EP and S Pass Salary Changes in 2027: How SMEs Should Rework Their Manpower Budgets Before January

Singapore employers hiring foreign professionals and skilled workers will face higher Employment Pass and S Pass salary requirements from 1 January 2027.

For SMEs, this is more than a work pass compliance update. Higher qualifying salaries can affect manpower budgets, hiring plans, salary structures and the overall cost of expanding a team.

Businesses planning to hire foreign employees in 2027 should therefore review their manpower budgets before the new thresholds take effect.

The key question is not simply whether an employee can still qualify for a work pass. Employers also need to determine whether the higher salary remains commercially sustainable once other employment costs are considered.

1. What is changing from 1 January 2027?

The Ministry of Manpower has announced higher minimum qualifying salaries for both the Employment Pass and S Pass.

For new applications submitted from 1 January 2027:

• the minimum Employment Pass qualifying salary for sectors outside financial services will increase from S$5,600 to S$6,000;
• the minimum Employment Pass qualifying salary for financial services will increase from S$6,200 to S$6,600;
• the minimum S Pass qualifying salary for sectors outside financial services will increase from S$3,300 to S$3,600; and
• the minimum S Pass qualifying salary for financial services will increase from S$3,800 to S$4,000.

These figures are starting points rather than universal salary requirements for every candidate.

The qualifying salary for both passes increases progressively with the candidate’s age.

Employers should therefore check the actual qualifying salary that applies to the individual candidate rather than budgeting only for the headline minimum.

2. The salary requirement increases with age

One of the most important points for SMEs is that S$6,000 for an Employment Pass and S$3,600 for an S Pass are only the minimum amounts for younger candidates.

Under the 2027 requirements, the Employment Pass qualifying salary outside financial services starts at S$6,000 for candidates aged 23 or below and progressively increases with age.

For example, outside the financial services sector, the qualifying Employment Pass salary for new applications from 1 January 2027 is:

• S$6,000 at age 23 or below;
• S$6,500 at age 25;
• S$7,750 at age 30;
• S$9,000 at age 35;
• S$10,250 at age 40; and
• S$11,500 at age 45 or above.

The same principle applies to the S Pass.

Outside financial services, the 2027 S Pass qualifying salary starts at S$3,600 for candidates aged 23 or below and increases progressively to S$5,100 for candidates aged 45 or above.

This means two candidates applying for the same type of pass may need significantly different salaries depending on their age.

3. When do the new rules apply?

The new salary thresholds apply to new Employment Pass and S Pass applications submitted from 1 January 2027.

For existing pass holders, the changes apply later.

The new thresholds will apply to renewals of passes expiring from 1 January 2028.

This gives employers with existing foreign employees additional time to review whether future salaries will continue to meet the required thresholds.

However, SMEs should avoid waiting until the renewal date approaches before checking.

If an employee’s salary will eventually need to rise significantly to remain eligible, management may need time to adjust its budget, salary structure or workforce plan.

4. What does “fixed monthly salary” mean?

The qualifying salary is based on the employee’s fixed monthly salary.

According to the Ministry of Manpower, fixed monthly salary is made up of:

• basic monthly salary; plus
• fixed monthly allowances.

Fixed monthly allowances may include items such as a housing or food allowance where the amount does not vary from month to month.

However, variable payments generally do not count towards fixed monthly salary.

Examples include:

• overtime payments;
• bonuses;
• commissions;
• annual wage supplements;
• variable allowances;
• expense reimbursements; and
• productivity incentive payments.

This is important when reviewing an employee’s package.

An employee may earn more than the qualifying salary after bonuses and commissions are included, but still fail the work pass salary requirement if the fixed monthly component is too low.

5. Example: an SME hiring an Employment Pass candidate in 2027

Consider an SME that plans to hire a 30-year-old foreign professional in February 2027.

The company initially budgets S$6,000 per month because it has heard that the new Employment Pass minimum is S$6,000.

However, the candidate is 30 years old.

For a new Employment Pass application outside financial services from 1 January 2027, the qualifying salary for a 30-year-old is S$7,750 per month.

This creates a difference of S$1,750 per month compared with the SME’s original assumption.

Over 12 months, that is S$21,000 in additional fixed salary before the business considers any other employment costs.

This illustrates why employers should use the candidate’s actual age and sector when preparing a hiring budget.

6. Example: an SME hiring an S Pass worker

Suppose an SME outside financial services wants to hire a 30-year-old employee on an S Pass in 2027.

The headline minimum S Pass salary is S$3,600.

However, the qualifying salary for a 30-year-old is S$4,077 per month.

The business therefore needs to budget at least S$477 more per month than it would if it relied only on the headline minimum.

That difference amounts to S$5,724 over one year.

In addition, employers hiring S Pass holders must account for the monthly foreign worker levy and ensure that they remain within the applicable foreign worker quota.

The current S Pass levy is S$650 per month across all sectors and levy tiers.

In this example, the employer’s annual cash cost should therefore not be estimated using salary alone.

7. EP applications also involve COMPASS

Meeting the Employment Pass qualifying salary does not automatically guarantee that a candidate will qualify for an Employment Pass.

Most Employment Pass applications must also satisfy the Complementarity Assessment Framework, commonly known as COMPASS.

COMPASS evaluates candidates and employers across several criteria, including salary, qualifications, workforce diversity and support for local employment.

The salary component also uses sector-specific salary benchmarks.

This means an SME should distinguish between two questions:

• Does the candidate meet the minimum qualifying salary for an Employment Pass?
• Does the overall application satisfy the relevant COMPASS requirements?

The minimum salary is therefore a starting requirement rather than the entire assessment.

8. Do not budget only for salary

A manpower budget should include more than the employee’s monthly salary.

Depending on the role and pass type, SMEs may also need to budget for:

• S Pass levies;
• recruitment fees;
• work pass application and issuance fees;
• medical insurance where required;
• employee benefits;
• equipment and software;
• training and onboarding;
• office or workspace costs;
• relocation support where applicable; and
• future salary adjustments.

An employee with a S$6,000 salary does not necessarily cost the business only S$72,000 per year.

A more useful manpower budget calculates the full annual employment cost and then compares that amount with the value the role is expected to create for the business.

9. Review existing employees before renewal becomes urgent

The new thresholds apply to renewals of Employment Passes and S Passes expiring from 1 January 2028.

That may sound distant, but SMEs should consider reviewing existing foreign employees during their 2027 manpower planning exercise.

For each employee, management can check:

• the employee’s current fixed monthly salary;
• the employee’s age at the relevant renewal date;
• the qualifying salary expected to apply;
• whether an adjustment will be required;
• the commercial value of retaining the employee; and
• whether the increased payroll cost remains sustainable.

This allows salary changes to be planned instead of being treated as an unexpected cost shortly before renewal.

10. Avoid raising salaries purely to meet a pass threshold

When a candidate is slightly below the required salary, it may be tempting to increase the offer solely to satisfy the work pass threshold.

However, the employer should first consider whether that salary is commercially appropriate for the role.

For example, increasing a planned S$6,500 role to S$7,750 simply to qualify a particular candidate may have wider consequences.

The higher salary may:

• increase the department’s payroll significantly;
• create salary differences between employees performing similar work;
• affect future salary review expectations;
• reduce the financial return from the position; and
• put pressure on the company’s working capital.

An SME should therefore assess the role, candidate and total employment cost together rather than treating the qualifying salary as a number that must be reached at any cost.

11. Recalculate the annual manpower budget

Before entering 2027, SMEs planning to hire Employment Pass or S Pass candidates can prepare a simple manpower forecast.

For every planned foreign hire, estimate:

• required fixed monthly salary;
• annual fixed salary;
• applicable levy, if any;
• recruitment and work pass costs;
• employee benefits;
• equipment and onboarding costs; and
• a buffer for future salary adjustments.

Management can then compare the revised amount with the original 2027 payroll budget.

If the difference is material, the business may need to reconsider the timing of the hire, the seniority of the role, its recruitment strategy or other planned expenditure.

12. Consider cash flow as well as profitability

A business can be profitable on paper and still experience cash-flow pressure when payroll increases quickly.

Salaries are recurring commitments that generally need to be paid regardless of whether customers pay the company on time.

Suppose an SME hires two employees in early 2027 and the revised qualifying salary requirements increase its expected payroll by S$2,500 per month.

That creates an additional S$30,000 annual cash commitment.

If the company already operates with long customer payment terms, seasonal sales or limited cash reserves, even a manageable annual payroll increase can create pressure during weaker months.

This is why manpower planning should be linked to cash-flow forecasting rather than treated purely as an HR exercise.

13. Questions SMEs should ask before making a 2027 hire

Before committing to a foreign hire, management may find it useful to ask:

• What is the qualifying salary for this candidate’s age and sector?
• Is the proposed salary made up of qualifying fixed monthly salary components?
• Will the candidate also need to meet COMPASS requirements?
• If this is an S Pass hire, do we have sufficient quota?
• What levy will the business need to pay?
• What is the full annual employment cost?
• Can the business support this cost during weaker cash-flow periods?
• Does the role generate enough value to justify the revised salary?
• Could the role be redesigned or filled differently if the cost becomes too high?
• How will the hire affect the wider team’s salary structure?

14. Use MOM’s official tools before finalising an offer

Because qualifying salaries vary by age, sector and pass type, employers should verify the latest requirements before making a final hiring decision.

The Ministry of Manpower provides detailed eligibility information for the Employment Pass and S Pass.

Employers can also use MOM’s Self-Assessment Tool to assess whether a candidate is likely to meet the relevant work pass criteria before submitting an application.

Checking the official requirements before confirming an employment package can prevent the business from making an offer based on an outdated salary threshold.

Final thoughts

The Employment Pass and S Pass salary changes taking effect from 1 January 2027 will increase the minimum cost of hiring some foreign employees in Singapore.

For SMEs, the most important step is to avoid budgeting using only the headline minimum salary.

The actual qualifying amount depends on the candidate’s age, sector and work pass type. Employment Pass applications may also need to satisfy COMPASS, while S Pass hires are subject to quota and levy requirements.

Businesses should therefore review planned hires, existing employees approaching future renewals and their overall 2027 manpower budget before the new rules take effect.

By calculating the full employment cost early, SMEs can make hiring decisions based on commercial value and cash-flow capacity rather than discovering the additional cost only when a work pass application is due.