Phantom Workers in Singapore: How MOM Detects Fake Locals Used to Inflate Work Pass Quota

Short answer: Phantom workers are Singaporeans or Permanent Residents who receive CPF contributions from a company they do not work for, so the company looks bigger and gets more Work Permit and S Pass quota. MOM finds them through data analytics, inspections and complaints, and treats each tainted work pass application as a false declaration under the EFMA.

Phantom workers in Singapore are a clear Ministry of Manpower (MOM) enforcement priority in 2026: MOM ran arrest operations in March, July and September, and told Parliament it acted against around 100 employers for the practice in 2024 and 2025. This guide covers how local headcount drives quota, how MOM says it detects fake locals, the penalties under the Employment of Foreign Manpower Act 1990 (EFMA), and a self-audit for SMEs with related-party staff on the CPF list.

This article is general information only and is not legal, tax or immigration advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

What are phantom workers in Singapore, and why do they inflate quota?

A phantom worker is a local who receives CPF contributions from a company that does not employ them, so the company can claim a larger local workforce and a larger foreign worker quota.

Every company hiring Work Permit or S Pass holders is subject to a Dependency Ratio Ceiling (DRC), the maximum share of foreign workers in its total workforce. In a March 2026 parliamentary reply, MOM said the DRC “links a firm’s entitlement to hire foreign workers to the number of local workers it employs”. Paying CPF for people who do not work for you breaks that link.

Do not confuse this with section 22B EFMA, which punishes obtaining a work pass for a business that does not exist or does not need the worker and then failing to employ the foreigner (presumptive minimum of 6 months’ imprisonment). In a phantom local scheme, it is the local headcount that is fake.

How is S Pass and Work Permit quota calculated from your local workforce?

MOM computes your quota from the locals in your company’s CPF account, weighted by the Local Qualifying Salary (LQS), the minimum monthly salary a local must earn to count. Fake CPF entries inflate exactly this number. MOM’s rules as at 11 October 2026:

• The LQS is S$1,800 a month for full-time locals (35 to 44 hours a week). Part-time locals must be paid at least S$10.50 an hour to meet the LQS requirement.
• A Singapore Citizen or PR employed under a contract of service, including the company’s director, counts as 1 local employee if paid at least S$1,800, and 0.5 if paid S$900 to below S$1,800.
• Sole proprietors, partners of partnerships and platform workers are not counted.
• A local can count towards the quota of up to two companies. MOM says you should not declare salary and CPF for the same employee under different CPF accounts to get more quota.
• The quota uses the average number of qualifying locals over the last 3 months, and a new hire only shows up once their first full-month salary and CPF contribution are paid.

Sector	DRC (all Work Permit and S Pass holders)	S Pass sub-quota
Services	35%	10%
Manufacturing	60%	15%
Marine shipyard	75%	15%
Construction	83.3%	15%
Process	83.3%	15%

Here is why a handful of phantom workers matters. A services company with 13 qualifying locals and 7 Work Permit holders has a total workforce of 20, so 35% is exactly 7 foreigners. Add 4 phantom locals at S$1,800 and the count of locals rises to 17, which lifts the ceiling to 9 foreigners (9 out of a total workforce of 26 is under 35%). The two extra workers are hired on quota that does not exist. Our earlier guide on how the S$1,800 LQS reshapes quota maths works through more examples, and the RCS free tools page has calculators that help with payroll planning.

How does MOM detect fake locals used for work pass quota?

MOM says it uses data analytics, inspections and complaints. It has not published its detection rules, and we do not speculate beyond what it has stated:

• In a written answer dated 27 February 2026, MOM said: “To detect such violations, we use data analytics, conduct inspections, and investigate all complaints.”
• In a written answer dated 3 March 2026, MOM said it investigates phantom worker arrangements “based on complaints and proactive on-site checks on firms”, and that enforcement action had been taken against around 100 employers from 2024 to 2025.
• Each of its 2026 press releases asks members of the public not to accept CPF contributions from businesses they are not working for, and to report suspected cases through MOM’s “Report an infringement” eService.

MOM’s quota page states that it uses your company’s CPF account to compute the number of local employees, so the quota rests on records MOM already holds. On site, section 16 EFMA lets authorised officers and employment inspectors inspect the business premises of an employer that has applied for a work pass, require documents and information, and examine people orally. A local who cannot be found at the workplace or cannot describe their job is hard to explain. See our walkthrough of a MOM inspection triggered by a tip-off.

What did MOM’s 2026 enforcement operations find?

MOM published three 2026 press releases on suspected fraudulent CPF contributions used to inflate foreign worker quota. None names the individuals or companies, and the investigations were ongoing when issued.

Press release	Operation date	What MOM reported
1 April 2026	31 March 2026	10 arrested, including directors and employees from five construction companies; 41 assisting; CPF contributions of more than 40 further persons under review.
23 July 2026	21 July 2026	14 arrested: four directors, nine foreign workers and one employment agency key appointment holder. CPF contributions to 139 locals not employed by the companies under investigation, with suspected EFMA false declaration and kickback offences and unlicensed employment agency activity.
4 September 2026	2 September 2026	4 arrested: two directors and two staff from the construction sector; 21 more assisting. Suspected false declarations and kickbacks.

In each case the inflated quota was used to bring in foreigners, and MOM’s investigations reach both the directors who paid the CPF and the people involved in the arrangements. Read the 23 July 2026 MOM press release and the 4 September 2026 MOM press release for MOM’s own wording.

What are the penalties for fictitious employment under the EFMA?

The core charge is making a false statement in connection with a work pass application, under section 22(1)(d) EFMA, punishable by a fine of up to S$20,000, imprisonment of up to 2 years, or both. MOM has said it will bar convicted entities and individuals from employing foreign workers.

Provision (EFMA)	Conduct	Maximum punishment
Section 22(1)(d), punished under 22(1)(i)	Making a statement or giving information to the Controller of Work Passes that the person knows, or ought reasonably to know, is false or misleading in a material particular	Fine up to S$20,000, jail up to 2 years, or both
Section 22A(1) and (2)	Receiving or deducting money from a foreign employee as a condition of employment (kickbacks)	Fine up to S$30,000, jail up to 2 years, or both; section 23A requires the court to order repayment of the kickback
Section 23(1)	Abetting any EFMA offence, for example a local who supplies particulars for fake CPF contributions	Same punishment as the offence abetted
Section 20	Offence by a company committed with an officer’s consent or connivance, or due to the officer’s neglect	The director or officer is personally liable, and section 20(5) presumes neglect in some cases until the contrary is proved

MOM has also told Parliament that errant employers may face a financial penalty of up to S$20,000 for every work pass application made using the inflated quota, and will be debarred from hiring foreign workers. Section 21 allows an employment inspector to arrest without warrant a person reasonably suspected of a section 22(1)(d) offence. The full text is on Singapore Statutes Online, and our guide to EFMA penalties for employers covers the wider offence list.

Can CPF for fake locals be explained as a genuine mistake?

Only if the facts support it. Section 22(1)(d) covers statements the person “ought reasonably to know” are false, so carelessness about the CPF list is not a full answer once a work pass has been applied for on that headcount.

Situations that can look like phantom workers include a relative who helps occasionally but draws a full salary, a director paid by two related companies, a secondee left on the original payroll, and a leaver whose CPF was not stopped. The question is whether the person is genuinely employed under a contract of service by the company paying their CPF, for real work.

If you find an error, correct the records before your next application and keep evidence of how you found it. Our article on how MOM audits under-declared salaries explains how MOM compares declarations with payroll evidence, and the same discipline applies here.

How should an SME self-audit related-party “locals” on its CPF list?

Run a short audit before every Work Permit or S Pass application and at least quarterly, so you can prove for every local you count that they work for you, where, and for what pay.

1. Export the list of locals with CPF contributions for the last 3 months, which is the window MOM uses for quota.
2. Mark everyone who is related to a director or shareholder, is a director of another company, or also appears on the payroll of a related company.
3. For each marked person, collect a signed employment contract or appointment letter, job description, work location and working hours.
4. Match payroll to reality: bank transfers of net salary to the person’s own account, timesheets or attendance records, work emails, rosters or site logs.
5. Check the salary against the LQS bands (S$1,800 and above counts as 1; S$900 to below S$1,800 counts as 0.5) and confirm part-timers meet the S$10.50 hourly requirement.
6. Confirm no local is counted by more than two companies and no one is declared under two of your CPF accounts for the same job.
7. Look for warning signs: a local who never attends work, salary handed back in cash, a headcount jump just before an application, or anyone offering to “lend” locals for a fee.
8. Remove anyone not genuinely employed, correct the records, recalculate your quota, and file the evidence for inspection.

If the recalculated quota is lower than the number of foreign workers you already employ, read our guide to S Pass quota breach remediation steps before you do anything else.

What should a local do if a company offers CPF for no work?

Decline it. MOM’s 2026 press releases warn members of the public not to accept CPF contributions from businesses they are not working for, because they may be guilty of aiding false declaration offences, which carries a fine of up to S$20,000, imprisonment of up to 2 years, or both.

“Free CPF” is not harmless: in the September 2026 case, 21 further people were assisting MOM for suspected involvement. Anyone approached, or who notices contributions from an unknown employer, can report it through MOM’s “Report an infringement” eService, which MOM says is kept confidential.

Frequently asked questions

Is it illegal to pay CPF to a family member who works part-time in my business?

No, if they genuinely work for the company under a contract of service and the pay reflects the work. A local paid below S$900 a month will not count towards quota at all, and anyone counted must be able to show real duties, hours and pay.

Does a company director count as a local employee for quota?

Yes, MOM counts a Singapore Citizen or PR director employed under a contract of service, using the same S$1,800 and S$900 bands. Sole proprietors and partners of partnerships are not counted.

How quickly does a new local hire increase my quota?

Only after you pay their first full-month salary and CPF contribution. MOM updates the local employee count every Saturday and uses the 3-month average.

Can MOM revoke work passes issued on an inflated quota?

MOM has said convicted entities and individuals will be barred from employing foreign workers, and its 1 April 2026 release said work pass privileges may also be suspended.

Who is liable: the company, the director, or the payroll staff?

All of them can be. Section 20 EFMA makes an officer personally liable where a company offence was committed with their consent or connivance or through their neglect, and section 23 treats anyone who abets the offence as guilty of it.

Need help with this? Call, SMS or WhatsApp +65 8501 7133, or email [email protected]. Little Big Employment Agency (EA Licence 19C9790) works with a panel of corporate and employment law firms; this article is general information, not legal advice.

Last reviewed: 11 October 2026. The Editorial Team, Little Big Employment Agency.