July 01, 2013

On May 31, 2013 the Ministry of Manpower (MOM) shortened the validity of In-Principal Approval Letters (IPA) for S Pass holders to two months. As a more drastic change, between July 1, 2013 and July 1, 2015 the MOM will increasingly restrict the eligibility requirements for S Pass holders and Work Permit holders in the service sector. These restrictions are designed to moderate the demand for foreign manpower and to increase the wages for Singaporeans.

What’s Changed?

Shortened Time to Enter Singapore on IPA

Mid-level skilled foreigners wishing to work in Singapore need to apply through the MOM for an S Pass. Upon approval an In-Principal Approval Letter is issued by the MOM, which enables the applicant to enter Singapore and finalize the S Pass process post arrival. Previously, the foreigner was given 3 months from date of issuance to enter Singapore with this IPA. Because most S Pass holders travel to Singapore within one month of issuance, the MOM has decided to shorten this period to 2 months, effective May 31, 2013.

Increase of Minimum Salary Requirement

Applicants for an S Pass are assessed on a points based system. Points can be earned based on several criteria, including meeting the minimum salary requirement, educational qualifications, type of job and work experience.  As of July 1, 2013 the minimum salary requirement for new applicants has been increased from $2,000 to $2,200, and higher for older and more experienced S Pass holders.

For existing S Pass holders transition measures have been put into place. Existing S Pass holders:

  • whose S Pass      expired before July 1, 2013 have still been able to renew their S Pass for      one time for the maximum 2 year duration based on the pre-July 2013      criteria;
  • whose S Pass      expires between July 1, 2013 and December 31, 2013 will be able to renew      their S Pass one time for up to 1 year based on the pre-July 2013      criteria;
  • whose S Pass      expires on or after January 1, 2014 will need to meet the new salary      requirements;
  • who change      employer after July 1, 2013 will need to meet the new salary requirements.

Increase of Foreign Worker Levy Rates

Employers need to pay a monthly levy for every S Pass holder or Work Permit holder they employ. Increases to these levies have been announced for all sectors to come into effect on July 1, 2014, and again on July 1, 2015. As an example, both for all S Pass holders and for Work Permit holders in the service sector the levies will increase to an additional $90 by July 2015 per S Pass or Work Permit holder, as compared to the previously published levy schedule.

Reduction of Dependency Ratio Ceilings for Service Sector

Employers who want to hire foreign personnel need to meet the Dependency Ratio Ceiling (DRC) requirement: up to July 1, 2013 the percentage of foreign workers in the service sector could not surpass 45% of the total workforce, and the percentage of S Pass holders specifically 20%. These quota and sub-quota have been reduced per July 1, 2013 to 40% and 15% respectively. All new applications will need to comply with these new (sub-)DRCs. However, for the existing foreign work force a transition measure applies: only from July 1, 2015 the new (sub-)quota apply to the existing foreign workers as well.

Extension of Job Flexibility Scheme to Entire Services Sector

The Job Flexibility Scheme, which was already implemented on October 1, 2012 for the hotel sector, has been extended to include the whole service sector from July 1, 2013 onwards. To raise productivity and to help companies copy with labor constraints Work Permit holders in the whole service sector are now allowed to multi-task. This means that Work Permit holders in the service sector are allowed to perform other duties for their employer in addition to their normal work, provided that their sponsoring company has a shortage of manpower.

ACTION ITEMS FOR EMPLOYERS

Companies who employ foreign workers in Singapore should note the new criteria that apply from July 1, 2013 onwards to new S Pass and Work Permit applications, and recruit new foreign and domestic staff accordingly. Please contact your Pro-Link GLOBAL Immigration Specialist in Singapore for further advice on how these changes will affect future applications.

Additionally, companies in the service sector which do not currently meet the new lowered Dependency Ratio Ceilings for their existing work force should adjust their recruiting efforts to either reduce their foreign work force or increase their domestic work force, to reach acceptable levels by July 1, 2015.

Caveat Lector | Warning to Reader

This is provided as informational only and does not substitute for actual legal advice based on the specific circumstances of a matter. Readers are reminded that Immigration laws are fluid and can change a moment’s notice without any warning. Please reach out to your local Pro-Link GLOBAL specialist should you require any additional clarification. This alert was prepared by Carlijn Langeveld, Coordinator, Knowledge Management and our Pro-Link GLOBAL Singapore office.

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