Beginning September 1, 2020, the minimum wage requirement for new applications for the Singaporean Employment Pass (EP) has increased by 15.4% to SGD 4,500 per month. Further increases are due to be implemented before the end of 2020 for Employment Passes in the financial sector and S Passes. Minimum requirements for renewing Employment Passes and S Passes are not due until May 2021.
In addition, from October 1, 2020, the period for which a job advertisement must be posted during the labour market testing phase will be increased from 14 days to 28 days. Previously, employers of S Pass applicants were not required to complete the labour market test, but they will be obliged to fulfil the new job advertisement posting requirement.
What has changed?
Increased minimum salary requirements
In an attempt by the Ministry of Manpower to protect the local labour market and encourage fair recruitment without stifling the growth of the economy in the current climate, the government has adjusted the qualifying minimum salary requirements for new Employment Passes for the second time this year. Following the last update in May, the qualifying minimum monthly salary level for Employment Passes is SGD 4,500 per month as of September 1.
For new S Pass applications, the minimum salary requirement is set to increase on October 1, 2020 by 4% to SGD 2,500 per month. For the financial sector, the minimum monthly salary requirement for Employment Passes will increase again on December 1, 2020 and be set at SGD 5,000 per month.
Where renewals of Employment and S Passes are concerned, the new minimum salary requirement is not due to be put into place until May 1, 2021. It is expected that Employment Permit applications that do not meet the new threshold may be downgraded to an S Pass, which will lead to increased costs to the employer in the form of a levy to be paid on each S Pass holder.
Employers will continue to be required to guarantee the salary as per the minimum amount in SGD, irrespective of whether payroll is in Singapore or not. Any benefits or allowances can continue to be included in the minimum salary level if specified in the employment contract (excluding holiday allowance).
New job advertisement requirements
From October 1, 2020, stricter requirements for labour market testing for employers of foreign nationals will be put into place. In order to strengthen the current process to ensure impartial hiring between foreign and local workers, employers will need to post their job advertisements for a minimum of 28 days, an increase from the 14 days required at present. Employers will need to factor this additional 2-week period into their planning for potential start dates of foreign employees.
Further to the above, S Pass applications will now also be required to complete the labour market test process and therefore the job advertisement posting, where this has previously not been needed. This is an additional administrative burden for employers hiring foreign workers under the S Pass application process and will increase expected processing times by at least a month.
Employers in Singapore should be mindful to follow the new requirements from October onwards, as failure to consider local Singaporeans fairly in the labour market can lead to harsh penalties.
Who is affected?
Singaporean employers of foreign nationals requiring either an Employment Pass or S Pass in order to legally work in the jurisdiction.
What to expect /impact?
The increased time period for which the job advertisements must be posted, plus the introduction of the labour market testing for employers of S Pass applicants will increase the administrative burden on employers of foreign nationals in Singapore. It will also increase the delay in the overall application process to obtain the relevant permits.
For further information on changes to salary and job advertisement requirements in Singapore, please contact the Sterling Lexicon immigration team.