Quota Calculation & LQS

How should I count my local employees to calculate my Work Permit and S Pass quota in Singapore?

The Local Qualifying Salary (LQS) determines the number of local employees who can be used to calculate your Work Permit and S Pass quota entitlement. The LQS was previously known as the Full-Time Equivalent salary.

The LQS ensures that local workers are employed meaningfully, rather than being employed on token salaries to allow the employer access to foreign workers. This also ensures that quota controls remain effective and keep pace with income levels.

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as:

Qualifying Salary From 01-July-2020:

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as: 1 local employee if they earn the LQS of at least $1,400 per month. 0.5 local employee if they earn half the LQS of at least $700 to below $1,400 per month.

Illustration:

Effective:	W.E.F. 01-July-2020
Local employee	Monthly salary	Count
A	$4,500	1.0
B	$1,400	1.0
C	$750	0.5
D	$900	0.5
E	$650	—
Total number of local employees		3
Remarks: Employees A and B are considered 2 local employees because they each earn at least $1,400. Employees C and D make up 1 local employee because they each earn $700 to below $1,400. Employee E is not counted because the salary is below $700.

 

The following employees are also not counted when calculating your quota:

• Business owners of sole proprietorships or partnerships.
• Employees who receive CPF contributions from three or more employers.

If you have multiple CPF accounts in your company, you should not contribute CPF for the same employee under the different accounts to get more quota.

If you hired new employees recently, you won’t see an immediate adjustment in your quota. It depends on when you pay the CPF contribution for each employee.

 

What is the Local Qualifying Salary (LQS)?

What is called Full-Time Equivalent salary?

The Local Qualifying Salary (LQS) determines the number of local employees who can be used to calculate your Work Permit and S Pass quota entitlement. The LQS was previously known as the Full-Time Equivalent salary.

The LQS ensures that local workers are employed meaningfully, rather than being employed on token salaries to allow the employer access to foreign workers. This also ensures that quota controls remain effective and keep pace with income levels.

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as:

Qualifying Salary From 01-July-2020:

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as: 1 local employee if they earn the LQS of at least $1,400 per month. 0.5 local employee if they earn half the LQS of at least $700 to below $1,400 per month.

 

Upcoming Changes

Firms hiring foreign workers must pay all Singapore employees at least a Local Qualifying Salary w.e.f. 01-Sep-2022

Presently, companies are already paying the LQS, but only to some of their local employees, depending on how many foreigners they hire.

Leveraging on the current Work pass system to ensure sustained wage growth, employers will be required to pay the prescribed Progressive Wages and local qualifying salary (LQS) from 01-September-2022, before they can access any foreign workers.

To give an example, this means that if one has 20 local employees in the company, and needs two local employees to qualify for a foreign worker, one will have to ensure all 20 local employees are paid the LQS first, before they can be eligible for the foreign worker quota.

This local qualifying salary will now be used to set the baseline salary for lower-wage workers not covered under the Progressive Wage Model.

The local qualifying salary (LQS) will continue to be used to determine the quota for work permits and S passes for foreign workers that a Singapore employer can hire.

This, however, will not change the calculation of the quota for foreign workers, which will continue to be based on existing calculations.

• The S Pass is for qualified mid-level skilled foreign workers who earn with specified salary per month.
• A work permit is generally issued to unskilled or semi-skilled migrant workers.

(Source: National Day Rally 2021 Speech by the PM on 29-Aug-2021 & Reports by National Wagegroup on 30-Aug-2021)

 

What is the Progressive Wage Model (PWM) in Singapore?

The Progressive Wage Model (PWM) helps to increase wages of workers through upgrading skills and improving productivity. It is implemented via government levers in the cleaning, security and landscape sectors.

What is PWM?

Developed by tripartite committees consisting of unions, employers and the government, the PWM helps to uplift low-wage workers in the cleaning, security and landscape sectors with the upcoming inclusion of retail, food services and waste management in the coming years. Some specific occupations are also set to be covered starting with administrative assistants and drivers across all sectors.

Wages in these sectors had stagnated due to widespread cheap sourcing. The low wages in turn resulted in high turnover and labour shortages.

The PWM benefits workers by mapping out a clear career pathway for their wages to rise along with training and improvements in productivity and standards.

At the same time, higher productivity improves business profits for employers. Service buyers also enjoy better service standards and quality.

Who are covered under PWM?

The PWM covers Singapore citizens and Singapore permanent residents (PRs) in the cleaning and security sectors, as well as landscape companies on NParks’ Landscape Company Register.

Employers are encouraged to use these principles of progressive wage for your foreign cleaners, security officers and landscape maintenance employees.

Visit MOM for the following queries and more details on PWM:

• Does the Progressive Wage Model also apply to part-time or temporary workers?
• How can I tell that my cleaning service provider is paying its workers appropriate wages?
• How much do I need to pay my employees under the Progressive Wage Model?
• I’m a cleaner, and my employer has paid me incorrect wages. What can I do?
• Who qualifies for the Progressive Wage Model for workers in the cleaning sector?

https://www.mom.gov.sg/employment-practices/progressive-wage-model/what-is-pwm

Help for employers

If you are an employer, you can tap on the Workfare Skills Support scheme at: https://www.workfare.gov.sg/Pages/WSS.aspx to offset a significant portion of the training costs for your Singaporean employees.

You can also get co-funding for productivity improvement projects through various grants in the Lean Enterprise Development (LED) Scheme at: https://bit.ly/3yxF6MZ

 

How often the Registry of Building Construction Authority (BCA) data is updated (synced) by MOM?

The data of BCA contractors’ registry is updated (synced) by MOM every Tuesday.

Once you have successfully registered with BCA contractors’ registry the data will be synced with MOM’s portal automatically. In case of any missing of such data, you need to contact MOM for further assistance.

 

Updating of Local workforce Quota

When the Local Workforce Quota is updated by MOM?

Local workforce is determined by the average of CPF contributions over a three-month period updated on the second working day and second Saturday of each month.

 

When can a new company (entity) start hiring foreign workers?

I have set up a new company. When can I start hiring foreign workers?

If you are a newly set up company and you have not made any CPF contributions yet, your quota for first month will be calculated based on your first CPF contribution, instead of the normal 3-month average.

Thereafter, your foreign worker quota is calculated based on the 3-month average number of local employees you have.

 

When can a existing company (entity) start hiring foreign workers?

I have hired new employees. When can I start hiring additional foreign workers?

Your foreign worker quota is calculated based on the latest 3-month average number of local employees in your company.

The number of local employees is based on the CPF contribution you have made to them, under the same company CPF account.

Eg: If you pay your employees’ July CPF contributions after 14 July, the quota will be calculated based on your number of local employees in May, June, July’s CPF contributions. This quota will only be updated in September.

However if you want the quota to be updated earlier, i.e. August, you should make your CPF contributions by 14 July.

 

Computation of Total Workforce

How the Total Workforce is computed by MOM?

MOM has regularised with some changes how a company’s foreign worker quota is computed (calculated) with effect from 01-Jan-2021.

Changes to total workforce computation (calculation)

• The total workforce refers to the number of local workers whose salaries meet the local qualifying salary (LQS) and number of S Pass and Work Permit holders hired by the company.
• The company’s foreign workforce quota changes as your company’s total workforce changes. When processing any work pass application / appeal, MOM will look at your company’s latest quota status. This means that any fluctuations in your company’s quota after the date of work pass application may affect the outcome of the application.
• You may wish to use the Quota Calculator on MOM website to check on your work pass quota entitlement.

Total Workforce computation w.e.f. 01-Jan-2021	The foreign workers will be counted after their work passes are issued. That means, foreign workers are not counted into the company’s total workforce as soon as their work passes are approved in principle till their work passes are eventually issued.
Total Workforce computation Till 31-Dec-2020	Foreign workers were counted into the company’s total workforce as soon as their work passes were approved in principle, even if their work passes were not eventually issued.

Click here to learn about the new computation from an Illustration.

 

HOW TO CALCULATE YOUR QUOTA AND LEVY BILL

You can refer to the requirements for relevant sector for Work Permits and S Pass.

You can:

• Refer to the MOM guidelines on how to calculate your quota and levy bill.
• Learn more about S Pass quota and levy rates at www.mom.gov.sg

Note:

• The daily levy rate only applies to Work Permit holders who did not work for a full calendar month. The daily levy rate is calculated as follows: (Monthly levy rate X 12) / 365 = rounding up to the nearest cent.
• If your Work Permit renewal involves changing between prior approval to MYE waiver, or vice versa, the change in levy rate will start on the 1st of the month following the expiry date of the permit.

 

Source of Information:

For all types of Work Passes with their related matters is from the Ministry Of Manpower (MOM), TAFEP &/or Immigration And Checkpoints Authority (ICA), Singapore accordingly.

For all other matters are from the relevant Authorities or Agencies of Government of Singapore.

 

ACHI BIZ is one of the licensed Employment Agencies in Singapore. We will assist your work pass related applications and appeals at our level best with the regulatory authority Ministry Of Manpower (MOM) for successful outcome.

Please refer to our GUIDES for more information, SERVICES to meet your requirements or CONTACT us if you wish to avail these or many other services.