For businesses that are looking to expand or grow operations in Singapore, they must understand the complexities of hiring foreign employees.
Singapore businesses looking to hire foreign employees must understand the plethora of rules on work permits and passes. Every employee must have a valid work pass (commonly known as work visa) but there are different options and processes for companies to follow, depending on individual circumstances.
The Ministry of Manpower (MOM) issues all work passes and permits but before submitting the application for any pass or permit, employers must check the candidate's eligibility through the Self-Assessment Tool Test (SAT) provided by MOM.
Types of work passes
1. Employment Pass (EP)
An EP is a work visa for foreign professionals, managers and executives who earn at least S$3,600 a month with acceptable qualifications. Older or more experienced candidates need higher salaries to qualify. A local employer or authorised third party can apply for a candidate's pass application but an overseas employer that does not have a registered office in Singapore, will need to get a Singapore-registered company to act as a local sponsor and apply manually on behalf of the foreign employer.
Challenges of obtaining an EP
As part of the Fair Consideration Framework, companies may be required to advertise job vacancies on the Jobs Bank website before offering a job to a specific candidate and/or applying for an EP for the shortlisted candidate. The job must be open to Singaporean locals and the ad must run for 14 days before the position becomes open to foreigners. A company may be exempt from the Jobs Bank advertising requirement in certain situations.
All companies are expected to have fair employment practices that are open, merit-based and non-discriminatory. Any company found to have nationality-based or other discriminatory HR practices will face scrutiny from MOM and have their work pass privileges curtailed.
The application process takes three weeks and, if awarded, the pass lasts up to two years for a new visa and three years for a renewal. The validity of EP is solely subject to the discretion of MOM.
2. S Pass
This is designed for mid-level skilled foreign workers and requires candidates to earn at least S$2,300 a month (will be raised to S$2,400 in 2020) and meet assessment criteria, which includes holding a diploma. S Pass is open to all nationalities. A local employer or authorised third party can apply for a S Pass application.
Challenges of obtaining a S Pass
A quota limits the amount of S Pass employees a company can hire – capped at 15% of the total workforce for businesses in the services sector and 20% in all other sectors. Employers must pay a foreign worker levy for all S Pass workers, which starts on the day the S Pass is issued. There are penalties for not paying levy to the MOM, which are the responsibility of the employer.
A S Pass is valid for up to two years and is renewable, depending on the validity of the passport.
3. Dependant's Pass (DP)
DP is available for spouses and children of eligible EP or S Pass holders. The EP holder must earn a minimum fixed monthly salary of S$6,000. The validity of the pass is tied to the main pass. A DP holder is allowed to work in Singapore if he/she finds a job subject to the application of a Letter of Consent by the employing company.
4. Long Term Visit Pass (LTVP)
LTVP is available for parents, common law spouses, step- or handicapped children of eligible EP or S Pass holders. The EP holder must earn a minimum fixed monthly salary of S$6,000 for the common law spouse and double that amount for the parents. The validity of the pass is tied to the main pass.
Work visa types
New regulatory updates from MOM
The MOM has instituted some new updates to the rules and regulations surrounding work passes and permits in Singapore. While some have not come into force yet, businesses should be aware of the requirements.
- Since 1 July 2019, local employees' earnings must meet at least the local qualifying salary of S$1,300.
- Starting in 1 January 2020, the fixed monthly salary of SP holders must be at least $2,400.
The services sector's Dependency Ratio Ceiling (DRC), which refers to the maximum permitted ratio of foreign workers to total workforce, will be revised:
- Starting on 1 Jan 2020, the DRC will be reduced from 40% to 38% and the S Pass sub-DRC will be reduced from 15% to 13%.
- Starting on 1 Jan 2021 the DRC will be reduced from 38% to 35% and the S Pass sub-DRC will be reduced from 13% to 10%.
These reductions will affect how many foreign employees a business can hire. The new regulations are part of the Fair Consideration Framework instituted by MOM to manage offering fair employment to citizens while limiting, but not restricting, the number of foreign workers in Singapore.
We can help
TMF Singapore can help your business navigate all aspects of hiring foreign employees in Singapore. Our team of experts have the local knowledge of HR, payroll, accounting and tax, corporate secretarial and regulatory issues to help you simplify operations and keep your business compliant. Talk to us.
This article was originally published by People Matters.
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.