SINGAPORE FOREIGN WORKER LEVY SCHEME
Singapore, as a developed country and an economy with relatively steady growth, requires a strong workforce to keep the systems and processes in top-notch condition.
The Foreign Worker Levy (FWL) is a pricing mechanism instituted by the Singapore Ministry of Manpower to control and regulate the number of foreign workers in the country. Under the FWL scheme, employers of foreign workers are required to pay a monthly levy to the government.
The number of foreign workers any one company can employ is also regulated by the Dependency Ratio Ceiling (DRC) system, which dictates the maximum permitted ratio of foreign workers to the total workforce of the company. The DRC varies across sectors.
Scope of the Scheme
The scheme applies to Work Permit holders and S Pass holders.
Levy for Work Permit holders
The levy rate for Foreign Workers varies across different sectors. The levy to be paid for each worker is determined by the sector in which the employer/company operates, and the educational qualifications and skills possessed by the worker. Workers with relevant qualifications and skill-based test certificates will be classified as skilled workers, and their employers will be entitled to a concession in the worker’s levy.
Monthly levy rates have been stipulated for the sectors by MOM. For Work Permit holders who are not employed for a full calendar month, a daily levy rate applies.
From 1 January 2011, the daily levy rate is computed based on the following formula:
For Construction Sectors
The Foreign Worker Levy is determined by the worker’s qualifications and skills. In the construction sector, FWL is charged based on whether the worker is higher-skilled or basic skilled, whereas, for most other sectors, the workers are classified as skilled or unskilled.
For Manufacturing & Service Sectors
The worker’s qualifications and the DRC quota for the sector together determine the levy amount. It must be noted that the rates are tiered so that employers who hire close to the maximum quota will incur a higher levy bill.
The table below illustrates the levies payable across different sectors in different tiers.
|Sector||Quota|||Dependency Ceiling Segmentation|||Monthly Levy (S$)||Daily Levy (S$)|
Employers in this sector are entitled to skilled levy rates for their foreign workers, up to 50% of the total workforce.
|60%||Basic Tier / Tier 1: Up to 25% of the total workforce||210||310||6.91||10.2|
|Tier 2: From 25% to 50% of the total workforce||300||400||9.87||13.16|
|Tier 3: From 50% to 60% of the total workforce||470||15.46|
Employers in this sector are entitled to skilled levy rates for their foreign workers, up to 25% of the total workforce.
|45%||Basic Tier / Tier 1: Up to 15% of the total workforce||240||340||7.9||11.18|
|Tier 2: From 15% to 25% of the total workforce||360||460||11.84||15.13|
|Tier 3: From 25% to 45% of the total workforce||500||16.44|
|Construction*||87.50%||On Man Year Entitlement (MYE)**||250||350||8.22||11.51|
|MYE Exempt **||500||11.51|
|Process||87.50%||On Man Year Entitlement (MYE)**||210||310||6.91||10.2|
|MYE Exempt **||470||15.46|
* To calculate the levy, workers in the construction sector are classified into
- Higher skilled workers
- Basic Skilled workers
MOM uses the following order of priority to determine the respective tiers of foreign workers
- S Pass holders
- Skilled workers
- Unskilled workers
The Man-Year Entitlement (MYE) system is a Work Permit allocation system introduced in April 1998 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 the project. The purpose of the MYE is to provide a means for the main contractor to control and manage the foreign worker allocation for the project. The main contractor can then distribute the MYE to sub-contractors. The MYE will be converted into either one-year or two-year Work Permits.
MYE is waived/exempted for workers from NTS if the worker has relevant experience of a 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. The main contractor with a valid construction contract can apply for Man-Year Entitlement (MYE) from the Work Pass Division (WPD).
Key Consideration for Workers Classification Based on Skills
Workers who possess relevant academic or skills-based test qualifications and certificates will be classified as skilled workers.
Levy for S-Pass Holders
|Sector||Quota|||Dependency Ceiling Segmentation||Skilled worker Levy (S$)|
|All Sectors||20%||Basic Tier / Tier 1: Up to 10% of the total workforce||200||6.58|
|Tier 2: From 10% to 20% of the total workforce||320||10.53|
S pass is a work pass given to workers with specialized skills who meet the educational qualification requirements, have significant experience, and meet the salary stipulations set by MOM. Therefore, there is no unskilled category here.
Skill Development Levy
Employers are required to contribute to the Skills Development Fund. The Skill Development Levy (SDL) applies to all employees rendering services wholly or partly in Singapore. The SDL is set at a minimum of S$2 (for an employee earning less than S$800 a month) and capped at S$11.25 (for an employee earning more than S$4,500 a month).
Employers employing foreign workers are required to pay SDL in addition to the Foreign Workers Levy (FWL).
The CPF Board collects the Skills Development Levy on behalf of the Singapore Workforce Development Agency. The levy collected is channeled into the Skills Development Fund (SDF), which provides grants to companies that send their workers for training.
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