Singapore tightens labour policy

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Singapore

The Singapore government has implemented several employment-related policy changes and taken highly publicised enforcement actions in 2020. The common thread underlying these developments is the government’s push to provide better jobs for Singapore citizens and permanent residents (Singaporeans), with emphasis on the employment of older workers.

Businesses with employees in Singapore may need to adapt their hiring strategies in view of the government’s decision to prioritise its aim of providing good jobs for Singaporeans. The main prongs of the government’s strategy to attain this goal are:

  • Attracting skilled foreign talent where necessary to complement the Singaporean workforce in order to fill skills gaps, so as to gain and retain high-value activities in Singapore. 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, the government took several actions to address Singaporeans’ concerns that foreigners entering the country do not actually attract high-value activities but occupy the 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. The government’s actions include:
    • Introducing Tech.Pass, a targeted programme to attract foreign talent to grow Singapore’s technology industry;
    • Increasing the minimum salary requirements to hire foreign nationals as mid-level and highly skilled labour in view of the economic impact of covid-19;
    • Penalising employers who may discriminate against hiring Singaporeans; and
    • Requiring job advertisements for applications for the work visas of mid-level skilled labour, and extending the job advertisement duration for all work pass applications.
  • Enhancing the job environment for Singaporeans by:
    • Introducing the Jobs Growth Incentive, government cash support for employers who hire more Singaporeans, from September 2020 to February 2021; and
    • Penalising employers for age-related discriminatory hiring.

Details of the government’s most significant labour policy actions are summarised below.

Welcoming skilled foreign talent

Introducing Tech.Pass. The government will grant up to 500 Tech.Passes to attract technical experts to develop Singapore’s technology industry. Applicants must meet at least two out of three of the following requirements:

  • Earned a fixed monthly salary at least an equivalent of S$20,000 (US$15,000) 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 US$500 million, or at least US$30 million in funding raised; and
  • 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 US$100 million 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 talents with demonstrated leadership ability in the technology sector.

Increasing minimum salary requirements for foreign mid-level and highly skilled labour. The government increased the minimum salary requirements for foreign nationals to be considered for “S Passes” (for mid-level skilled workers) from S$2,400 to S$2,500. The minimum salary for “Employment Pass” applications (for highly skilled workers) increased from S$3,900 to S$5,000 for applicants in the financial services sector, and S$4,500 for non-financial services sector applicants.

The government explained that the higher minimum salary for the financial services sector recognises the different salary norms in financial services. As the minimum salaries above apply to entry-level employees, the qualifying salaries for older and more experienced candidates were also correspondingly increased. S Passes differ from Employment Passes in that there is a maximum number of S Pass holders that an employer can sponsor, and employers must also pay levies to hire S Pass holders. The 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 it may be more affordable for employers to hire a Singaporean candidate for the role, given that the minimum salary requirements applicable to foreign nationals do not apply. The reduced competition may increase the number of good jobs being awarded to Singaporeans.

Penalising employers who may discriminate against hiring Singaporeans. The government 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: (1) skilled labour comprised of a higher proportion of foreign nationals than industry peers; (2) a high concentration of skilled employees from a single nationality; and (3) preselected a foreign national for a job vacancy without seriously considering Singaporean applicants who applied to the job posting. The penalties include rejecting or delaying the employer’s work pass applications for foreign employees for up to two years, and fines of up to S$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.

Extending advertisement duration requirements and requiring job advertisements for S Pass applications. Subject to limited exemptions, the government now requires employers to advertise job vacancies on https://www.mycareersfuture.gov.sg/ before submitting all S Pass and Employment Pass applications. Previously, 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 for 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.

Better job environment for Singaporeans

The Jobs Growth Incentive. The government provided cash support to employers who increased their overall number of Singaporean employees between September 2020 and February 2021. The cash payment amounts to 25% (or 50% for Singaporeans aged 40 and above, all persons with disabilities, or ex-offenders) of the first S$5,000 of monthly salaries of the new Singaporeans hired for 12 months. The Jobs Growth Incentive not only reduces the employer’s salary expenditure for new hires, but may also encourage employers to hire Singaporeans over foreigners, because they enjoy the cash payment for Singaporean hires, but not foreign hires.

Penalising employers for age discrimination. The government 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 age-related discriminatory hiring.

Looking ahead

Several of the above-mentioned policy actions, especially the tightening of the work pass requirements for foreign workers, may be attributable to the government’s thrust to safeguard employment for 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 in 2021 and beyond.

Business Law Digest is compiled with the assistance of Baker McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact the author by emailing Celeste Ang, (celeste.ang@bakermckenzie.com), Ng Zhao Yang (zhao.yang.ng@bakermckenzie.com) and Averill Chow (averill.chow@bakermckenzie.com).