Special Briefing: Fair Consideration Framework

On Thursday 5 June 2014, the British Chamber of Commerce in Singapore together with Magrath Global, hosted a presentation on all aspects of the introduction of the Fair Consideration Framework (“FCF”), which will take effect in Singapore on 1 August 2014.

A large number of companies attended to hear Brian Wong of the Ministry of Manpower explain how the new changes to Employment Pass (“EP”) applications will be implemented.  Two other key officials from the Ministry of Manpower (Mrs Penny Han, Divisional Director/ Controller of Work Passes and Mr Silas Sng, Director, Customer Experience, Policy & Strategy) then responded in a lively Q&A session. Ben Sheldrick, the Managing Partner of Magrath LLP and Magrath Global, flew out from London to open the presentation, introduce the speakers and moderate the Q&A session.

The main objectives of the Framework are as follows:

  1. To ensure that “Singaporeans” (Singapore Citizens and Singaporean Permanent Residents) fair access to job and development opportunities; and
  2. Set out required standards for hiring practice.

Indicative of this new approach is that companies will be required to advertise in the WDA (Singapore Work Development Agency) Jobs Bank before filing a new EP application. The advertisement will have to comply with the Tripartite Guidelines on Fair Employment Practices and run for at least 14 calendar days.

Current practice

At present, foreigners who wish to work in Singapore and have a job offer in Singapore from a Singaporean based entity or if the prospective employer is not registered in Singapore, a sponsor based in Singapore, are able to apply for an EP, subject to meeting the relevant pass criteria.

EPs are available for applicants who draw a minimum monthly salary of SG$3,300. These are typically young graduates of reputable educational institutions. Older applicants are expected to command higher salaries to qualify for the EP, commensurate with the work experience and quality they are expected to bring to Singapore. There is no requirement that the Singapore based employer should advertise the role within Singapore. Employers, however, are expected to implement fair employment hiring practices in respect of local recruitment.

As an indication in a shift of public sentiment with respect to immigration, the Government’s approach is to help maintain a level playing field, and help equip Singaporeans with the skills they need to fill ‘quality jobs’ – and the FCF is seen as a crucial aid to the achievement of this objective.

Advertising requirements

  1. When companies wish to hire a foreigner for a job that has been advertised, an application for an EP must be made within three months of the closing date of the advertisement, otherwise a new advertisement will need to be posted
  2. The advert must include information such as job title and closing date, along with skills, experience and qualifications required to undertake the role. Employers do not need to state the position’s salary range in the WDA Jobs Bank if the intention is not to hire a foreigner for the position. However, if there is a possibility that the company may wish to consider a foreigner for a position, companies are strongly advised to state the salary range.
  3. A salary range is needed by the Ministry of Manpower in order to assess the EP application, and although the salary range does not need to be made public, an EP application will not be approved if it is not stated in the jobs bank and employers will need to re post the advert, in some cases delaying the recruitment of foreign talent for a further 14 days.

Exemptions

At time of writing, there are four circumstances in which certain employers will be exempt from the FCF advertising provisions. These are:

  • Companies with 25 employees or less;
  • Jobs advertised paying at least SG$12,000 per month;
  • Employees who are considered to be intra-corporate transferees (ICT); and
  • Pass upgrades within the same company.

Companies with 25 employees or less

The Ministry of Manpower has devised a “Warm Body Concept” to identify these companies, where the total employees would include all local employees with CPF (Central Provident Fund) contributions, along with any foreign employees, including those on mainstream work passes (EP/S-Pass/ Work Permit) and those on all other work passes; such as LOCs (Letters of Consent), PEPs (Personalised Employment Passes) and training passes.

The Ministry of Manpower will be updating this “Warm Body Concept” figure on the last Saturday of the last month in each quarter (i.e. March, June, September and December) – it is important to note that this is not the same as the total workforce used for the purposes of computing a company’s quote under the S-Pass.

Employees who are considered to be intra-corporate transferees (ICT)

With respect to those who are considered to be an intra-corporate transferee, the Ministry of Manpower state that the individual must have worked for a at least one year in the firm before being posted to the subsidiary or affiliated firm in Singapore prior to the EP application; and fall within one of the following categories:

a)      Manager

Primarily directs the organisation or a department of sub-division of the organisation; and who:

  • supervises and controls the work of other supervisory, professional or managerial employees; and
  • has the authority to hire and fire or take other personnel actions (such as promotion or leave authorisation); and
  • exercises discretionary authority over day-to-day operations.

b)      Executive

Primarily directs the management of the organisation; and who:

  • exercises wide latitude in decision-making; and
  • receives only general supervision or direction from higher level executives, the board of directors, or stakeholders of the business.

c)       Specialist

  • Possesses knowledge at an advanced level of expertise; and
  • Possesses proprietary knowledge of the organisation’s service, research, equipments, techniques or management.

Conclusion

The FCF seeks to redress the balance between using foreign talent and protecting the local workforce. The FCF is not a ‘Hire Singaporeans First’ policy; it is about giving a fair chance for Singaporeans to compete.

The Ministry of Manpower will be seeking to use the data gained from the implementation of the FCF to consider whether further changes to protect the local workforce and identify what and in which sectors, foreign talent is needed. We expect further changes to be implemented in the coming months and years as Singapore (along with most of the world) deals with the politically sensitive issue of immigration.

For further information, or for any clarity on the above, please contact Magrath Global who specialise in the provision of immigration assistance in the Asia-Pacific region and beyond.