Minimum Salary Level for Singapore Employment Pass to Increase from 1 May 2020

Category of applicant

Changes

Actions / Considerations

Initial EP applications

From 1 May 2020, employers of foreign nationals applying to work in Singapore under an EP will be required to pay a minimum salary of SGD 3,900.

Employers of foreign workers in Singapore will need to review their employees’ salaries to ensure they meet the new minimum amounts.

Renewal applications

Employers of foreign nationals seeking to renew an EP will be subject to the new minimum requirement from 1 May 2021. EP applications that do not meet the minimum salary may be downgraded to an S Pass, which will result in increased costs to the company and a requirement to pay a monthly levy for each S Pass holder.

Once the MOM’s online assessment tool is updated with the new amounts, employers should review the salaries of the EP holders who may be downgraded to an S Pass at the time of their EP renewal. It is not clear when the tool will be updated.

Local Qualifying Salary (LQS) increase

The qualifying salary for local workers to be counted toward the S Pass quota will increase on 1 July 2020, from SGD 1,300 to SGD 1,400.

A company’s foreign worker quota is calculated by taking into account the number of local employees (Singapore citizens and permanent residents) and foreign employees (S Pass and Work Permit) and the Dependency Ratio Ceiling (DRC) for the particular sector. Employers with more local workers in their workforce are generally granted higher quotas to sponsor foreign nationals.

Affected employers may need to raise the salaries of affected local employees. Companies unwilling to do so may need to reduce their foreign workforce to comply with the lower quota.

Older and experienced EP applicants

The minimum salary for older and more experienced applicants will increase depending on the foreign national’s age at the time of application. For example, an EP applicant in their early 40s will need to earn around double the new minimum qualifying salary of SGD 3,900.

It will be more difficult for employers to hire experienced workers. Employers should be prepared for increased costs in order to qualify for an EP.

Job advertising

The labour market testing requirement for EPs will be expanded on 1 May 2020 to include jobs paying up to SGD 20,000 per month (up from SGD 15,000).

Employers will need to start labour market testing for jobs being offered salaries of less than SGD 20,000 per month.