Foreign Worker Levy: A 2025 Guide For Employers

The Foreign Worker Levy is a pricing mechanism for Singapore’s workforce. It regulates the number of migrant workers and migrant domestic workers (MDWs) in the country.

Companies pay this monthly fee for each Work Permit holder they employ.

The two factors affecting the foreign worker levy rate are the worker’s skill level and the company’s sector, with sector-specific adjustments for the construction, manufacturing and services sectors.

In 2025, there will be some changes to the monthly levy rates and regulations. These updates are aimed at balancing business needs with local employment goals.

Understanding the Foreign Worker Levy is important for companies hiring foreign workers. It affects your costs and workforce planning whether you are in the process sector or manufacturing.

Knowing how to calculate and pay the levy will help you avoid penalties and manage your business better.

Quick Facts

• Foreign Worker Levy is a monthly fee per Work Permit holder employed

• Levy rates are based on worker’s skill level, company sector, and quota requirements

• You can apply for higher skilled worker levy rates to save on qualified employees

Companies in Singapore employing foreign workers must pay the monthly levy. The amount depends on the worker’s qualifications and company sector.

In Singapore, the Dependency Ratio Ceiling (DRC) defines the maximum proportion of foreign workers a company can employ relative to its total workforce.

This ratio varies across different industry sectors. Below is a summary of the DRC limits for each sector:

Sector: Construction

• Dependency Ratio Ceiling (DRC): 83.3%
• Effective Date: Current
• Notes: Allows up to 5 foreign workers for every local employee.

Sector: Process

• Dependency Ratio Ceiling (DRC): 83.3%
• Effective Date: Current
• Notes: Allows up to 5 foreign workers for every local employee.

Sector: Marine Shipyard

• Dependency Ratio Ceiling (DRC): 77.8%
• Effective Date: Current
• Notes: Allows up to 3.5 foreign workers for every local employee.

Sector: Manufacturing

• Dependency Ratio Ceiling (DRC): 60%
• Effective Date: Current
• Notes: Allows up to 1.5 foreign workers for every local employee.

Sector: Services

• Dependency Ratio Ceiling (DRC): 35%
• Effective Date: Current
• Notes: Allows up to 0.54 foreign workers for every local employee.

Note: The DRC is calculated as the ratio of Work Permit and S Pass holders to the total workforce, which includes both local and foreign employees.

Here’s an example of how the Dependency Ratio Ceiling (DRC) calculation works for the manufacturing sector:

Step 1: Total Foreign Worker Quota

• Calculation: Local employees × DRC ratio
• Result: 10 × 1.5 = 15
• Notes: Maximum number of foreign workers allowed based on local workforce size.

Step 2: Total Workforce

• Calculation: Local employees + Foreign employees
• Result: 10 + 15 = 25
• Notes: Total workforce includes both local and foreign employees.

Step 3: Foreign Worker Proportion

• Calculation: (Foreign workers / Total workforce) × 100
• Result: (15 / 25) × 100 = 60%
• Notes: Percentage of foreign workers in the workforce.

Step 4: Compliance Check

• Calculation: Compare Foreign Worker Proportion with DRC limit
• Result: 60% ≤ 60% (Compliant)
• Notes: The company meets the DRC for the manufacturing sector.

Step 1: Total Foreign Worker Quota

• Calculation: Local employees × DRC ratio
• Result: 10 × 1.5 = 15
• Notes: Maximum quota remains unchanged.

Step 2: Total Workforce

• Calculation: Local employees + Foreign employees
• Result: 10 + 16 = 26
• Notes: Workforce size increases due to additional foreign worker.

Step 3: Foreign Worker Proportion

• Calculation: (Foreign workers / Total workforce) × 100
• Result: (16 / 26) × 100 = 61.5%
• Notes: Exceeds DRC limit for the manufacturing sector (60%).

Step 4: Compliance Check

• Calculation: Compare Foreign Worker Proportion with DRC limit
• Result: 61.5% > 60% (Non-compliant)
• Notes: The company violates the DRC regulation.

The levy amount varies with the foreign worker’s qualifications. Here’s the breakdown:

• Higher-skilled workers: Lower levy rates

• Basic-skilled workers: Higher levy rates

Your workers’ skill levels are determined by their qualifications and work experience. Upgrading your workers’ skills can help you to reduce levy costs.

Some foreign workers are exempt from the levy.

You don’t need to pay for:

• Employment Pass holders

• Permanent Residents

• Student Pass holders on internships

Factors that affect levy rates:

• Your company’s sector

• Proportion of foreign workers in your workforce

• Government’s foreign labor policies

Keep track of these to manage your levy better.

In Singapore, the Foreign Worker Levy (FWL) rates vary across sectors and are influenced by factors such as the worker's skill level and the company's dependency ratio ceiling (DRC).

Below is a summary of the levy rates for each sector:

Sector: Construction

• Levy Tier: MYE*
  • Quota %: N/A
  • Monthly Levy Rate (Basic-Skilled): $300 - $700
  • Monthly Levy Rate (Higher-Skilled): $200 - $500
• Levy Tier: Non-MYE
  • Quota %: N/A
  • Monthly Levy Rate (Basic-Skilled): $600 - $950
  • Monthly Levy Rate (Higher-Skilled): $400 - $700

Sector: Manufacturing

• Levy Tier: Tier 1
  • Quota %: Up to 25%
  • Monthly Levy Rate (Basic-Skilled): $370
  • Monthly Levy Rate (Higher-Skilled): $250
• Levy Tier: Tier 2
  • Quota %: >25% to 50%
  • Monthly Levy Rate (Basic-Skilled): $470
  • Monthly Levy Rate (Higher-Skilled): $350
• Levy Tier: Tier 3
  • Quota %: >50% to 60%
  • Monthly Levy Rate (Basic-Skilled): $650
  • Monthly Levy Rate (Higher-Skilled): $550

Sector: Services

• Levy Tier: Tier 1
  • Quota %: Up to 10%
  • Monthly Levy Rate (Basic-Skilled): $450
  • Monthly Levy Rate (Higher-Skilled): $300
• Levy Tier: Tier 2
  • Quota %: >10% to 25%
  • Monthly Levy Rate (Basic-Skilled): $600
  • Monthly Levy Rate (Higher-Skilled): $400
• Levy Tier: Tier 3
  • Quota %: >25% to 35%
  • Monthly Levy Rate (Basic-Skilled): $800
  • Monthly Levy Rate (Higher-Skilled): $600

Sector: Process

• Levy Tier: N/A
  • Quota %: N/A
  • Monthly Levy Rate (Basic-Skilled): $450 - $650
  • Monthly Levy Rate (Higher-Skilled): $300

Sector: Marine Shipyard

• Levy Tier: N/A
  • Quota %: N/A
  • Monthly Levy Rate (Basic-Skilled): $500 - $700
  • Monthly Levy Rate (Higher-Skilled): $300

*Note: MYE refers to Man-Year Entitlement, a system previously used in the construction sector to allocate foreign worker quotas.

Key Points:

• Levy Tiers: For sectors like Manufacturing and Services, levy rates are tiered based on the proportion of foreign workers to the total workforce. Hiring closer to the maximum quota results in higher levy rates.

• Skill Levels: Workers classified as Higher-Skilled (R1) are subject to lower levy rates compared to Basic-Skilled (R2) workers.

• Sector-Specific Rates: Each sector has distinct levy rates and structures. For example, the Construction sector differentiates between MYE and Non-MYE projects, with varying rates for workers from different source countries.

Step 1: Determine your sector's DRC limit

• Formula/Details: Check the Dependency Ratio Ceiling (DRC) for your sector (e.g., Construction: 83.3%, Manufacturing: 60%).
• Example: Manufacturing sector: 60% (1.5 foreign workers per local employee).

Step 2: Calculate the total workforce

• Formula/Details: Total workforce = Local employees + Foreign workers
• Example: Local employees = 10, Foreign workers = 15 → Total workforce = 10 + 15 = 25 employees.

Step 3: Calculate the foreign worker quota

• Formula/Details: Foreign worker quota = Local employees × DRC ratio
• Example: 10 local employees × 1.5 = 15 foreign workers allowed.

Step 4: Verify compliance

• Formula/Details: Foreign worker proportion = (Foreign workers / Total workforce) × 100
• Example: (15 foreign workers / 25 total workforce) × 100 = 60%. Meets DRC for manufacturing.

Step 5: Group foreign workers by levy tiers

• Formula/Details: Levy tiers are based on worker skill level (e.g., Basic-Skilled or Higher-Skilled).
• Example: 5 Higher-Skilled workers, 10 Basic-Skilled workers.

Step 6: Apply the levy rates for each tier

• Formula/Details: Levy amount = Number of workers in tier × Tier rate
• Example: Higher-Skilled rate = $450; Basic-Skilled rate = $650.

Step 7: Calculate the total levy

• Formula/Details: Total levy = (Higher-Skilled workers × Higher-Skilled rate) + (Basic-Skilled workers × Basic-Skilled rate)
• Example: (5 × $450) + (10 × $650) = $2,250 + $6,500 = $8,750 total levy.

Notes:

• Always confirm sector-specific DRC limits and levy rates on the Ministry of Manpower (MOM) website.

• Levy rates and quotas may change annually, so ensure calculations use the latest data.

• Online tools like the MOM Foreign Worker Levy Calculator can simplify the process.

Remember levy rates and quotas change. Always check Ministry of Manpower website for latest information.

You can also use online tools like the Foreign Worker Levy Calculator to make it easier.

Notes:

• The total penalty is capped at 30% of the outstanding levy.
• Employers must pay their levy by the 17th of each month to avoid penalties.
• Use MOM's Levy Penalty Calculator for accurate calculations and to check your latest levy bill.

You can pay foreign worker levies via several methods. The most common is via General Interbank Recurring Order (GIRO).

This is an automatic payment system.

For new employers who are still setting up GIRO, you can use PayNow QR as a temporary payment option for the monthly foreign worker levy.

Levy is due by the 17th of each month for the previous month’s bill. If the due date falls on a weekend or public holiday, payment is expected on the next working day.

Don’t miss to pay on time. Late payment will incur penalties:

• 5% of the outstanding amount for up to 30 days late

• Additional 2% per month for 30 days to 12 months late

Check your levy status and the amount due at the Ministry of Manpower online portal.

Here you can also apply for a waiver or refund if eligible.

Remember consistent late payment will affect your ability to hire foreign workers. The Ministry of Manpower takes payment seriously.

Set up automatic payments to avoid missing deadlines. This will keep you in good standing with the authorities and your business will run smoothly.

A higher skilled worker levy is a lower tax rate for foreign workers with better qualifications. Companies pay less for workers with more skills or education.

To get this lower rate, you need to apply to convert your worker to higher-skilled status. You need to show proof of their skills.

Here’s what to do:

1. Collect your worker’s certificates

2. Go to Work Permit Online

3. Apply for higher-skilled status

4. Upload your worker’s documents

Requirements may vary by industry.

For example in the harbor craft industry, you need to submit a trade certificate.

If the documents are not in English, you need to submit:

• The original document

• English translation

After you apply, the new levy rate will take effect on the 1st of the next month. You can check your worker’s new status and levy rate online.

You can lower your levy costs by upgrading your workers' skill sets. It’s a good way to save and develop skills.

If your foreign worker meets certain conditions, you can apply for levy waiver. It’s easy and can be done online.

Employers in Singapore may apply for a Foreign Worker Levy waiver under specific conditions. The following table summarizes these conditions and the corresponding documentation required:

You can apply for the levy waiver from the 1st of the month following the issuance of the levy bill.

Applications must be submitted within 1 year of the levy bill date.

Processing Time:

• The levy waiver request will be processed within 12 working days. Processing may take longer if additional information is required from the applicant or other agencies.

Post-Approval:

• The waived amount will be credited into your levy account to offset your next levy bill. Any remaining amount will remain in your levy account to offset future levy payments. If there are no upcoming levy bills, you can apply for a levy refund to have the outstanding amount credited into your bank account.

Here’s a quick guide:

• If waiver period is March 2024 to April 2024

• You can apply between June 1, 2024, and March 31, 2025

To apply:

1. Go to CPF website

2. Log in using your SingPass

3. Fill up online application form

4. Upload the documents listed in Part 4A of the form

You can also apply by post or in person at any CPF office. Don’t forget to include all the required documents with your application.

Contact 1800-227-1188 or email if you need help. They can assist you with the process.

You can only apply for waiver if your worker was on overseas leave for at least 7 days or was hospitalized.

If you need more guidance in this area, you can reach out to P Connect Services for help. We have more than 20 years of HR experience.

Construction Sector

• DRC: 83.3%
• This allows for up to 5 foreign workers for every local employee.

Process Sector

• DRC: 83.3%
• This allows for up to 5 foreign workers for every local employee.

Marine Shipyard Sector

• DRC: 77.8%
• This allows for up to 3.5 foreign workers for every local employee.

Manufacturing Sector

• DRC: 60%
• This allows for up to 1.5 foreign workers for every local employee.

Services Sector

• DRC: 35%
• This allows for up to 0.54 foreign workers for every local employee.

Note: The DRC is calculated as the ratio of Work Permit and S Pass holders to the total workforce, which includes both local and foreign employees.