The Ministry of Manpower (MOM) of Singapore has issued an official notice: the Local Qualifying Salary (LQS) for local employees will be raised from SGD 1,600 to SGD 1,800 effective 1 July 2026.
This policy is directly linked to the quota allocation for Work Permit (WP) for general foreign workers and S Pass (SP) for skilled foreign employees. Failure to adjust salaries in a timely manner will not only bar enterprises from hiring new foreign staff but also result in outright rejection of renewal applications for existing foreign employees’ passes, which will severely delay the progress of overseas projects.
New Official MOM Regulations
1. Adjustment to Salary Threshold
Monthly qualifying salary for full-time Singapore Citizens (SC) and Singapore Permanent Residents (PR) counted towards foreign worker quota:
- Old standard: Monthly salary ≥ SGD 1,600 = 1 local quota unit
- New standard: Monthly salary ≥ SGD 1,800 = 1 local quota unit
2. New Quota Calculation Rules (determines the number of foreign hires permitted)
- Monthly salary ≥ SGD 1,800: counted as 1 full local quota unit
- Monthly salary between SGD 900 and SGD 1,799: counted as only 0.5 local quota unit
- Monthly salary below SGD 900: not eligible for any local quota unit
3. Two Key Penalties for Non-Compliance
- Quota Reduction: The number of eligible local quota units will drop, limiting the total number of WP and SP holders a company may employ.
- Pass Application Freeze: Companies failing to meet the LQS threshold cannot submit new applications for foreign work passes, nor renew existing WP/SP passes upon expiry, leaving overseas teams vulnerable to critical staffing shortages.
4. Corresponding Rise in CPF Contribution Costs
Based on a monthly salary of SGD 1,800 and standard contribution rates for common age brackets, the total Central Provident Fund (CPF) payable jointly by employer and employee amounts to SGD 666. Total labour costs will increase alongside the new salary threshold, requiring enterprises to revise their annual manpower budgets in advance.
Practical Impacts of the New Rules on Chinese Enterprises Expanding into Singapore
1. Labour-intensive Chinese enterprises (manufacturing, construction, logistics, F&B)
These industries rely heavily on WP foreign workers, with their hiring quotas calculated entirely based on the number of eligible local SC/PR employees. If multiple local staff are paid between SGD 1,600 and SGD 1,799 monthly, the company’s total quota will be halved, drastically limiting recruitment and leading to severe labour shortages for production lines and construction projects.
2. Small and medium-sized foreign trade & service enterprises (with only a handful of local administrative roles)
Many Chinese subsidiaries in Singapore employ just one or two local administrative staff. If their monthly salaries are not increased to SGD 1,800, each employee will only count as 0.5 quota unit instead of one. Companies that previously qualified to hire two S Pass skilled workers will face insufficient quotas, halting recruitment for overseas business expansion.
3. Heightened Risks During Pass Renewal
Many business owners only focus on new quota applications while overlooking compliance reviews during renewals. MOM will audit a company’s local staff payroll records for the preceding six months when processing pass renewals. Failure to meet the LQS requirement will lead to rejected renewals, forcing key foreign employees to leave Singapore upon pass expiry.
Why Gonex?
Experienced Management Team: each member in the team has 10+ years experiences in Overseas Human Resources Management, composed of seasoned HR professionals.
Powerful connection: Gonex has established over 10 entities worldwide, along with more than 30 stable partners, together offering the most comprehensive overseas human resource services to our clients.
Strict compliance with laws and regulations: At every step in our service process, Gonex strictly adheres to local laws and regulations, ensuring our clients completely avoid any legal disputes.
Competitive price: Gonex’s services are 20% more affordable compared to other companies in the industry, allowing our clients to allocate more resources to their core business.
What Gonex offer?
Employment of Record: This service helps clients legally hire employees in countries or regions where they do not have a legal entity established.
Payroll BPO service: This includes payroll project implementation plan development, project deployment, payroll calculation, payment of funds, administration of statutory and supplementary benefits, customized reporting, and other comprehensive payroll services.
Global Mobility: Based on the company’s internationalization strategy, the company assigns employees to overseas branches/subsidiaries and handles visa and tax matters in accordance with local policies, while assisting in the compliance management of employees throughout their international assignment life cycle.
GONEX One-Stop Solution: Your strategic partner
Compliance and Legal Adherence: GONEX’s Employer of Record (EOR) service ensures legal compliance in employing local staff.
Cross-Border Payroll and Tax Management: Streamlined payroll services simplify cross-border management.
Flexible Employment Solutions: Adaptable employment services cater to changing business needs.
International Talent Dispatch: Support services facilitate the dispatch of key talent to overseas.
Digital HR Management Platform: Technology-driven solutions enhance management efficiency and cultural integration.
Who do we serve?
Gonex served 70+ clients to expand overseas. The incomes of our clients like Mengniu, Kuaishou and CHINT are up to 192.4 billion.
Let Gonex assist you and your company with handling such complex overseas hiring processes! To access more information on corporate international expansion cases, global employment guidelines, worldwide compensation management, regulations for various regional countries, and factory establishment manuals in different nations, you are welcome to visit the GONEX official website at www.letsgonex.com to download these resources or view our company’s business introduction in PDF format (https://letsgonex.com/in.pdf).
