Achi Biz GuidesQuota Calculation & LQS

Quota Calculation And Local Qualifying Salary (LQS) In Singapore

How should I count my local employees to calculate my Work Permit and S Pass quota in Singapore?

The Local Qualifying Salary (LQS) determines the number of local employees who can be used to calculate your Work Permit and S Pass quota entitlement. The LQS was previously known as the Full-Time Equivalent salary.

The LQS ensures that local workers are employed meaningfully, rather than being employed on token salaries to allow the employer access to foreign workers. This also ensures that quota controls remain effective and keep pace with income levels.

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as:


Qualifying Salary From 01-July-2024:	A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as: 1 local employee if they earn the LQS of at least $1,600 per month. 0.5 local employee if they earn half the LQS of at least $800 to below $1,600 per month.

Illustration:

Effective:	W.E.F. 01-July-2024
Local employee	Monthly salary	Count
A	$4,500	1.0
B	$1,600	1.0
C	$850	0.5
D	$900	0.5
D	$750	—
Total number of local employees		3
Remarks: Employees A and B are considered 2 local employees because they each earn at least $1,600. Employees C and D make up 1 local employee because they each earn $800 to below $1,600. Employee E is not counted because the salary is below $800.

The following employees are also not counted when calculating your quota:

Business owners of sole proprietorships or partnerships.
Employees who receive CPF contributions from three or more employers.

If you have multiple CPF accounts in your company, you should not contribute CPF for the same employee under the different accounts to get more quota.

If you hired new employees recently, you won’t see an immediate adjustment in your quota. It depends on when you pay the CPF contribution for each employee.

What is the Local Qualifying Salary (LQS)?

What is called Full-Time Equivalent salary?

A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as:


Qualifying Salary From 01-July-2024:	A Singaporean or Permanent Resident employee employed under a contract of service, including the company’s director, is counted as: 1 local employee if they earn the LQS of at least $1,600 per month. 0.5 local employee if they earn half the LQS of at least $800 to below $1,600 per month.

New LQS Requirement as part of the Progressive Wage (PW) Moves

Since 1 September 2022, firms employing foreign workers e.g. Work Permit, S Pass or EP holders are required to pay:

PWs to local workers covered by the relevant Sectoral or Occupational PWs in cleaning, security, landscape maintenance, and retail sectors, and in-house workers covered by the PWM

AND

At least the LQS to all other local workers

The LQS requirement is as follows:


For locals working part-time i.e. < 35 hours/week	≥ $10.50/hr gross For monthly rated part-timers, the hourly gross rate is calculated as follows to check if it meets the ≥ $10.50/hr gross requirement: (total monthly gross wages) ÷ (total hours worked for the month)
For full-time locals working full time i.e. 35-44 hours per week	≥ $1,600 gross
For full-time locals working overtime i.e. > 44 hours/week	LQS requirement will increase for every hour of overtime work. You can refer to the LQS wage schedule

Calculation of foreign worker quota for firms will remain unchanged with the new LQS requirement.

Example:

You hire a part-time local worker:

He works 10 hours per week, and earns $450 monthly gross wages (i.e. $10.30/hour).
Hence, you will fulfil the new LQS requirement for part-timers.
You can continue to hire new foreign workers and renew existing foreign workers.
However, your part-time local will not be counted towards your quota entitlement as he earns a monthly gross wage below $800.

What is the Progressive Wage Model (PWM) in Singapore?

The Progressive Wage Model (PWM) helps to increase wages of workers through upgrading skills and improving productivity. It is implemented via government levers in the cleaning, security and landscape sectors.

What is PWM?

Developed by tripartite committees consisting of unions, employers and the government, the PWM helps to uplift low-wage workers in the cleaning, security and landscape sectors with the upcoming inclusion of retail, food services and waste management in the coming years. Some specific occupations are also set to be covered starting with administrative assistants and drivers across all sectors.

Wages in these sectors had stagnated due to widespread cheap sourcing. The low wages in turn resulted in high turnover and labour shortages.

The PWM benefits workers by mapping out a clear career pathway for their wages to rise along with training and improvements in productivity and standards.

At the same time, higher productivity improves business profits for employers. Service buyers also enjoy better service standards and quality.

Who are covered under PWM?

The PWM covers Singapore citizens and Singapore permanent residents (PRs) in the Sectoral PWs in cleaning, security, landscape, lift and escalator, retail, and food services job roles.

Employers are encouraged to use the principles of progressive wage for their foreign employees.

Since 1 September 2022, Progressive Wages (PWs) expanded to cover retail workers, and in-house cleaners, security officers and landscape maintenance employees.

Food services PWM and occupational PWs for administrators and drivers will be subsequently implemented from March 2023, while waste management PWM will be implemented from July 2023.

Visit MOM for the following queries and more details on PWM:

Does the Progressive Wage Model also apply to part-time or temporary workers?
How can I tell that my cleaning service provider is paying its workers appropriate wages?
How much do I need to pay my employees under the Progressive Wage Model?
I’m a cleaner, and my employer has paid me incorrect wages. What can I do?
Who qualifies for the Progressive Wage Model for workers in the cleaning sector?

https://www.mom.gov.sg/employment-practices/progressive-wage-model/what-is-pwm

Help for employers

If you are an employer, you can tap on the Workfare Skills Support scheme at: https://www.workfare.gov.sg/Pages/WSS.aspx to offset a significant portion of the training costs for your Singaporean employees.

You can also get co-funding for productivity improvement projects through various grants in the Lean Enterprise Development (LED) Scheme at: https://bit.ly/3yxF6MZ

Learn more about:

What is the Progressive Wage Model:

https://www.mom.gov.sg/employment-practices/progressive-wage-model/what-is-pwm

Expansion of Progressive Wage approach and coverage:

https://www.mom.gov.sg/employment-practices/progressive-wage-model/expansion-of-progressive-wage-approach-and-coverage

Occupational Progressive Wages for administrators and drivers:

https://www.mom.gov.sg/employment-practices/progressive-wage-model/occupational-pws-for-administrators-and-drivers

Requirements to hire foreign workers

Since 1 September 2022, firms employing foreign workers need to pay and fulfil all the requirements:

PWs to local workers covered by the relevant Sectoral or Occupational PWs in cleaning, security, landscape maintenance, and retail sectors, and in-house workers covered by the PWM
At least the LQS to all other local workers

Firms that do not comply with the requirements will not be able to renew existing work passes or apply for new work passes.

Note: The revised LQS is $1,600. The LQS wage requirement is pro-rated for part-time work and increases for every hour of overtime work.

How often the Registry of Building Construction Authority (BCA) data is updated (synced) by MOM?

The data of BCA contractors’ registry is updated (synced) by MOM every Tuesday.

Once you have successfully registered with BCA contractors’ registry the data will be synced with MOM’s portal automatically. In case of any missing of such data, you need to contact MOM for further assistance.

Updating of Local workforce Quota

When the Local Workforce Quota is updated by MOM?

Local workforce is determined by the average of CPF contributions over a three-month period updated by MOM by every Saturday w.e.f. 03-Dec-2022.

New changes to your foreign worker quota computation

From 3 Dec 2022, your foreign worker quota will be updated in WP Online (WPOL) every Saturday. You are reminded that your local employees must earn the Local Qualifying Salary (LQS) of at least $1,600 before they can be counted as one local worker towards your foreign worker quota entitlement. You are also reminded to promptly declare your employees’ Central Provident Fund (CPF) contributions and wages to the CPF Board for quota computation.

When can a new company (entity) start hiring foreign workers?

I have set up a new company. When can I start hiring foreign workers?

If you are a newly set up company and you have not made any CPF contributions yet, your quota for first month will be calculated based on your first CPF contribution, instead of the normal 3-month average.

Thereafter, your foreign worker quota is calculated based on the 3-month average number of local employees you have.

When can a existing company (entity) start hiring foreign workers?

I have hired new employees. When can I start hiring additional foreign workers?

Your foreign worker quota is calculated based on the latest 3-month average number of local employees in your company.

The number of local employees is based on the CPF contribution you have made to them, under the same company CPF account.

Eg: If you pay your employees’ July CPF contributions after 14 July, the quota will be calculated based on your number of local employees in May, June, July’s CPF contributions. This quota will only be updated in September.

However if you want the quota to be updated earlier, i.e. August, you should make your CPF contributions by 14 July.

Computation of Total Workforce

How the Total Workforce is computed by MOM?

MOM has regularised with some changes how a company’s foreign worker quota is computed (calculated) with effect from 01-Jan-2021.

Changes to total workforce computation (calculation)

The total workforce refers to the number of local workers whose salaries meet the local qualifying salary (LQS) and number of S Pass and Work Permit holders hired by the company.
The company’s foreign workforce quota changes as your company’s total workforce changes. When processing any work pass application / appeal, MOM will look at your company’s latest quota status. This means that any fluctuations in your company’s quota after the date of work pass application may affect the outcome of the application.
You may wish to use the Quota Calculator on MOM website to check on your work pass quota entitlement.


Total Workforce computation w.e.f. 01-Jan-2021	The foreign workers will be counted after their work passes are issued. That means, foreign workers are not counted into the company’s total workforce as soon as their work passes are approved in principle till their work passes are eventually issued.
Total Workforce computation Till 31-Dec-2020	Foreign workers were counted into the company’s total workforce as soon as their work passes were approved in principle, even if their work passes were not eventually issued.

Click here to learn about the new computation from an Illustration.

HOW TO CALCULATE YOUR QUOTA AND LEVY BILL

You can refer to the requirements for relevant sector for Work Permits and S Pass.

You can:

Refer to the MOM guidelines on how to calculate your quota and levy bill.
Learn more about S Pass quota and levy rates at www.mom.gov.sg

Note:

The daily levy rate only applies to Work Permit holders who did not work for a full calendar month. The daily levy rate is calculated as follows: (Monthly levy rate X 12) / 365 = rounding up to the nearest cent.
If your Work Permit renewal involves changing between prior approval to MYE waiver, or vice versa, the change in levy rate will start on the 1st of the month following the expiry date of the permit.

ACHI BIZ is one of the licensed Employment Agencies in Singapore. We will assist your work pass related applications and appeals at our level best with the regulatory authority Ministry Of Manpower (MOM) for successful outcome.

Please refer to our GUIDES for more information, SERVICES to meet your requirements or CONTACT us if you wish to avail these or many other services.