How to calculate foreign employee quota?
Many companies frequently face the challenge of not being aware of their quota for hiring foreign employees. This article aims to provide you with a clearer understanding of how your company’s quota is calculated. By gaining this knowledge, you will be able to make informed decisions and plan ahead effectively.
The Ministry of Manpower (MOM) utilizes your company’s Central Provident Fund (CPF) account to calculate your Work Permit (WP) and S Pass quota by considering your local employees. It is crucial that you accurately and punctually declare their salaries and CPF contributions.
Local employees encompass Singaporean and Permanent Resident (PR) staff who are employed by your company under a contract of service, including the company’s director. However, the following individuals are not included when calculating your quota:
- Business owners of sole proprietorships or partnerships.
- Employees who receive salaries and CPF contributions from three or more employers.
If your company has multiple CPF accounts, it is important not to contribute CPF or declare salaries for the same employee under different accounts to artificially increase your quota.
The number of local employees eligible for calculating your WP and S Pass quota entitlement is determined by the local qualifying salary (LQS). The following criteria apply to Singaporean or Permanent Resident employees employed under a contract of service, including the company’s director:
- If they earn the LQS of at least $1,400 per month, they are considered as 1 local employee (1LQS count).
- If they earn half the LQS, ranging from at least $700 to below $1,400 per month, they count as 0.5 local employee (0.5 LQS count).
To accommodate fluctuations in the number of local employees, MOM calculates the average based on three months’ data (salaries and CPF contributions) declared to CPF. The specific months used for the average depend on when you declared this CPF data. For instance:
- If you declare your employees’ July CPF data by July 14th, your quota for August will be based on the average of CPF data from May, June, and July.
- In August, your quota for August will be based on the average of CPF data from April, May, and June.
The number of local employees is updated every Saturday, and you can check your quota balance on the next working day. It is important to note that any delay or non-payment of CPF contributions and late salary declarations will impact your quota and may result in your workers being assigned higher levy tiers. Even if you settle any arrears, late interests, or fines, MOM may not consider late CPF contributions and salary declarations in their calculations.