In this Article [Hide]
1. What you should know about the foreign worker quota
2. Exceptions to the quota calculation include:
3. Steps for calculating your total workforce
4. Understanding quotas by sector: It’s not a one-size-fits-all scenario.
5. The S Pass and Employment Pass nuances
6. Why accuracy in quota calculations is crucial
7. Streamline your HR processes with Adaptive Pay.
In a global city like Singapore, hiring foreign workers is common across various sectors. However, understanding the complexities of foreign worker quotas is crucial to maintaining compliance with regulatory frameworks and avoiding hefty penalties. To aid in compliance and reduce guesswork, the use of HR software in Singapore is highly recommended.
This guide is tailored for employers in Singapore considering hiring foreign workers. From Work Permit to S Pass holders, we’ll delve into everything you need to know about foreign worker quotas across multiple sectors.
What you should know about the foreign worker quota
Known as the ‘dependency ratio ceiling,’ the foreign worker quota specifies the maximum percentage of foreign workers a company can employ in relation to its total workforce. This is sector-specific and aims to balance the employment landscape between local and foreign labour.
To calculate the quota, the Ministry of Manpower (MOM) uses information from a company’s Central Provident Fund (CPF) account to ascertain the number of local employees. Note that not all local employees count equally towards the quota. Here’s how it works:
- A local employee who is a Singaporean or Permanent Resident and earns at least $1,400 per month counts as one full local employee towards the quota.
- If a local employee earns between $700 and $1,399 per month, they count as half (0.5) of a local employee towards the quota.
Exceptions to the quota calculation include:
- Employees who receive salaries and CPF contributions from multiple employers
- Owners of sole proprietorships and partnerships
Companies must update their local employee count every Saturday, but they can only verify the updated quota on the next working day.
Inaccurate or late CPF contributions could adversely affect the quota, leading to elevated levy tiers. This is where HR software in Singapore can offer invaluable support.
Steps for calculating your total workforce
After establishing the number of local employees, the subsequent step is determining the total workforce. The calculation includes both Work Permit and S Pass holders but excludes Employment Pass (EP) holders. The formula is:
Total Workforce = LQS count + S Pass holders + Work Permit holders
Understanding quotas by sector: It’s not a one-size-fits-all scenario.
Foreign worker quotas differ by sector and encompass both Work Permit and S Pass holders. Specific percentages apply to various industries:
- Construction: 87.5%
- Marine Shipyard: 77.8%
- Process: 87.5%
- Services: 35%
- Manufacturing: 60%
When hiring employees from China, the work permit quota is 25% for Manufacturing and 8% for Services.
The S Pass and Employment Pass nuances
For S Pass holders, the quota varies by sector but is counted within the overall quota for foreign workers. As of January 1, 2023, it’s 15% for most industries and 10% for services. Employment Pass holders have no specific quota but must meet the minimum salary requirements.
Why accuracy in quota calculations is crucial
Being well-versed in the various levy rates and guidelines ensures better compliance with Singapore’s foreign worker regulations. It eliminates the guesswork often associated with manual calculations. Comprehensive HR software in Singapore, such as Adaptive Pay, can prove to be an invaluable asset for these tasks.
Streamline your HR processes with Adaptive Pay.
Eliminate the complexities associated with foreign worker regulations by incorporating Adaptive Pay into your HR processes. As a complete HR software in Singapore, Adaptive Pay can significantly simplify your administrative tasks and boost compliance. For a detailed look into how Adaptive Pay can benefit your organisation, consider requesting a demo or watching an informational video at Adaptive Pay.
With stringent regulations in place, understanding and adhering to foreign worker quotas is not just a recommendation but a requirement for Singapore employers. This guide aims to give you a thorough understanding of the system, thereby helping you make informed decisions and maintain compliance. HR software in Singapore, like Adaptive Pay, can offer further assistance in streamlining these processes, making it a worthwhile investment for any discerning employer.
