Ministry of Manpower’s new hiring rules and how they will affect employers come 2014
On 23 September 2013, the Ministry of Manpower ("MOM") announced new hiring rules which are aimed at ensuring that employers consider Singaporeans fairly before hiring employment pass ("EP") holders. These rules, known as the Fair Consideration Framework ("FCF") will take effect in stages from 1 January 2014 to 1 August 2014.
The classes of persons likely to be significantly affected by the changes under the FCF include but are not limited to:
1. firms that hire a sizable number of EP holders;
2. firms with relatively fewer Singaporeans in professional, managerial and executive roles compared to their sector peers;
3. firms that have received complaints of discriminatory HR practices;
4. firms which are looking to hire foreigners on an EP;
5. firms who currently have employees with EPs that will expire between 1 January 2014 to 1 August 2014; and
6. current EP holders whose EPs will expire between 1 January 2014 to 1 August 2014.
The key features of the FCF are:
1) increase in the qualifying salary for new EP applications;
2) additional scrutiny for firms with discriminatory HR practices; and
3) mandatory advertisement for job vacancies prior to making new EP applications.
II. Increase In The Qualifying Salary For New EP Applications
From January 2014, the qualifying salary for new EP applications will be raised from S$3,000 to S$3,300. Applicants will have to earn a monthly salary of at least S$3,300 or more, depending on qualification and experience. Accordingly young graduates from good educational institutions can qualify if they earn at least S$3,300 while older applicants will have to command higher salaries to qualify, commensurate with the work experience and quality that they are expected to bring.
For existing EP holders, MOM will phase in these new requirements over the next two to three years, depending on when their current EPs expire. Existing EP holders whose passes expire:
1) before 1 January 2014 will receive a one-time renewal based on existing EP criteria;
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2) between 1 January 2014 and 30 June 2014 (both dates inclusive) will receive a one-time renewal of up to one year based on the existing EP criteria; and
3) after 30 June 2014 will have to meet the new criteria.
These transitional measures are applicable provided that there is no change of employer for the existing EP holders.
III. Additional Scrutiny For Firms With Discriminatory HR Practices
MOM and other government agencies will start to identify firms with poor hiring and career development practices. This would include firms that have a relatively low concentration of Singaporeans at the professional, managerial and executive level compared to others in their industry, and firms which have received repeated complaints of nationality-based or other discriminatory HR practices. MOM will notify the firms that will be subject to additional scrutiny in the first quarter of 2014.
Such firms will be asked to provide information to MOM such as organisation charts with nationality information, recruitment processes, and plans to develop local internal staff to take on higher roles or reduce reliance on EP holders.
If firms are not responsive towards improving their recruitment and training practices, MOM may impose additional requirements which include requiring the firm to attest that it will not displace any similarly employed Singaporean within 60 days before or after applying or renewing EPs, and to display at the workplace, a factsheet containing key information submitted to MOM.
MOM has also made clear that unresponsive firms would face greater scrutiny and a longer review period when applying for EPs. Further, these firms may have their work pass privileges curtailed.
IV. Mandatory Advertisement For Job Vacancies Prior To Making New EP Applications
To encourage firms to consider Singaporeans fairly for jobs, firms making new EP applications must advertise these job vacancies on a new jobs bank administered by the Singapore Workforce Development Agency. These job advertisements must be open to Singaporeans, comply with the Tripartite Guidelines on Fair Employment Practices, and run for at least 14 days. These requirements must be met before an EP application is submitted to MOM. Further, the period between the closing date of the job advertisement and the EP application should be less than or equal to three months. This mandatory advertisement requirement will take effect on 1 August 2014.
To be clear, firms can continue to advertise job vacancies on other platforms and websites. However, if an EP application is needed, firms must advertise on the new jobs bank before submitting the application to MOM. Advertisements on the new jobs bank will be free-of-charge.
Small firms with 25 or less employees, and jobs which pay a fixed monthly salary of S$12,000 and above will however be exempted from these advertising requirements. Notwithstanding this, if the MOM receives complaints of nationality-based or other discriminatory HR practices, these firms may be placed under greater scrutiny by MOM and may have their work pass privileges curtailed.
As the FCF rules start to take effect on 1 January 2014, businesses should consider the impact of these rules on their human capital needs. In addition, it is important for businesses to review their employment policies and processes to ensure that they will be in full compliance with the FCF rules.