Singapore attracts a large number of foreign job seekers each year. While this supports business growth, it also intensifies competition for jobs among Singapore Citizens and Permanent Residents. To manage the proportion of foreign workers in the labour market, the Singapore Government introduced the Foreign Worker Levy (FWL).
This article explains what the Foreign Worker Levy is, how employers can check and make levy payments, and how a payroll services provider can support compliance with statutory requirements.
What is Singapore Work Permit?
Before exploring the Foreign Worker Levy, it is important to understand Singapore’s work permit framework and the Dependency Ratio Ceiling (DRC).
A Singapore Work Permit is issued to foreign nationals who are approved to work in the country. The DRC sets the maximum number of foreign employees a company is allowed to hire, based on its industry.
Employers are required to comply with sector-specific DRC limits while offering fair employment opportunities to both local and overseas workers. The Foreign Worker Levy plays a role in supporting this framework.
What is the Foreign Worker Levy?
The Foreign Worker Levy is a regulatory measure introduced by the Singapore Government to control the number of Work Permit and S Pass holders employed by businesses. Employers hiring foreign workers are required to calculate and pay the levy for each eligible employee.
This levy applies only to foreign employees and represents an additional employment cost for employers.
Which Employees Does the FWL Apply to?
Employers are required to pay the Foreign Worker Levy when employing the following categories of workers:
- Work Permit holders
- S Pass holders
The levy does not apply to Employment Pass (EP) holders, as EPs are governed by separate regulatory requirements rather than a levy-based system.
Who is Responsible for Processing & Paying FWL Contributions?
Employers are fully responsible for paying the Foreign Worker Levy to the Ministry of Manpower (MOM).
FWL payments are typically made through GIRO, which is MOM’s default and preferred payment method. Employers without an existing GIRO arrangement must submit a GIRO application to MOM. Processing generally takes three to four weeks, and application status can be tracked online.
Until GIRO approval is completed, employers must ensure levy payments are made using alternative payment methods by the stipulated deadline.
FWL deductions are usually made around the 17th of the following month, or the next working day if this falls on a weekend or public holiday. For example, the levy for December is typically deducted in mid-January.
If there are insufficient funds in the account, a late payment penalty of 2% per month or SGD 20 (whichever is higher) will be imposed, up to a maximum of 30% of the outstanding levy amount.
Employers may also use PayNow QR to make levy payments, although GIRO remains the recommended option for ongoing compliance.
How is Foreign Worker Levy Calculated?
The Foreign Worker Levy payable depends on several factors, including:
- The employee’s academic and professional qualifications
- The industry or sector in which the employee is working
- The total number of Work Permit and S Pass holders employed by the company
Levy rates vary across sectors and are reviewed periodically by MOM. Employers should always refer to the latest MOM levy tables to ensure accuracy.
Is There a Foreign Worker Levy Waiver?
In certain situations, employers may apply for a Foreign Worker Levy waiver. Common qualifying scenarios include when a foreign employee:
- Is on overseas leave for at least seven consecutive days (capped at 60 calendar days per year)
- Is on hospitalisation leave issued by a Singapore hospital (capped at 60 calendar days per year)
- Does not return to Singapore after overseas leave
- Is under police custody or housed at an embassy
- Has passed away
- Has obtained Singapore Permanent Residency
- Works in the harbour-craft industry and is on board a vessel departing Singapore for at least three consecutive days
- Is a Malaysian national serving National Service in their home country
Levy waivers can only be applied for after the levy has been charged, and applications must be submitted within one year of the levy bill. Employers can apply online via the CPF website by selecting “Application for Waiver of Foreign Worker Levy (Business)” after logging in.
Engaging experienced payroll outsourcing providers can help ensure levy payments are made accurately and waiver applications are submitted on time. Payroll specialists can also assist employers in managing end-to-end payroll processes, including levy compliance and refund claims. Contact us today to learn more!
For more information on levy rate and quota visit the government website.