This article was first published on DollarsAndSense.sg
Hiring is a perennial challenge that companies both big and small face. In general, the Singapore government’s labour policy is for Singaporeans to have first dibs on the jobs available in the market, and then when not enough Singapore workers with the requisite skills are available or are willing to take up the jobs, to allow companies access to a global talent pool through hiring foreign workers.
As such, there are very specific rules and regulations governing the hiring of foreign workers. Here’s an overview of the three broad types of passes – Work Permit, S Pass and Employment Pass – that employers and hiring managers could consider applying for.
In view of continued weakness in the job market and uncertain growth outlook, the Ministry of Manpower (MOM) announced raising of work pass criteria for foreigners on 27 August 2020, with the aim of encouraging businesses to retain and expand local employment. These changes are reflected in this article.
Work Permits allows semi-skilled foreign workers from a pre-approved list of countries to work in certain labour-intensive sectors, namely construction, marine shipyard, manufacturing, or the service sector. Individual sectors have specific criteria for granting of work permits.
There are quotas for each industry, known as the Dependency Ratio Ceiling (DRC). For example, the SRC for the services sector is 38%, but will be reduced to 35% from 1 January 2021. Employers also need to pay a monthly levy for each worker and provide mandatory medical insurance.
From 1 January 2024, the DRC for businesses in the Construction and Process industries will be reduced from 1:7 (87.5%) to 1:5 (83.3%). The existing Man-Year Entitlement framework will be phased out and the levy structure for Work Permit holders will be revised. This is to support the industry transformation and incentivise firms to hire higher-skilled foreign workers.
Foreign employees must also come from MOM’s approved source countries, which vary by sector. Currently, for Services and Manufacturing sectors, these are restricted to the traditional source countries (i.e. Malaysia, People’s Republic of China (PRC) and North Asian sources (NAS): Hong Kong (HKSAR passport), Macau, South Korea, Taiwan). From 1 September 2023, this will be expanded to allow businesses in Services and Manufacturing sectors to hire Work Permit holders from NTS countries for a restricted set of occupations in the NTS Occupation List.
When granted, Work Permits are valid for up to 2 years, which is renewable, though there are maximum periods of employment as well as age limits. There is no minimum qualifying salary needed, though Work Permit holders are not able to apply for passes for their family members.
To apply for a Work Permit, an employer or appointed employment agent can apply for the permit from the Ministry of Manpower.
The S Pass allows mid-level skilled staff of all nationalities with relevant qualifications and work experience to work in Singapore. Prospective S Pass holders will need to have a degree or diploma, or specialised technical certificates, have multiple years of experience, and be offered a job that pays at least $2,400 a month (from 1 January 2020).
The minimum qualifying salaries (and corresponding adjustments for older and more experienced applicants) were raised to $2,500 for new applicants from 1 October 2020, and from 1 May 2021 for renewal applicants. This will be further raised to $3,000 from 1 September 2022. Additionally, there will be higher minimum qualifying salaries for the Financial Services sector. This will be set at $3,500 from 1 September 2022.
There is a monthly levy of either $330 or $650 that employers need to pay, depending on how many foreign nationals are working at the company. Companies are also limited by a quota that caps the number of S Pass holders at 13% of the company’s total workforce in the services sector or 20% in all other sectors (construction, marine shipyard, and process). The monthly levy will also be gradually raised to $650 over 3 years for Tier 1 levy.
From 1 January 2021, the quota will be revised to 10% for the services sector, and 18% for all other sectors, respectively. And from 1 January 2023, the quota for all other sectors will be further reduced to 15%.
Once employers successfully apply for an S Pass, it is valid for up to 2 years and is renewable. S Pass holders are able to apply for passes for their family members.
Employment Pass (EP)
Employment Passes (EPs) are for foreign professionals of all nationalities who work in managerial, executive or specialised roles and earn a minimum fixed monthly salary of $4,500 from 1 September 2020 for all new applicants, with qualifying salaries for older and more experienced candidates being correspondingly higher. This will be further increased to $5,000 from 1 September 2022.
In addition, there are even higher qualifying salaries specifically for the Financial Services sector, $5,000 from 1 December 2020. This will be raised to $5,500 from 1 September 2022.
Employment Pass holders must also possess qualifications like a good university degree, professional qualifications or possess specialist skills. There are higher minimum salary requirements for more experienced applicants.
To ensure the quality of EP holders, MOM will be introducing a new points-based Complementarity Assessment Framework (COMPASS) for EP applications. From 1 September 2023, applications must meet both the EP qualifying salary and earn sufficient points under COMPASS to qualify for an EP.
Once granted, Employment Passes are valid for 2 years, and can subsequently be renewed for 3 years at a time. There are no quotas or levies for Employment Pass employees, employers can also choose whether to provide medical insurance for employees on EP.
Employers can use the Self-Assessment Tool to check a candidate’s eligibility before applying. If the tool indicates that you will not qualify, you shouldn’t apply, since your application will be rejected.
Further Steps To Enhance Fair Consideration Framework
For Employment Pass positions, employers are required to advertise the job opening on the MyCareersFuture (formerly JobsBank) for at least 14 days. This requirement to advertise on MyCareersFuture will be extended to S Pass applications from 1 October 2020.
Furthermore, the minimum duration for advertising the position before making a work pass application will be extended to 28 days and apply to both EP and S Pass positions from 1 October.
For more details and requirements, you can refer to the Fair Consideration Framework.
Work Permit, S Pass Or Employment Pass: Which Should You Apply For?
Here is an overview of the various passes available to employers:
With 1.1 million foreign workers working in Singapore (excluding foreign domestic workers), they play an integral role in our economy and workforce. They are our colleagues, clients, vendors, bosses, or even employers.
Having an appreciation and understanding of employment criteria can help us have a more informed view when discussing labour policies, even if we’re not hiring managers.
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