Self-sponsored employees should plan for new minimum income rules

IMPACT – MEDIUM

What is the change? A new rule setting a minimum monthly salary of SGD 12,000.00 (about USD 9,600) or an annual fixed salary of SGD 144,000.00 (about USD 115,000) for Personal Employment Passes (PEPs) will be going into effect.

What does the change mean? PEP holders who fall short of the minimum must find alternatives for remaining in Singapore to work.

• Implementation timeframe: Dec. 31.
• Visas/permits affected: Personal Employment Passes.
• Who is affected: Workers who received PEPs under the much lower previous minimum annualsalary of SGD 34,000 (about USD 27,000) prior to Dec. 1, 2012, when the higher minimum salary was set.
• Impact on processing times:Workers seeking to convert immigration status should begin now.
• Business impact: Companies will need to review salaries and eligibilities of PEP workers on their payrolls.

Background: The PEP is a non-renewable three-year work authorization that provides qualified foreign nationals an opportunity to work in Singapore without a sponsoring company. When their three-year PEP expires, they may stay in Singapore for six months to pursue new employment opportunities.

The government significantly revamped its PEP rules effective Dec. 1, 2012 in an effort to establish the PEP as a source of top-tier international talent. Along with the higher required minimum salary, applicants for PEPs had to have higher educational levels. Existing PEP holders with minimum annual salaries under SGD 144,000 on Dec. 1, 2012, were allowed to keep their PEPs at the lower income level until Dec. 31, 2014. Workers whose PEPs are scheduled to expire between Jan. 1, 2015 and June 30, 2015 can remain until the expiration date.

Dependent family members of existing PEP holders may remain if they were in Singapore by Dec. 1, 2012 and the principal has a valid PEP.

BAL Analysis: Companies and PEP holders should begin planning now to meet the Dec. 31 deadline. Those who do not meet the new salary minimums may pursue alternatives, such as converting to Employment Passes (EP) or S Passes. Those employers and workers are strongly advised to start the process as soon as possible to ensure that they obtain legal status by the Dec. 31 deadline. Applications for new EPs submitted after Aug. 1 must meet the new advertising requirement on the National Jobs Board as determined by the Fair Consideration Framework (FCF) guidelines .

This alert has been provided by the BAL Global Practice group in Singapore. For additional information, please contact singapore@bal.com.

Copyright © 2016 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.