Employment Update

In its recent 2022 Budget Statement, the Singapore Ministry of Finance announced that the framework for issuing work passes would be reviewed and updated to strengthen Singapore’s workforce, and to ensure that incoming work pass holders meet the quality of Singaporeans in professional, managerial, executive and technical jobs (PMETs).

As a result, the minimum qualifying salary for Employment Pass (EP) and S Pass applicants will be increased with effect from 1 September 2022 (for new applications) and 1 September 2023 (for renewals). During the debate, it was further announced that all EP applicants will be required to pass a new points-based Complementarity Assessment Framework (or ‘COMPASS’) with effect from 1 September 2023 (for new applications) and 1 September 2024 (for renewals).

This alert summarises the key requirements and provides some immediate action points and practical takeaways for employers to consider.

Increase in Minimum Qualifying Salary for EP and S Pass Applications

The minimum qualifying salary for EP and S Pass holders will be increased as follows:

Employment Pass

The above changes will apply to new applications from 1 September 2022 and to renewal applications from 1 September 2023.

S Pass

 

There will also be changes to the S Pass quota and S Pass Basic/Tier 1 levy rate as follows:

Complementarity Assessment Framework (COMPASS)

One of the biggest announcements to come out of the Budget debate is the introduction of a new points-based immigration system for EP applicants similar to that which exists in other countries such as Australia. This means that in addition to the increased minimum qualifying salary, applicants will also need to pass COMPASS by earning a minimum number of points which are based on a range of individual and company criteria.

An EP application will be scored on 4 foundational criteria and 2 bonus criteria. For each criterion, the applicant can earn 0 points if they do not meet expectations, 10 points if they meet expectations or 20 points if they exceed expectations.

The applicant needs to earn at least 40 points in order to pass COMPASS. These can be earned through any combination of the foundational criteria or the bonus criteria. For example, an applicant will pass if they earn 10 points on the first two foundational criteria, 0 points on the third foundational criteria and 20 points on the fourth foundational criteria. Similarly, an applicant will pass if they earn 20 points on the foundational criteria and 20 points on the bonus criteria.

Criteria and Points System

The following table summarises each of the criteria and how points are earned.

Foundational Criteria

(1) Salary: fixed monthly salary compared to local PMET salaries in the employer’s sector by age

65th to 90th percentile: 10 points

< 65th percentile: 0 points

Applicants earn points by meeting sector-specific benchmarks for local PMET salaries. More information on the relevant sectors and subsectors will be made available before September 2023 but will be based on the business activity declared to the Accounting Corporate and Regulatory Authority (ACRA).

(2) Qualifications

Degree-equivalent qualification: 10 points

No degree-equivalent qualification: 0 points

Qualifications are not a mandatory requirement under COMPASS. Candidates who do not hold degree-equivalent qualifications can still pass COMPASS by earning sufficient points on other criteria.

(3) Diversity: share of candidate’s nationality among the employer’s PMETs

< 5%: 20 points

5 to 25%: 10 points

≥ 25%: 0 points

COMPASS awards more points to applications where the candidate’s nationality forms a small share of the employer’s PMETs. No points are earned if the employer is applying to bring in a candidate whose nationality currently forms a significant share of its PMETs.

The Ministry of Manpower (MOM) considers all employees earning at least SGD3,000 per month as “PMETs” when assessing this criterion.

The application will score 10 points by default if the employer employs fewer than 25 PMETs.

The candidate’s nationality is determined according to their passport in the MOM’s records.

(4) Support for local employment: share of local PMETS within the employer’s subsector

20th to 50th percentile: 10 points

< 20th percentile: 0 points

COMPASS awards more points if the employer has a relatively higher share of locals among PMET employees, compared to its peers in the same subsector.

The MOM considers all employees earning at least SGD3,000 per month as “PMETs” when assessing this criterion.

The application will score 10 points by default if the employer employs fewer than 25 PMETs.

If the employer’s local PMET share is at least 70% (pegged to the 20th percentile of employers economy-wide), the application will earn at least 10 points. This is regardless of where the employers stands within their subsector. In this way, COMPASS will not penalise companies in subsectors which have a relatively high share of local PMETs.

Bonus Criteria

(5) Skills Bonus: if the role is on the Shortage Occupation List (SOL)

(reduced to 10 points if the candidate’s nationality forms 1/3 or higher of the employer’s PMETs)

The SOL will recognise EP holders in occupations requiring highly specialised skills that are currently in shortage in the local workforce. The SOL is not currently finalised but as an indication, it may include niche infocomm-related roles supporting Singapore’s digitalisation drive.

A tripartite evaluation panel will be appointed to assess the proposed occupations and provide a final recommendation for the SOL. The first SOL will be announced when the tripartite evaluation panel has completed its review by March 2023.

(6) Strategic Economic Priorities Bonus: if the employer meets specific assessment criteria on innovation, or internationalisation activities

10 points

To qualify, employers must participate in selected programmes run by various economic agencies or meet specific assessment criteria, and show commitment to developing the local workforce or ecosystem.

More details, including the finalised list of government programmes, eligibility criteria and application process, will be announced by March 2023.

Exemptions

Candidates will be exempted from the COMPASS requirements if at least one of the following conditions applies:

  • the candidate earns a minimum fixed salary of SGD20,000 per month;
  • the candidate is applying as an overseas intra-corporate transferee under the WTO’s General Agreement on Trade in Services or an applicable Free Trade Agreement that Singapore is a party to; or
  • the candidate is filling a role on a short term basis (i.e. 1 month or less).

These exemptions broadly mirror those which currently exist as exemptions to the requirement under the Fair Consideration Framework (FCF) to advertise roles locally on MyCareersFuture for at least 28 consecutive days. However, the exemptions under the FCF for employers with fewer than 10 employees or where the role is to be filled by a local transferee do not seem to apply, meaning that candidates will still need to pass COMPASS in these situations even though the employer may not need to comply with the local advertising requirement.

Effective Date

COMPASS will apply to new EP applications starting from 1 September 2023 and to renewal EP applications starting from 1 September 2024.

Practical Tips and Takeaways

The changes announced represent a significant overhaul to Singapore’s immigration framework. While there is a relatively generous transitional period, employers should start reviewing their hiring and global mobility processes now in order to plan ahead.

Some practical steps and tips to consider include:

  • Carrying out an audit of existing work pass holders and checking whether they will meet the revised minimum qualifying salary threshold. Any changes to salary will need to take effect before 1 September 2023 in the case of renewal applications.
  • Providing training and communications to help HR and mobility teams familiarise themselves with the COMPASS principles.
  • A ‘Pre-Assessment Tool’ will be made available prior to COMPASS coming into effect which will allow an employer to receive an indicative COMPASS score for their prospective candidate before submitting an EP application. Employers should take advantage of this tool when it becomes available (by September 2023) as it will help them to estimate how their application is likely to score against each of the criteria.
  • Taking steps to quantify and benchmark performance in foundational criteria 3 and 4 (diversity and support for local PMETs). While these have always been considered relevant factors by the MOM when deciding applications, employers are encouraged to follow the MOM’s lead in adopting a more scientific approach which seeks to quantify and benchmark performance against industry peers. To help them to do this, the Employer Data Portal (EDP) on myMOM Portal will be enhanced so that employers can see how their local PMET share compares to industry peers. The MOM also regularly publishes labour market statistics, including resident income statistics, which provide an overview of wage trends.
  • Checking the description of business activities registered with ACRA is accurate and up-to-date, as this will likely be used to determine the sector for benchmarking purposes.
  • Separately identifying employees who earn at least SGD3,000 per month as these will be considered PMETs when assessing foundational criteria 3 and 4 (diversity and support for local PMETs). This is also important as employers with fewer than 25 PMETs will score 10 points by default in each of these criteria (20 in total), which is half the total number of points required to pass COMPASS.
  • For employers in the manufacturing, construction, marine shipyard and process, checking whether they are still compliant with the reduced quota for S Pass holders.

If you have any questions in relation to any of the above changes, please contact David Smail.

DLA Piper is restricted for regulatory reasons from practicing local law in Singapore, as are most international law firms. Where advice on Singapore law is required, we will work with a local firm to provide such advice while leveraging our own knowledge and experience as international counsel in international advisory and transactional work.

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