Increased Minimum Salary Levels for Employment Passes and S Passes

The situation

Effective September 1, 2020, the minimum qualifying monthly salary for Employment Passes (EP) in Singapore will increase to SGD 4,500, up 15.4% from the last increase in May 2020.  The minimum monthly salary for EPs in the financial sector will be increased again on December 1, 2020.  Effective October 1, 2020, the minimum qualifying monthly salary for S Passes in Singapore will increase to SGD 2,500, up 4% from the last increase in January 2020. The exchange rate at the time of the publication of this alert is 1 SGD to .74 USD.

A closer look

CHANGE	DETAILS	IMPACT
Initial EP applications	On September 1, 2020, employers of foreign nationals applying for EPs will be required to pay at least a monthly salary of SGD 4,500, up from SGD 3,900. On December 1, 2020, employers of foreign nationals in the financial sector applying for EPs will be subject to a second minimum monthly salary increase, with the new amount SGD 5,000.	Affected employers of foreign workers in Singapore will need to review the salaries at which they hire these foreign nationals in order to ensure they comply with the new rules.
Initial S Pass applications	On October 1, 2020, employers of foreign nationals applying for S Passes will be required to pay a minimum monthly salary of SGD 2,500, up from SGD 2,400.
Renewal applications	Renewal applications of EP or S Passes will only be subject to the new minimum monthly salary beginning May 1, 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 Ministry of Manpower’s online assessment tool is updated with the new minimum monthly salaries, employers should review the salaries of EP holders who may be downgraded to an S Pass at the time of their EP renewal.

 

Reminders on other requirements

• Benefits and allowances. As before, benefits and allowances may only be included in the minimum salary calculation if they are specified in the employment contract, guaranteed and fixed, and are not paid in kind. Holiday allowance cannot be included in the minimum salary calculation.
• Currency. As before, employers are required to guarantee the salary in SGD regardless of payroll location and/or exchange rate fluctuations.

 

Background

• Regular increases of minimum monthly salaries. The qualifying salary requirements have been regularly adjusted by the government to enable businesses to grow as well as to support employment opportunities for locals. This is the second time this year the minimum qualifying salary has been increased for EPs and comes as a surprise as all prior salary changes in the last decade were usually increased on an annual basis, at most. The Minister for Manpower stated to the press that the intention is to encourage companies to ensure fair hiring, particularly in the current economic climate.
• Financial sector salary trends. Salaries in the financial services sector are consistently higher than in other sectors and attract strong interest from local job seekers; this likely resulted in the MOM deciding, for the first time, to single out an industry and set higher minimum monthly salaries for foreign national applicants seeking to work in finance.

 

Looking ahead

The adjustments are part of the government’s continuing effort to protect the local labor market given the weakness in the job market and its uncertain growth outlook. It is likely that the minimum salary amounts will continue to increase on a regular basis with specific sectors receiving higher adjustments as the government deems necessary.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to  [email protected].