Knowledge Highlights 30 March 2020

Executive summary

On 24 March 2020, the Ministry of Manpower (“MOM”) announced that further measures will be introduced to help businesses cope with the Covid-19 situation. MOM stated that it will provide:

  • A three-month extension of the levy payment timeline to small-and-medium size enterprises (“SMEs”) with immediate effect, for more flexibility in their cash-flow management;
  • Levy waiver for up to 90 days with immediate effect for foreign workers on overseas leave; and
  • Man-Year Entitlement (“MYE”) refund for construction firms affected by disruptions arising from Covid-19, with effect from 1 April 2020.

In addition, the announcement urges firms with excess manpower to prioritise locals to be retained in their jobs. These firms should also give consent for their existing foreign workers to be transferred to other employers facing manpower shortages.

Three-month extension of levy payment timeline for SMEs

Prior to 24 March 2020, the foreign worker levy incurred in any month would be due for payment by the 14th of the following month. Failure to make payment on the due date would cause the contravening employer to have new and renewal work pass applications rejected. All existing work passes would be revoked if an employer accumulates two consecutive months of late or non-payment of levies.

With effect from 24 March 2020, MOM will provide SMEs with an additional three months to make the levy payment. In total, SMEs will have up to five months to pay for the foreign worker levy from the month it is incurred before revocation action comes into effect. This relief measure is temporary and will apply to levies incurred in the year 2020.

MOM encourages employers who use the extended payment timeline to retain existing workers and not employ new foreign workers. These employers will only be allowed renewals of work passes but not new applications.

The 2% monthly late payment penalty will still apply for levies which are deferred. MOM encourages firms to exercise financial prudence and plan their cash flow to pay levies on time as far as possible.

Levy waiver for up to 90 days for foreign workers on overseas leave

Prior to 24 March 2020, MOM allowed levy waiver for up to 60 days for foreign workers who go on overseas home leave for a minimum of seven consecutive days.

In light of the widespread travel restrictions and difficulties workers may encounter in returning to Singapore, the levy waiver period has been extended to up to 90 days for foreign workers who are on overseas leave with effect from 24 March 2020. This extended period of levy waiver will also apply to employers who send their foreign workers home from 24 March 2020 till end 2020. Employers arranging for their workers to leave Singapore and seeking a subsequent return will be subject to the prevailing conditions then.

MYE refund for construction firms

The Singapore Contractors Association Limited (“SCAL”) has provided feedback to MOM and the Building and Construction Authority (“BCA”) that construction firms are facing work disruptions arising from delays in overseas supplies and entry of foreign construction workers due to travel restrictions. With the forfeiture of any unused MYEs, construction firms would be unable to fully utilise the MYEs allocated for their projects, which result in higher costs to contractors who will have to hire foreign workers on higher levy rates.

MOM has worked together with SCAL and BCA on a temporary scheme to refund unutilised MYE due to work disruptions from Covid-19. Firms will have the flexibility to use the refunded MYE within one year to hire new workers or renew existing ones. This relief measure will be available for a period of six months starting from 1 April 2020. Affected firms will be required to apply to BCA for the MYE refund. More details on the application process are expected to be released by BCA.

Allow foreign workers to change employer if they are not needed

On 18 March 2020, the Ministry of Health issued an advisory for all travel abroad to be deferred in view of the heightened risk of further importation of Covid-19 to Singapore. MOM has been limiting the number of entry approvals for work pass holders to enter Singapore to a very small number, with priority given to essential services like healthcare and transport. MOM advises employers to:

  • Defer bringing in new foreign workers from overseas until the situation stabilises;
  • If foreign workers are still needed, retain the existing foreign workers who are already in Singapore; and
  • For foreign workers who are not needed, give consent for their transfer to other employers facing manpower shortages in the same sector:
  • Firms in manufacturing and services sectors can approach the Singapore Business Federation (“SBF”) for assistance under the SBF ManpowerConnect scheme.

Construction firms can tap on the Foreign Construction Worker Directory System (FCWDS) which facilitates matching of workers with prospective employers.

Further information

Allen & Gledhill has a Covid-19 Resource Centre on our website www.allenandgledhill.com that contains published knowhow on legal and regulatory aspects of the Covid-19 crisis. 

In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at covid19taskforce@allenandgledhill.com.

 

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