass applications must first advertise the vacant job position on MyCareersFuture.sg ("Jobs Bank") for local jobseekers to apply and be considered for the position fairly. The aforementioned FCF job advertising requirements must be met before employers are permitted to submit an Employment Pass application on behalf of a foreign candidate.
Under the Announcement, this advertising requirement will be subject to the following change:
|-||Before 1 October 2020||1 October 2020 onwards|
|Duration of Jobs Bank advertisement||14 days||28 days|
Changes to S Pass
Minimum qualifying salary
The table below sets out the change made to the minimum qualifying salary of new S Pass applicants pursuant to the Announcement. This change applies regardless of the industry sector in which the applicant intends to work in.
|Category of applicant||Before 1 October 2020||1 October 2020 onwards|
|Experienced applicants||Higher rate pegged to minimum qualifying salary of young applicants||Revised accordingly|
For existing S Pass holders who are seeking to renew their work pass, the foregoing changes will take effect from 1 May 2021.
FCF job advertising requirement
Currently, employers are not required to advertise a vacant job position on Jobs Bank prior to applying for an S Pass for a foreign candidate. However, from 1 October 2020 onwards, prior to applying for an S Pass, employers must first advertise the vacant job position on Jobs Bank for 28 days to allow local jobseekers to apply and be considered for the position fairly. The aforementioned FCF job advertising requirements must be met before the employer is permitted to submit an S Pass application on behalf of a foreign candidate.
Lower Dependency Ratio Ceilings
In Singapore, employers seeking to hire foreign employees under S Passes and Work Permits are subject to a dependency ratio ceiling ("DRC"). A DRC is the maximum ratio of foreign workers (under the S Pass and Work Permit holders) to the total workforce (eligible local employees, S Pass and Work Permit holders) that a company in a given sector can employ.
While the Announcement did not make changes to the DRC, the following table sets out the upcoming changes to the DRC for service sector companies pursuant to the 2019 Budget Statement:
|DRC for Services sector||Before 1 January 2021||1 January 2021 onwards|
|DRC (maximum ratio of S Pass and Work Permit holders in one company)||38%||35%|
|Sub-DRC (maximum ratio of S Pass holders in one company)||13%||10%|
Heightened considerations for work pass applications
In line with the greater overall emphasis on fair hiring practices and strengthening the Singaporean core workforce, the MOM will also lend greater emphasis to the following factors in evaluating Employment Pass and S Pass applications going forward:
- whether the employer has kept up support of local professionals, managers, executives and technicians ("PMETs") in their employment; and
- whether the employer has been responsive to government efforts to help them recruit and train more Singaporean PMETs.
To avoid an overconcentration of Employment Pass and S Pass employments, the MOM has also made its first public announcement that it will maintain a watchlist ("FCF Watchlist") of employers whose PMET workforce profiles suggest bias against locals. Such employers include those with a weakening Singaporean core workforce as well as those whose Employment Pass and S Pass workforce are overly concentrated from a single source. Employers who may potentially be placed on the FCF Watchlist will be given a chance to review their hiring practices before they are placed on the FCF Watchlist.
In response to the Announcement, Members of Parliament have raised a number of suggestions, including:
- extending the higher qualifying salary requirement for the financial services sector to the infocomm technology sector and the professional services (including law, accountancy and consultancy) sector;
- requiring companies to publish their selection criteria for jobs;
- requiring more transparency from employers who employ foreign professionals, managers and executives under intra-corporate transfer exemptions to the FCF job advertising requirements;
- enacting fair employment or anti-discrimination legislation in Singapore; and
- subjecting Employment Pass holders to the DRC.
While the MOM has not commented nor adopted these suggestions, employers may wish to prepare themselves for future work pass tightening measures since the MOM has taken on board certain parliamentary suggestions in the past.
The full Announcement may be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.