The Impact of Mergers and Acquisitions on Singapore Immigration
August 17, 2015
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By: Dalia Wong
Business has a long history of M&A as organisations pursue strategic advantages by diversifying or consolidating their resources. Among the complex considerations for any merger or acquisition, however, is the impact on the immigration status of foreign national employees. Failure to address the immigration consequences of a merger or acquisition at the outset can have severe consequences.
Depending on the circumstances of the case, immigration authorities have the discretion to impose penalties for noncompliance and these could involve a monetary fine and/or imprisonment, either to the employee and employer or both.
In Singapore, immigration measures have been introduced by the government over the last few years to raise the quality of the workforce and to avoid over-reliance on foreign labour. As a result, the immigration status of foreign nationals when they become employees of a new company as a result of an M&A transaction is no longer a certainty.
Once the structure and details of the transaction have been finalised, it is critical that the businesses involved undertake a thorough review of their foreign nationals and work on a planned strategy to ensure that there is minimal immigration impact.
There are four main work categories in Singapore: the Employment Pass, which is aimed at professionals, managers, executives and specialists; the Personalised Employment Pass, targeted at high earning employment pass holders; the S Pass for mid-level skilled workers; and the Work Permit, intended for blue collar workers.
Employment Pass Holders
Under the current framework, Employment Passes are generally not transferable when employees move from one entity to another, hence a new Employment Pass must be applied for.
Under a company restructuring, such as an M&A, it is possible to write to the Ministry of Manpower (MOM) to request a transfer of the Employment Pass from the existing entity to the new entity. However, approval remains at the MOM’s discretion. It is helpful to provide any publicly available information to the MOM prior to filing the transfer request to check if there would be any issues with this approach.
The request for Employment Pass transfers should ideally be submitted to the MOM at least six weeks prior to the effective date, as it typically takes them about two weeks to process the transfer. In the event that the Employment Pass transfers are denied, this would give sufficient time to apply for fresh Employment Passes under the new entity. A job posting may be required depending on the employee’s and company’s profiles.
Personalised Employment Pass Holders
No transfer is required for employees on Personalised Employment Passes, although prescribed notifications must be filed with the MOM by the PEP holder, current employer and new employer reporting the change of employer within seven days of the effective date.
S Pass Holders
Affected S Pass holders will be required to apply for fresh S Passes under the new entity as transfers are not usually allowed. A fresh S Pass application takes the MOM approximately one week to process. It is important to note that the new entity must complete the business classification and have the available quota to sponsor new S Pass applications.
Where there are existing dependants, the company must also review its employees’ salaries to determine if they meet the raised salary threshold required to sponsor family members on dependant passes.
Registration and other considerations
Employers must be fully aware of the impact of their M&A activity on pending and new visa applications. As timing is critical in any M&A, it is important that businesses work with their immigration team to ensure that pending and new applications do not fall through the cracks.
Where a new entity is established as a result of the M&A transaction, businesses must also ensure that the necessary Workforce Development Account (WDA) and Employment Pass Online (EPOL) accounts are registered in a timely manner to support any new and ongoing immigration processes.
