Under What Circumstance Can a Sole Proprietor in Singapore Employ Foreign Workers
As a general rule, foreign workers are not allowed to work in Singapore unless they have been granted a valid work pass. However, there are some circumstances under which a sole proprietor in Singapore may employ foreign workers.
For example, if the business is registered with the Accounting and Corporate Regulatory Authority (ACRA) as a sole proprietorship, the sole proprietor may be eligible to apply for an Employment Pass or Personalized Employment Pass.
Alternatively, the sole proprietor may apply for an Entrepreneur Pass if he or she plans to set up a new business in Singapore. In order to be eligible for an Employment Pass or Personalized Employment Pass, the sole proprietor must demonstrate that he or she is able to pay the foreign worker’s salary and that the foreign worker is suitably qualified for the position.
On the other hand, the application for an Entrepreneur Pass requires the sole proprietor to show that he or she has a minimum investment of S$50,000 and that he or she has a viable business plan. Sole proprietors who meet these eligibility requirements may employ foreign workers in Singapore under certain circumstances.
- Under What Circumstance Can a Sole Proprietor in Singapore Employ Foreign Workers
- How Can a Sole Proprietor Hire Foreign Workers?
- Common Requirements For Employing Foreign Workers
- Levy Waivers
- Conditions For a Levy Waiver
- Supporting Documents Needed for a Levy Waiver Application
- How Long Can Sole Proprietor in Singapore Employ Foreign Workers?
- Work Permit Rules that Must be Met by The Employer
- What Every Employer of Migrant Workers Must Know About Work Permits
- Higher-Skilled Worker Levy Rate: What Is It All About?
- What are The Requirements to Upgrade to Higher-skilled Status?
- How Can IAS Help
- Frequently Asked Questions
How Can a Sole Proprietor Hire Foreign Workers?
If you want to hire foreign workers in Singapore, there are a few things you need to know. First, you must be a Sole Proprietor registered with the Accounting and Corporate Regulatory Authority (ACRA).
You must also be planning to hire the foreign worker for work in the services sector only. Additionally, the foreign worker must come from an approved source country or region, and you must have an available Quota for that particular nationality.
Finally, you must be able to pay the required Levy for the foreign worker. If you can meet all of these requirements and local laws, then you can proceed with hiring a migrant worker for your company.
Employing foreign workers is not as easy as employing workers native to the Singapore or permanent residents. So, as an employer you need to be sure that you are well-versed with the local laws and work permit prerequisites enacted by the government of Singapore.
Why, you may ask? Well, for a start, you do not want to employ competent workers at the expense of breaking the law. And you need not be told that ignorance is no defense when it comes to breaking the law. You must do your due diligence and review compliance obligations of local authorities on employing workers from a foreign country.
Below is a list of the requirements that MUST be met in order to employ foreign workers legally:
- Potential workers’ home country
- Age of Foreign Employee
- Type of business activities or services
- Quota and levy
Potential Workers’ Home Country
In Singapore, as with other countries, there are specific immigration/employment laws that must be obeyed if you wish to employ workers from a foreign country.
These laws or requirements are not to deter employers from seeking qualified candidates outside the borders of their home country. However, these laws were created to guide employers in search of a foreign top talent.
Before employing foreign employees, you must ensure that he or she hails from the following countries – People’s Republic of China, Malaysia, Macau, South Korea, Taiwan, and Hong Kong.
Any employer hiring employees outside the approved list of countries is not only at the precipice of receiving jail time but also risks the government shutting his or her business down.
Age of Foreign Employee
Now that you are aware of the host country a potential employee must hail from, you should also know that there is an age requirement that must be met.
Only individuals who are 18 years and above are eligible for work permits in Singapore.
Any local employment laws prohibit you from employing anyone below the age of 18.
It is advisable for you as an employer not to seek duplicitous ways to circumvent this requirement simply because you want to employ cheap labour.
Asides from 18 years being the minimum age a foreign employee, there is also a maximum age limit – such reasoning or, if you please, the requirement is only corollary.
For foreign employees of non-Malaysian descent, you must be between the ages of 18 and 50. While foreign employees of Malaysian descent must be at least 18 years old and at most 58 years old.
Types of Services Rendered
The type of business services an establishment offers determines if the company, sole proprietor or partner, is eligible to hire employees from foreign countries.
According to the sector-specific regulations issued by the Singapore government, the following services are categorised under the service sector. Hence, a permanent establishment operating the services outlined below can extend their employment contract to foreign employees.
- Financial, real estate, insurance, Infocomm, and business services.
- Transport, storage, and communications services.
- Commerce (retail and wholesale trade).
- Community, social and personal services (excluding domestic workers).
- Hotels, restaurants, coffee shops, food courts, and other approved food establishments (excluding food stalls or hawker stalls).
Quota and levy
There is a quota for the number of foreign employees that can be hired. Concomitantly, the various quota are subject to a levy.
For instance, the maximum quota of workers from foreign countries for the service sector is 35%.
This maximum number suggests that within each employing company, there is space for domestic workers to be employed.
The quota or dependency ratio ceiling (DRC) prevents domestic workers from feeling that immigrants with work permits are replacing them.
There are 3 different tiers under the DRC system – with the first tier being the lowest or basic and the third tier being the highest.
Kindly note that the DRC system is designed such that employers hiring close to the maximum quota (tier 3) are poised to pay levies higher than those who employ significantly lower than the maximum quota.
Also, note that there are two types of skills – basic and higher – and the levy for each is different.
The levy for each skill type can be paid monthly or daily.
The daily levy rate, however, has a slant to it. It is only applicable to migrant workers who were unable to work for a full month.
Waivers for migrant workers levy payments are available to employers.
However, certain conditions must be met in order to be eligible for the levy waivers.
These conditions or situations are not so herculean that they make receiving a levy waiver implausible and impossible.
Conditions For a Levy Waiver
Bear in mind that applying for a levy waiver is because something happened to the worker; thus, preventing the worker from performing his or her designated duties.
Conditions that make an employer eligible for a levy waiver
- The migrant worker is on overseas leave.
- The worker was hospitalized and required a medical leave.
- The worker was arrested by the police or detained at an embassy.
- The worker has shuffled off this mortal coil.
- The worker became a permanent resident of Singapore.
- The worker is Malaysian citizen doing a mandatory National Service in his or her home country.
- The worker is in the harbor-craft sector and, consequently, left Singapore’s port aboard a shipping vessel for at least three successive days.
If your migrant worker at one point or another falls in one or several of the categories listed above, you are well within your right as an employer to request for levy waiver.
Now that you are sure your worker met the conditions above, you will need to provide supporting documents to your claim for a levy waiver.
As you know already, your claim alone is not enough reason for the Ministry of Manpower to approve your request for a levy waiver.
Supporting Documents Needed for a Levy Waiver Application
- If your migrant worker was hospitalised in a Singapore hospital, you will need a medical certificate from the hospital, specifying the length of hospitalisation. Also, request for the medical bills, indicating the dates of admission and discharge.
- If your migrant worker vacation overseas, you do not need to provide any document. Simply apply for a levy waiver after the worker returns to Singapore.
- If the migrant worker was arrested or kept at an embassy, request an official letter from the police or the embassy for the period of detainment.
- If the migrant worker shuffled off this mortal coil, a photocopy of the death certificate is enough for a levy waiver.
- If the migrant worker becomes a permanent resident in Singapore, a letter from the Immigration and Checkpoints Authority is sufficient.
- If the migrant work is aboard a shipping vessel away from Singapore’s shore for 3 straight days, a signed form, stating the period the worker was aboard the vessel, from the vessel’s captain is enough.
- If the migrant worker is from Malaysia and has to return home for a mandatory service, a letter from the Malaysian authority indicating how long the national service lasted and a certificate for completion.
Note that you can only apply for a levy waiver after the levy has been paid, and your application can only be done online.
How Long Can Sole Proprietor in Singapore Employ Foreign Workers?
As with all types of employment contracts, there is a limit to the period of employment. After which, the employment contract expires, or the employee is told to retire.
In Singapore, the employers in the services industry are allowed to hire employees with work permits for a certain period, depending on the host country of said employee.
Higher-skilled or Basic-skilled foreign employees from the People’s Republic of China are allowed to work in the service industry for a period of 14 and 22 years, respectively.
However, workers from Malaysia and North Asian Sources are exempted from the maximum employment period clause.
Albeit, workers from all eligible home countries cannot work after the age of 60.
Note that the maximum employment period clause might differ for other sectors. So, do well to know the rules that apply to your sector.
Work Permit Rules that Must be Met by The Employer
Even though Work Permit holders are expected to comply with the rules and regulation stipulated by the Government of Singapore, the employer must also meet certain condition in order to become an employer or Work Permit holders and stay so.
Below are some of the conditions that must be met:
- Each worker must paid the fixed monthly salary specified by Singapore’s Ministry of Manpower.
- Asides from paying workers salary, the cost of daily living and medical treatment must also be paid.
- Proper housing containing the necessary appliances must be provided to workers.
- Medical insurance covering in-patient treatment and surgery should be bought for workers.
- In the case when a worker is deemed medically unfit for work by a Singapore-trained doctor, then such worker must be relieved of his or her duty – and the corresponding work permit will be nullified.
- Payment of monthly foreign employee levy. Note that this payment is not an “umbrella” payment; that is, the payment is for each employee. Think of it as an employment tax liability.
- For workers of non-Malaysian origins, ensure to purchase a security bond for each.
The litany of conditions above is not the entire list of conditions specified by the Ministry of Manpower, so, do well to check their website.
Another reason for employers of Work Permit users to check the Ministry of Manpower’s website is because additional conditions are sometimes added to the existing list.
What Every Employer of Migrant Workers Must Know About Work Permits
- Work Permits or passes are issued ONLY to migrants, not locals.
- The issued Work Permit is for a specific worker, and said worker is allowed to ONLY work for a particular employer within a specific sector or job.
- The term of a Work Permit depends on the employment period, security bond and the validity of the migrant worker’s international passport.
- The Work Permit holder is not allowed to start a personal business.
- The only business or occupation the Work Permit holder is allowed to participate in is the one specified in the Work Permit card.
- Since the employer is responsible for providing accommodation for the beneficiaries of the Work Permit. Thus, said beneficiary must reside at the accommodation provided by the employer at the outset of employment.
- Work Permit holders are not allowed to get married to a Singaporean or Singapore permanent resident without the permission of the Ministry of Manpower.
- Finally, the Work Permit does not cover the medical cost associated with pregnancy or child delivery. So, Work Permit holders are not to get pregnant or give birth in Singapore during the term of their Work Permit unless they are married to a Singaporean or Singapore permanent resident with the Ministry of Manpower’s permission.
Higher-Skilled Worker Levy Rate: What Is It All About?
There are two levy rates. Employers are mandated to pay one of these levy rates.
The first is called basic-skilled, while the latter is called higher-skilled. Both levy rates can be paid monthly or daily.
However, when your workers are considered higher-skilled, the levy bill reduces.
The higher-skilled worker levy due to the lower rates is attractive to many employers.
Furthermore, workers with higher-skilled status have longer employment periods, unlike basic-skilled workers.
If you are interested in this type of levy, you can easily upgrade your workers to higher-skilled status.
The criteria that migrant workers must meet in order to be upgraded to the higher-skilled status differs from sector to sector.
The requirements for each sector, namely Service, Process, Construction, Manufacturing, and Marine Shipyard, will be discussed shortly.
How to Upgrade to Higher-skilled worker levy?
The conversion from “basic-skilled” to “higher-skilled” is done entirely online.
- For The Process Sector
As a sole proprietor, if your business meets the description of what the Process sector is, as specified by the Ministry of Manpower, then you can apply for your workers to get higher-skilled status through:
- The skills or education and salary route;
- The experience and salary route; or
- The skills or education and experience route.
For the first and third route of getting higher-skilled status for your foreign employee, the worker will need to provide an educational or a trade certificates acknowledged by the Ministry of Manpower.
While for the second route, no certificate is requisite, only a minimum years of experience and monthly salary.
By following one of the 3 routes mentioned above, you can apply for a higher-skilled status for your migrant workers.
- For The Construction Sector
There are four paths that can be followed to get higher-skilled status – CoreTrade, Direct R1 Pathway, Market-Based Skills Recognition Framework (MBF), and Multi-Skilling Scheme.
Each path has distinct features that makes it different from others.
For instance, under the “CoreTrade” pathway, the worker must have a minimum of 4 years experience in the construction industry and successfully complete the CoreTrade skills assessment.
Similarly, the Multi-Skilling Scheme path quires the migrant worker to have between four to six years of experience, as well as specific certificates.
Every other pathway requires skills or certification except the MBF pathway.
It is advisable for the employer to consult with the migrant workers to know which pathway is the best fit for each worker.
- For The Manufacturing, Marine Shipyard or Service Sector
All that you need to do is upload a scanned copy of the foreign employee academic or trade test certificates.
The trade certificates required by each sector differs.
For example, in the Marine Shipyard sector, to upgrade to higher-skilled status, the welding trade test of the worker must be approved by the institutions listed on the Ministry of Manpower’s website.
For the Service sector, the trade test certificate accepted are Skills Evaluation Test (SET), Workforce Skills Qualification (WSQ), and Market-Based Skills Recognition Framework.
Some Caveats About Upgrading to Higher-Skilled Levy Rate Employers Should Note
The new levy rate will take effect from the first day of the following month.
Workers from a foreign country whose native language is not English – and the accompanying certificates are not in English language – will need to provide a translated copy of the certificate(s), as well as the original document.
Academic or educational documents, such as diploma or higher academic degrees, need accompanying documents (like verification proof, transcripts, or certificate of graduation) to authenticate the provenance of the academic document uploaded.
How Can IAS Help
So, can a Sole Proprietor in Singapore employ foreign workers? The answer is yes! Employers must ensure that the potential worker passes the Self-Assessment Tool Test provided by the Ministry of Manpower before starting the application process for a work permit or pass.
The Ministry of Manpower is the only branch of the Singaporean government that can issue work permits and passes. Immigration Advice Service is an expert in helping businesses navigate the complex web of local government laws, paperwork, and approvals. Call us today to learn more about how we can help you employ foreign staff in your business.
Last modified on March 31st, 2023 at 3:00 pm
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Frequently Asked Questions
After you fire an employee, you will need to cancel the issued Work Permit, at most a week after the worker’s last day of work.
Furthermore, you, the employer, will cover the worker’s relocation and travel costs (back to the home country).
Lastly, issues such as outstanding salary payment and levy must be paid.
See “What should I do after firing an employee?”
See “What should I do after firing an employee?”
Yes. The Ministry of Manpower can ban employers from hiring migrant workers if they break one or more employment rules.
Yes. Employers can appeal the ban they received by writing to the Ministry of Manpower.
The work permit for your employees will be revoked. And if you default on your levy payment for a work permit more than twice within the last 2 years, that work permit cannot be reinstated.
The process is quite simple. All you have to do is:
One, pay all levy debts using the stipulated payment methods;
Two, fill and submit your reinstatement request online before the deadline – the deadline will be stated in the Work Permit suspension letter sent to you; and
Lastly, pay the transaction charge for the reinstatement of your worker’s Work Permit.
Note that the transaction charge for musicians is higher than that of non-musicians.
Also, reinstating the Work Permit for construction workers require an additional process.
The deadline cannot be extended.
Once the reinstatement deadline elapses and you failed to reinstate the Work Permits, the workers under your employment will have to return to their home countries.
The length of the ban depends on the severity of offense committed.