The Ministry of Manpower announced that from 1 May 2021, foreigners in Singapore on dependant's passes (“DP Holder”) will need to have their own work pass to entitle them to be employed in Singapore; the current Letter of Consent (“LOC”) method will no longer be effective.
By way of background, a dependant (i) of a holder of an Employment Pass, EntrePass or Personalised Employment Pass; (ii) with a dependent’s pass valid for at least 3 months; and (iii) who had a job offer from a Singapore employer, can “piggy back” on their spouses to work in Singapore by obtaining an LOC from the Ministry of Manpower.
To this end, a separate Employment Pass, S Pass, or Work Permit, is not necessary for the DP Holder, as long as the DP Holder obtains a LOC. An LOC (i) is significantly easier to obtain than other work passes as there is no minimum qualifying salary for the same; (ii) does not subject the employer to a foreign worker levy; (iii) does not form part of an employer’s dependency ratio (i.e. the proportion of S Pass and Work Permit holders to local employees that an employer employs); and (iv) does not require an employer to advertise the job on the MyCareersFuture.gov portal before an LOC application is made. This makes LOCs an extremely attractive manner by which employers can employ foreigners who are DP Holders.
What the Change means for Employers
From 1 May 2021, employers currently sponsoring DPs for their existing foreign employees’ spouses will no longer be able to obtain LOCs to enable the spouses to work in Singapore. This may have an impact on their foreign employees’ family arrangements and desire to continue working in Singapore. MNCs may wish to take a longer-term view when hiring foreigners or transferring foreign employees to work in Singapore.
Employers currently employing DP Holders will now have to sponsor work passes for these individuals once their current LOC expires. Practically, when applying for a work pass for a DP Holder, an employer will have to bear in mind:
a) whether the DP Holder meets the relevant minimum qualifying salary for that type of work pass; b) whether there is any impact on the employer’s dependency ratio; and c) payment of the relevant foreign worker levy to the Ministry of Manpower.
Employers should be mindful of how the employment of DP Holders on work passes will affect their dependency ratio, in particular, whether it will cause them to exceed the prescribed dependency ratio ceiling for their business sector.
What this means for Individuals
A DP Holder may continue to work under an LOC on the basis that their business creates local employment, if a DP Holder (i) is a business owner; and (ii) owns at least 30% of the business’s shares. Further, that business must employ at least one Singaporean or permanent resident earning at least S$1,400/month, and make contributions to the employee's Central Provident Fund account for at least three months.
If the DP Holder’s business does not meet the aforementioned criteria, he/she may (i) continue to run that business on an existing LOC until its expiry; and/or (ii) apply for a one-off extension (which would run until April 30, 2022) when they next renew their dependant's pass. Related Changes
The Minister for Manpower further announced that periodic adjustments will continue to be made to the local qualifying salary (which is the minimum salary for local workers to count towards a company's headcount in calculating work permit and S Pass quotas, and currently stands at S$1,400/month). However, this adjustment will not take effect this year, in order to give companies time to recover from the impact of the Covid-19 pandemic
The Minister for Manpower also stated that more details surrounding the updates to foreign workers’ requirements for working in Singapore would be announced later this year.
If you would like to discuss the measures that you may take to ensure compliance with the updates to the laws concerning employment of foreign workers, please do not hesitate to get in touch with any member of the Bird & Bird Singapore Employment team.