In a move to align the requirements with other foreigners working in Singapore, Dependant's Pass (DP) holders working in Singapore will soon have to secure a work pass if they want to work in Singapore. The change was announced by Minister for Manpower Mrs Josephine Teo on 3 March 2021 during the debate on the Ministry of Manpower’s budget. It is set to become effective from 1 May 2021.

This is a step taken by the Government towards harmonising the employment of foreigners in Singapore.

Impact on Individuals

Currently, DP holders who are dependent on holders of an Employment Pass (EP), EntrePass or Personalised Employment Pass can work in Singapore without obtaining a separate work pass – they are permitted to work if they obtain a Letter of Consent (LOC).

With effect from 1 May 2021, DP holders relying on a LOC will need to hold a valid work pass such as an EP, S Pass or work permit instead of a LOC to be able to work in Singapore. If the DP holder is already working under the LOC, the DP holder will be allowed to continue working until the expiry of the LOC, with the application for the relevant work pass to be made once the LOC expires.

Impact on Employers

Employers currently hiring a DP holder working under a LOC will have to apply for a work pass applicable to the DP holder in order to keep employing such DP holder.

Employers should take note of the impact that this will have on the hiring process after the change takes effect. Companies hiring DP holders holding a LOC will have to comply with the conditions which are applicable when hiring foreigners under work passes, including the relevant qualifying salary, quotas and levies.

Impact on DP holders who are business owners

When the change is implemented, DP holders who are business owners can continue to work using a LOC, but with restrictions:

1. The DP holder should either be a sole partner, or company director, with at least a 30% shareholding in the business; and
2. The DP holder’s business should also hire at least one Singaporean or Singapore permanent resident who earns at least the “Local Qualifying Salary”, which is currently set at S$1,400 per month, and receives contributions to the Central Provident Fund for at least 3 months.

If the DP holder does not meet the required criteria, the DP holder can either run the business on the existing LOC until it expires or make an application for an extension of the LOC. However, the extension of the LOC will only be valid until April 2022 and such extension application can only be made once.

If the DP holder does not meet the abovementioned criteria, the DP holder will need to obtain a work pass.

Conclusion

The move aligns the requirements for foreigners working in Singapore with DP holders currently working under a LOC by requiring DP holders to meet the work pass requirements which are applicable to all other foreigners working in Singapore. From a business perspective, the changes mean that all employers will need to comply with the relevant qualifying salary, dependency ratio ceiling and levies payable for the employment of a foreigner as may be applicable to the corresponding work pass.

Further details on this change are expected to be released on 1 May 2021. Given the ongoing structural changes in the employment market, DP holders, employers and business owners should be aware of the updated restrictions when hiring foreigners to work in Singapore. Dentons has leveraged our global footprint to provide clients with an overview of their obligations as employers across multiple markets. We answer the typical questions you might have, and provide guidance around key employment concerns. If you have any questions about these new requirements and how they may apply to you, please call or e-mail us.