Zhao Yang Ng, Local Principal, and Averill Chow, Associate, Baker & McKenzie Wong & Leow share the five major changes to Singapore's labour laws that HR professionals should take note of.
In recent months, the Singapore government has made a number of changes to employment policy, which have been backed up by highly publicised enforcement actions. The naming of a firm that was prosecuted for not fairly considering local candidates and curtailment of work pass application privileges for 47 employers in August 2020 show the risks for employers that don’t comply with the latest regulations.
The common thread behind both trends is the government’s push to provide better jobs for Singapore Citizens and Permanent Residents (whom we’ll refer to as Singaporeans for the purposes of this article), with an added emphasis on the employment of older workers.
As a result, businesses with employees in Singapore may need to adapt their hiring strategies to keep ahead of any potential issues. We outline some of the trends to keep in mind.
What’s behind these changes?
This strategy aims to attract and retain high-value activities in Singapore by ensuring the city-state remains competitive in attracting skilled foreign talent, but only where it is necessary to complement the Singaporean workforce and fill existing skills gaps. The government reasons that these activities are required to generate and support a variety of good jobs that meet the ambitions of Singaporeans.
In 2020 and 2021, the government took several actions aimed at addressing concerns expressed by some that foreigners entering Singapore do not actually bring more high-value economic activity to Singapore but rather occupy these good jobs intended for Singaporeans. Several of these actions are centred on Singapore’s tight immigration controls – foreign nationals can only work in Singapore if they hold valid work passes, which are granted at the government’s discretion.
What changes have been made?
There are five major changes that HR professionals should take note of:
1. Introducing Tech.Pass
Up to 500 Tech.Passes will be granted to attract technical experts to develop Singapore’s technology industry. Applicants must meet at least two out of three of the following requirements to be considered:
- Earned a fixed monthly salary of at least an equivalent of SGD 20,000 in the year preceding the Tech.Pass application
- Have a minimum of five cumulative years of experience leading a technology company with a valuation or market capitalisation of at least USD 500mn, or at least USD 30mn in funding raised
- Have a minimum of five cumulative years of experience in leading the development of a technology product that has at least 100,000 monthly active users or at least USD 100mn annual revenue.
The limited number of Tech.Passes and the experience requirements show that the government is keen on only welcoming a limited number of foreign talent with demonstrated leadership ability in the technology sector.
2. Increasing minimum salary requirements for foreign mid-level and highly skilled labour
Minimum salary requirements for foreign nationals to be considered for S Passes have increased from SGD 2,400 to SGD 2,500. Likewise, Employment Pass requirements have risen from SGD 3,900 to SGD 5,000 for applicants in the financial services sector and SGD 4,500 for other sectors.
As the minimum salaries above apply to entry-level employees, the qualifying salaries for older and more experienced candidates were also correspondingly increased.
At the same time, the S Pass quota available to employers has been reduced while the levies payable for hiring S Pass holders have increased over recent years, with the latest reduction to the S Pass quota in the manufacturing sector announced on 16 February 2021. These quota and levy requirements do not apply to Employment Pass holders.
Raising the minimum salary requirements for S Pass and Employment Pass holders may help to reduce competition faced by Singaporeans when applying for jobs. Because the minimum salary requirements applicable to foreign nationals do not apply, it may be more affordable for employers to hire a Singaporean candidate for the role. The reduced competition may increase the number of good jobs being awarded to Singaporeans.
3. Penalising employers who may discriminate against hiring Singaporeans
The government has condemned the practice of employers discriminating against Singaporean job applicants in favour of foreign applicants. Since 2016, the government has penalised at least 1,247 employers who have:
- Skilled labour comprised of a higher proportion of foreign nationals than industry peers;
- A high concentration of skilled employees from a single nationality;
- Pre-selected a foreign national for a job vacancy without seriously considering the Singaporean applicants that applied.
Nationality-based discrimination accounted for 60% of employers who were penalised for discriminatory based hiring practices. The penalties include rejecting or delaying the employers’ work pass applications for foreign employees for up to two years, and fines of up to SGD 20,000.
In 2020, about 400 employers were penalised. The increased enforcement actions by the government may mitigate discriminatory hiring practices against Singaporeans, increasing the likelihood of Singaporeans enjoying good jobs.
4. Extending advertisement duration requirements and requiring job advertisements for S Pass applications
Subject to some exemptions, the government now requires employers to advertise all job vacancies on MyCareersFuture before submitting all S Pass and Employment Pass applications. Until now, employers were only required to post job advertisements for Employment Pass applications.
The government also extended the minimum advertisement duration from 14 to 28 days. The enhanced advertising requirement increases the likelihood of Singaporeans applying to the job vacancies that would have otherwise been filled by foreigners.
This measure may mitigate the risk that foreigners take up good jobs intended for Singaporeans, because employers must consider Singaporean applicants, or risk being penalised.
5. Requiring work passes for Dependant’s Pass holders who wish to work
From 1 May 2021, the government will require Dependant’s Pass holders who wish to work in Singapore to hold a valid work pass, such as an Employment Pass or a S Pass. Presently, family of work pass holders may enter Singapore on Dependants’ Passes to accompany the work pass holder.
Currently, these Dependant’s Pass holders do not need work passes to work in Singapore. Instead, their employers can apply for Letters of Consent, which allow them to work in Singapore until the expiry of the work pass of their family member. This means that the current requirements applicable to work pass applications, such as minimum salaries for Employment Passes or S Passes, do not apply to Letter of Consent applications.
By requiring a valid work pass for Dependant’s Pass holders working in Singapore instead of a Letter of Consent, the government is expanding the scope of the tightened work pass requirements to these Dependant’s Pass holders as well.
What are the other initiatives that aim to enhance the job environment for Singaporeans? What should employers keep in mind?
From September 2020 to September 2021 (inclusive), the government is providing cash support to employers who increase their overall number of Singaporean employees earning at least SGD 1,400 per month compared to the employer’s baseline month through the Jobs Growth Incentive. The initiative provides subsidies of up to 50% of monthly salaries up to a fixed amount, for between 12 and 18 months.
Nonetheless, employers should note that to encourage retention of existing Singaporean employees as far as possible, the Jobs Growth Incentive cash payout will be reduced if existing Singaporean employees leave the employer.
The government is also extending the SGUnited Jobs and Skills programme, which was launched due to the COVID-19 pandemic, to 31 March 2022. Under this programme, employers who submit successful applications may provide traineeships with government co-funding for 80-90% of training allowances paid to trainees.
The cash support under the Jobs Growth Incentive and the SGUnited Jobs and Skills programme not only reduces the employer’s manpower expenditure for new Singaporean employees and trainees, but may also encourage employers to engage Singaporeans over foreigners because they would enjoy the cash payment for Singaporeans but not for foreigners.
Penalising employers for age and gender discrimination
The government has barred an average of 20 employers per year since 2018 from hiring new foreign employees and renewing the work passes of existing foreign employees due to non-nationality based discrimination (i.e. discrimination based on gender, age, race, marital status or family responsibilities).
In 2020, the government took strong action and penalised five employers for posting discriminatory job advertisements or indicating preferences for candidates of a specific age group during recruitment. The government named and shamed each employer, and barred them from hiring new foreign employees and renewing the work passes of existing foreign employees for 12 months. These measures promote a more inclusive job environment by deterring employers from engaging in discriminatory hiring.
What other changes could come up in Singapore’s employment landscape?
Several of the policy actions described above, especially the tightening of the work pass requirements for foreign workers, may be attributable to the government’s thrust to safeguard employment of Singaporeans in view of the impact of COVID-19. With resident employment rebounding to pre-pandemic levels at the end of 2020, it remains to be seen if the government will maintain these policy actions beyond 2021.
The authors are lawyers in the Employment Practice of Baker McKenzie Wong & Leow in Singapore, a member firm of Baker McKenzie.
Photo / Provided (the authors, Averill Chow and Zhao Yang Ng)