Singapore receives a huge population of foreign job applicants each year. This creates a problem for citizens and PR holders in Singapore, as competition for jobs increases. One mechanism that the Government of Singapore has initiated in order to keep the number of foreign employees in check, is the Foreign Worker Levy.
In this article, we’ll discuss what the FWL levy is and explore how employers can check and pay foreign worker levy. We will also understand how a payroll outsourcing services provider can help you pay your foreign worker levy according to the governmental mandate.
What is Singapore Work Permit?
Before we discuss the foreign worker levy, we need to touch upon Singapore’s work permit and the Dependency Ratio Ceiling (DRC).
The Singapore work permit is awarded to any foreign citizen who applies to work in Singapore. The DRC refers to the maximum number of foreign job applicants that a business is allowed to recruit and hire.
Companies need to follow the DRC required by sector and give equal employment opportunities to overseas and local workers. This is where the FWL levy comes in.
What is the Foreign Worker Levy?
The foreign worker levy is a specialised mechanism initiated by the Singapore Government to keep the number of work permit holders in check. Companies hiring overseas staff must check and pay foreign worker levy for each foreigner they hire. This is an expense that applies exclusively to foreign employees.
Which Employees Does the FWL Apply to?
Companies need to pay the FWL Levy when they hire:
Who is Responsible for Processing & Paying FWL Contributions?
Companies must use the General Interbank Recurring Order to pay their foreign worker levy. If you don’t have a GIRO account to make the payment, you will need to submit a GIRO application form to the Ministry of Manpower (MOM).
Your form will be sent to your bank and processed within 1 month. You can check the application status after 2 weeks using our Check and Pay Foreign Worker Levy eService. Before the application is approved, you must use the other payment methods by the 14th of the month.
The FWL levy for one month is usually deducted on the 17th of the next month or the next working day if it falls on a weekend or public holiday. So, if you need to pay the FWL levy for December, the payment will get deducted on the 17th of January.
Usually, the FWL levy is a standing order and the MOM will automatically deduct the amount. If you are unable to pay the FWL levy due to insufficient funds, a penalty of 2% per month or $20SGD (whichever is higher) will be charged for each failed FWL payment. The total late payment penalty will be capped at 30% of the outstanding levy.
You can check and pay the foreign worker levy also through the PayNow QR code & eNets options in the GIRO account or through SingPost at your local branch.
How is Foreign Worker Levy Calculated?
The MOM calculates the FWL levy to be paid based on:
- The worker’s academic & professional qualifications and the industry they are working in.
- The industry/sector they are working in
- The number of Work Permit or S Pass holders hired
For more information on levy rate and quota visit the government website.
Is There a Foreign Worker Levy Waiver?
Businesses can apply for an FWL waiver under certain situations:
- The employee is on overseas leave for 7 consecutive days (Capped at 60 calendar days)
- The employee is on hospitalisation leave issued by Singapore hospitals (Capped at 60 calendar days)
- Does not return to Singapore after overseas leave.
- Is under police custody or is housed at an embassy.
- Has passed away.
- Has become a Singapore permanent resident.
- Is in the harbour-craft industry and is on board a vessel leaving Singapore’s port for at least 3 consecutive days.
- Is a Malaysian and is serving National Service in home country
Businesses can only apply for the levy waiver after the levy has been charged and the application must be within 1 year of the levy bill. Companies can apply online through the CPF website. After logging in, choose Application for Waiver of Foreign Worker Levy (Business).
How Can Companies Apply for a Levy Rebate?
Apart from the waivers, Singapore companies can also apply for the FWL levy rebate for the months of May to December 2021. The rebate has been increased from SGD$90 to SGD$250 per foreign employee. This refund will apply only to those who have already paid the complete foreign worker levy for the month.
By seeking the right foreign worker levy payment advice from payroll process outsourcing experts, you’ll be able to seamlessly apply for your refunds on time. At Links International, our payroll outsourcing specialists have extensive experience with end-to-end payroll management. We can help you pay your FWL levy on time and also help you submit your waivers and claim your refunds. Our team is committed to helping you increase your profitability through dedicated payroll and FWL levy management support. Reach out to us to start discussions.
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