Tightening of rules for foreign employment in Singapore

What you need to know

• The minimum salary threshold for an Employment Pass (EP) outside of the financial services sector will be raised to SGD 4,500 per month.  The new threshold will apply to new applications from 1 September 2020 and to renewal applications from 1 May 2021.  A new, financial services specific threshold of SGD 5,000 per month will apply from 1 December 2020. The minimum salary threshold for an S Pass will be raised to SGD 2,500 per month and the qualifying salary for older and more experienced S Pass candidates will be revised accordingly.  The new threshold will apply to new applications from 1 October 2020 and to renewal applications from 1 May 2021.
• The Ministry of Manpower (MOM) will further scrutinise the hiring practices of employers to detect hiring practices which may discriminate against Singaporeans under framework of the MOM's Fair Consideration Framework (FCF) and the Tripartite Guidelines on Fair Employment Practices.
• From 1 October 2020, employers will now need to advertise all jobs covered by the Fair Consideration Framework for 28 days before they can apply for a new EP or S Pass for foreign candidates.  The FCF requirements (including the advertising requirement) will now also apply to S Passes in addition to EPs. 

What you need to do

As the Singapore Government continues to emphasise the importance of a strong Singaporean core in the workforce, changes to the rules regarding the employment of foreign manpower had been anticipated.

• Review the changes and consider if they apply to your hiring and resourcing practices.  If they do, ensure that you are able to meet the requirements with respect to new or existing employees affected by the changes.  Employers who have a high proportion of foreign employees should consider whether this can be reasonably justified to the MOM.
• Monitor any further developments in this space.  The rules regarding the employment of foreign workers have been amended a few times this year and further changes cannot be ruled out as the economic fallout from the COVID-19 pandemic continues. 

Further increase in minimum salary for granting of work visas

The minimum salary that an employee has to earn to qualify for an EP will be raised from SGD 3,900 to SGD 4,500 per month.  This marks the second time this year that the minimum salary threshold for an EP, which is intended for highly skilled professionals, managers, executives and technicians (PMETs) has been raised.  The new SGD 4,500 threshold will apply to applications for new EPs from 1 September 2020, and to renewals of existing EPs from 1 May 2021.

For mid-skilled workers on an S Pass, the minimum salary will be raised from SGD 2,400 to SGD 2,500 from 1 October 2020 for new applications and 1 May 2021 for renewals of an existing S Pass.  This also marks the second time this year that the minimum salary for an S Pass has been raised.

The minimum salary thresholds  for EPs and S Passes are intended to apply to younger and less experienced employees only.  Older and more experienced candidates will be subject to a stricter salary criteria.  For example, the MOM has stated that the EP qualifying salary for an older and more experienced employee in his or her 40s will be around double that of the SGD 4,500 per month minimum. 

EP minimum salary threshold specific to financial services sector

There has been recent commentary regarding the concentration of foreign employees in one of Singapore's biggest sectors, the financial services sector, where well-paying PMET roles are concentrated.  The Monetary Authority of Singapore (MAS) has publicly stated that "Singaporeans are generally doing well in the financial sector, but MAS would like to see more of them move into the senior ranks". ¹

For the first time, the MOM will implement a minimum salary threshold which is applicable only to a specific sector- the financial services sector.  The EP minimum salary for this sector will be SGD 5,000 (as opposed to the general minimum salary of SGD 4,500) from 1 December 2020 for new applications and 1 May 2021 for renewals of an existing EP in the sector.

The EP salary criteria for older and more experienced candidates in the financial services sector will also be correspondingly increased, with a suggestion that the EP qualifying salary for an older employee in his or her 40s will be around double the financial services sector minimum threshold of SGD 5,000 in order for the relevant EP to be approved.

MAS placing priority on ensuring that financial sector growth supports local employment while continuing to welcome global talent 

For the Financial Services Sector, speeches by MAS officials indicate a stronger emphasis on growing and strengthening the Singaporean Core, while acknowledging the continued importance of skilled foreign talents.² Key areas of concerns that MAS is looking into include:

• the active grooming of Singaporeans for senior leadership and specialist roles;
• the hiring practices of Financial Institutions (FIs); and
• sectors that are foreign labour intensive, especially business functions that are lower in value-add. ³

At present, MAS has been stepping up engagement with the top leadership of key financial institutions on their hiring practices. MAS is also actively engaging firms that are on MOM's Fair Consideration Framework Watchlist. However, MAS acknowledges that the higher share of foreigners in senior roles is mainly due to the large international component of the activities that Singapore now undertakes. 

While MAS places a high priority on ensuring that financial sector growth supports local employment outcomes, it has stated that a key prong of its development strategy is to attract more global and regional headquarter functions of FIs here, and that will involve FIs bringing in a diversity of talent.⁴ It has acknowledged that FIs may need to bring in foreigners with experience and skills not available locally, and noted that most do so responsibly by ensuring that they concurrently build the local talent pipeline in specialist expertise and groom locals into leadership positions while bringing in foreigners to plug immediate capability gaps.⁵

The key message for financial institutions is to ensure that they commit to good HR practices that consider Singaporeans fairly and have action plans to grow their pool of Singaporean professionals and leadership in the long term. MAS is stepping up efforts in ensuring diversity and has indicated that it will release further details in coming months. 

Increased scrutiny of hiring practices

The MOM has also announced that it will scrutinise the hiring practices of employers who either have a low percentage of Singaporeans in their workforce or where there is an unusual concentration of a single nationality in their EP and S Pass workforce.  This follows a recent announcement from the MOM that it had placed 47 employers on its watch list because the composition of their respective workforces indicated hiring practices that may have been discriminatory against Singaporeans.

The MOM has also announced that when evaluating an employer's applications for EPs and S Passes, it will now place more emphasis on whether the employer has recruited and trained Singaporean PMETs and the extent to which it has supported existing Singaporean PMETs in its workforce.

Changes to FCF advertising requirements

From 1 October 2020, the duration for which an employer will be required to advertise a job on the MyCareersFuture.sg government job portal will be doubled from 14 days to 28 days.  The advertising requirement will also now apply to jobs which will be filled by an S Pass holder – a significant development given that the FCF has up till now applied only to EPs.

These changes mark the second time the FCF has been amended this year: in May 2020 the FCF was amended to increase the minimum monthly salary for a job to be exempted from the advertising requirement from SGD 15,000 to SGD 20,000.

Conclusion

These changes are the latest in a widespread series of changes in the employment landscape as the Singapore Government tries to assist with job retention, particularly in respect of jobs held by Singaporeans.  All companies who employ foreign workers (particularly at the PMET level) should pay close attention to these changes and monitor further developments.  

_{1. https://www.bloomberg.com/news/articles/2020-08-29/mas-says-falsehoods-around-financial-sector-hiring-unfair-st}

_{2. "Creating Opportunities and Strengthening the Singapore Core in Financial Services" - Keynote Speech by Ms Jacqueline Loh, Deputy Managing Director (Markets & Development), Monetary Authority of Singapore, at SGUnited Financial Sector Jobs & Skills Fair on 12 August 2020}

_{3. "A Vibrant Sector for Singaporeans" - Speech by Mr Ong Ye Kung, Minister for Transport and Board Member of the Monetary Authority of Singapore, at the debate of President's Address on 1 September 2020}  

_{4. "Creating Opportunities and Strengthening the Singapore Core in Financial Services" - Keynote Speech by Ms Jacqueline Loh, Deputy Managing Director (Markets & Development), Monetary Authority of Singapore, at SGUnited Financial Sector Jobs & Skills Fair on 12 August 2020 at paragraph 15.}

_{5. Id, at paragraph 16.}