What is a Work Permit and who is it for?
Singapore’s continuous restructuring has called for a demand for workers in certain industries. The Work Permit (WP) is a visa issued to basic-skilled workers who want to be a part of Singapore’s in-demand sectors and are from approved source countries.
Work permit holders make up 59% of Singapore’s non-resident population. This is according to the Population in Brief 2013 report issued by the National Population and Talent Division.
What is the Foreign Worker Levy and Dependency Ratio Ceiling?
In order to calibrate the intake of migrant workers, the government has introduced the Foreign Worker Levy (FWL) and Dependency Ratio Ceiling (DRC).
The DRC refers to the maximum permitted ratio of foreign workers to the total workforce that a company is allowed to hire. The DRC varies across sectors.
Employers of WP holders are also required to pay a monthly foreign worker levy (FWL) to the government. The FWL is a form of checks and balances, compelling employers to give priority to the skills, qualifications and experience of their potential employees at the time of recruitment.
Scope of the scheme
The Foreign Worker Levy scheme is applicable to WP as well as S Pass holders. There is also a separate levy scheme for foreign domestic workers (FDWs).
How the levy is calculated
The amount of levy to be paid for each worker is determined by the sector the employer/company belongs to as well as the educational qualifications and skills of the workers. Workers with relevant qualifications and skill-based test certificates will be classified as skilled workers and entitled to a concession in the worker’s levy.
MOM uses the following order of priority to determine the respective tiers of the foreign workers:
- S Pass holders
- Skilled workers – possess relevant academic or skills-based test qualifications and certificates.
- Unskilled workers
For Marine, Construction & Process Sectors
The FWL is determined by the worker’s qualification and skills. The construction sector’s levy is charged on the basis of higher or basic-skilled workers whereas for other sectors the workers are classified as skilled or unskilled.
For Manufacturing & Service Sectors
The worker’s qualification and the DRC for the sector determine the levy amount. The levies are tiered so that employers who hire close to the maximum quota will incur higher levy bill.
|Sector||Quota||Dependency Ceiling Segmentation||Monthly Levy|
|Manufacturing Employers in this sector are entitled to skilled levy rates for their foreign workers, up to 50% of the total workforce.|
|Basic Tier / Tier 1: Up to 25% of the total workforce|
|Tier 2: Above 25% to 50% of the total workforce|
|Tier 3: Above 50% to 60% of the total workforce|
|Services Employers in this sector are entitled to skilled levy rates for their foreign workers, up to 25% of the total workforce.|
|Basic Tier / Tier 1: Up to 15% of the total workforce|
|Tier 2: Above 15% to 25% of the total workforce|
|Tier 3: Above 25% to 45% of the total workforce|
|Construction||on Man Year Entitlement (MYE)|
|Process||on Man Year Entitlement (MYE)|
Understanding Man Year Entitlement
The Man-Year Entitlement (MYE) system is a Work Permit allocation system for workers from Non-Traditional Source (NTS) countries deployed in the Construction and Process sectors. Under the system, the main contractor is allocated “man-years” based on the value of his project.
The purpose of the MYE is to provide a means for the main contractor to control and manage the foreign worker allocation for his project. The main contractor then distributes the MYEs to his sub-contractors. The MYEs will be converted into either one-year or two-year Work Permits.
MYE is waived for workers from NTS if the worker has relevant experience of cumulative period of two or more years with any employer in Singapore. However, the employer will have to pay a higher monthly levy rate for such a worker. A main contractor with a valid construction contract can apply for Man-Year Entitlements (MYE) from the Work Pass Division (WPD).
Skills Development Levy
Employers are required to contribute to the Skills Development Fund, a kitty which provides grants to employers who send their staff for training. The Skills Development Levy (SDL) is applicable for all employees rendering services wholly or partly in Singapore. The SDL is set at a minimum of $2 (for an employee earning less than $800 a month) and capped at $11.25 (for an employee earning more than $4,500 a month).
Employers hiring migrant workers are required to pay the SDL in addition to the Foreign Workers Levy (FWL).
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