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Everything you need to know about the Foreign Worker Levy

7 minute read

According to the Population in Brief 2021, up to 60% of Singapore’s non-resident population are Work Permit holders, due to manpower shortages within in-demand industries. For foreign workers or basic-skilled workers to join a company, a Work Permit (WP) is required.

This article explains the process of how to apply for a Work Permit and details what business owners need to take note of.

Overview:

What is the Foreign Worker Levy (FWL)?

The Foreign Worker Levy (FWL), or known as levy, is a pricing mechanism used to regulate the number of foreign citizens working in Singapore.

Employers are required to pay this monthly levy that applies to Work Permit and S Pass holders. The levy’s eligibility starts on the day the Work Permit or the Temporary Work Permit is issued, and ends on the day the permit expires or is canceled.

Dependency Ratio Ceiling (DRC)

In order to regulate the intake of migrant workers, the Singapore government introduced the Foreign Worker Levy (FWL) and the Dependency Ratio Ceiling (DRC) for employers.

The Dependency Ratio Ceiling is the maximum permitted ratio of foreign workers who are permitted to join a company’s workforce. This ratio varies from sector to sector, and is often subject to changes.

For example, the DRC for companies in the construction industry was reduced from 1:7 to 1:5 during the announcement of the recent Singapore Budget 2022.

What is the levy rate and quote for businesses?

There are two factors that determine the levy rate you have to pay and the quota:

  1. Worker’s qualifications
  2. Current number of S Pass or Work Permit holders you employ

Employees with relevant qualifications are considered to be higher-skilled workers, which qualifies them for higher-skilled Foreign Worker levy.

Construction sector

Tier Monthly (S$) Daily (S$)
Malaysians and NAS – Higher-Skilled 300 9.87
Malaysians and NAS – Basic-Skilled 700 23.02
NTS and PRC – Higher-Skilled, on MYE 300 9.87
NTS and PRC – Basic-Skilled, on MYE 700 23.02
NTS and PRC – Higher-Skilled, MYE waiver 600 19.73
NTS and PRC – Basic-Skilled, MYE waiver $950 $31.24

*NAS: North Asian Sources (i.e. Hong Kong, Macau, South Korea, Taiwan)

*NTS: Non-traditional sources (i.e. India, Sri Lanka, Thailand, Bangladesh, Myanmar, Philippines)

*MYE: Man-year entitlement is a Work Permit allocation system for workers from non-traditional source (NTS).

Manufacturing sector

Quota Monthly for basic-skilled (S$) Daily for basic-skilled (S$) Monthly for higher-skilled (S$) Daily for higher-skilled (S$)

Tier 1:

Up to 25% of the total workforce

370 12.17 250 8.22

Tier 2:

Above 25% to 50% of the total workforce

470 15.46 350 11.51

Tier 3:

Above 50% to 60% of the total workforce

650 21.37 550 18.09

Marine shipyard sector

Category Monthly levy rate Daily levy rate
Higher-skilled $300 $9.87
Basic-skilled $400 $13.16

Process sector

Tier Monthly (S$) Daily (S$)
Higher-skilled, on MYE 300 9.87
Basic-skilled, on MYE 450 14.80
Higher-skilled, on MYE waiver 600 19.73
Basic-skilled, on MYE waiver 750 24.66

Services sector

Quota Monthly for basic-skilled (S$) Daily for basic-skilled (S$) Monthly for higher-skilled (S$) Daily for higher-skilled (S$)
Tier 1:
Up to 10% of the total workforce
450 14.80 300 9.87

Tier 2:

Above 10% to 25% of the total workforce

600 19.73 400 13.16
Tier 3:
Above 25% to 35% of the total workforce
800 26.31 600 19.73

Is there a penalty for not paying the FWL?

Employers who fail to pay the FWL may face the following penalties:

  • A penalty for late payment of S$20 or 2% per month, whichever of the two amounts is higher. The complete late payment penalty is capped at 30% of the outstanding levy.
  • Cancelation of the existing Work Permits.
  • Possible legal actions will be taken to recover the unpaid levy.
  • A denial for the application or issuing of new Work Permits, or the renewal of existing Work Permits.
  • A ban on applying for Work Permits for both you and your partners and directors, if you are heading other companies.

Am I eligible for the FWL rebate?

The Foreign Worker Levy rebate isn’t available for S Pass holders. Only Work Permit holders are eligible for the rebate. The levy rebate for each month is processed and credited on the following month and credited to eligible employers.

For the March 2022 foreign worker levy rebate, Work Permit holders who are employed as of 1 March 2022 are eligible and will be paid on 12 May 2022 by cheque or 14 April 2022 by PayNow Corporate.

Want to register for PayNow Corporate to receive your foreign worker levy rebate? You can do so online or via mobile banking. Just make sure to link your company’s UEN (without the suffix) to your business bank account.

To receive your foreign worker levy rebate via PayNow Corporate, the bank needs to approve the account no later than one day before the date of the levy rebate payment is scheduled.

How Sleek can help

Hiring foreign workers requires jumping through a lot of hoops, one of them is visa application. Thanks to Sleek’s visa services, you can apply for your employees’ visa permits with no hassle.

Let us help you with the following:

  • Your Employment Pass application: a visa designed for executives, managers, and skilled professionals.
  • The Dependent’s Pass application along with a Letter of Consent (LOC) which is needed for your DP application.
  • We can help you with your S Pass application, for your mid-level skilled workers.

Have questions or need help? Feel free to reach out to Sleek today, our expert team is ready to help you with your visa applications.

Start a business in less than 3 hours with us. Talk to our experts today.

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