Singapore's Fair Consideration Framework "Watchlist" – What it means for Employers

At least 250 employers have been placed on the Fair Consideration Framework Watchlist ("Watchlist") resulting in the curtailment of their employment pass processing. Key points employers should know about the Watchlist are set out below.

What is the Watchlist?

The Fair Consideration Framework Watchlist ("Watchlist"), announced in 2016, has been described by Singapore's Manpower Minister as a "negative measure taken against "unfair" employers", that is, employers who have not given fair consideration to the recruitment and development of Singaporeans in their workforce.

Being placed on the Watchlist will negatively affect an employer's Employment Pass ("EP") applications, including a longer processing time of 3 months or more and the possibility of rejection of EP applications if the employer does not manage to get off the Watchlist within 6 months.

Some 250 employers in Singapore are reported to have been placed on the Watchlist as at the end of February 2017. Of these, about 50 employers have not shown enough improvement after 6 months resulting in their work pass privileges being curtailed by MOM "until they improve" with more than 500 EP applications rejected or withdrawn. As the Manpower Minister has said, curtailment of work pass privileges will have serious consequences on their continued operation and growth in Singapore.

Context for the Watchlist

Against an anticipated slowdown in the growth of the Singapore workforce for the period 2015 to 2020, the Manpower Minister announced in 2016 that the Ministry of Manpower ("MOM") will focus Singapore's labour policies along 3 main thrusts:

  • Become more manpower-lean and more productive.
  • Build a strong Singaporean Core.
  • Strengthen the global competitiveness of the Singaporean workforce comprising both local and foreign manpower.

The Singapore workforce today is made up of two-thirds locals (comprising Singaporeans and Singapore Permanent Residents) and one-third foreigners. MOM recognises that having foreign manpower is a "plus" which complements the local workforce, and that Singapore stands "a better chance of beating the competition for better investments and jobs if our local manpower and foreign manpower work together as one Singapore Workforce… rather than as two competing workforces…" 1.

Thus, the Watchlist is a negative measure against a minority of "outlier" companies which do not nurture and strengthen the two-thirds Singaporean Core, "not because we are anti-foreigner but because their behaviour has added to the deepening of "local-foreign" divide in our Singapore Workforce" which "[i]f left unchecked… will weaken the unity and cohesion and eventually the overall competitiveness of Singapore" 2.

Basic obligations of Singapore employers

Under regulations introduced in 2013 to the Employment of Foreign Manpower Act, MOM may decide whether to debar a company from applying for or being issued work passes by having regard to "whether the company has made reasonable efforts to provide fair employment opportunities to citizens of Singapore including efforts to attract and consider such citizens for employment or to train them and develop their careers and potential in the workforce."

In parallel with these regulations:

  • Employers are expected to comply with the Tripartite Alliance for Fair and Progressive Employment Practices ("TAFEP") Guidelines on Fair Employment Practices ("TGFEP") including using reasonable efforts to provide fair consideration and a fair hiring framework for the general workforce in Singapore based on merit, regardless of nationality.
  • Specifically, employers should:
    • Ensure that Singaporeans are considered fairly for hiring and progression, including at the professional, managerial, executive and technical ("PMET") levels.
    • Meet or exceed the workforce ratio of two-thirds local to one-third foreign.
    • Comply with the Fair Consideration Framework requirements for non-discriminatory advertisements for job vacancies on the Jobs Bank before submitting applications to MOM for EPs for foreigners.

MOM's "differentiated" approach

Against these requirements, MOM has adopted a differentiated approach in dealing with employers:

  • Fast Lane: for employers which exceed these requirements and are members of the Human Capital Partnership ("HCP"). HCP employers enjoy certain benefits including "fast track" approval for their EP applications.
  • Normal Lane: for employers which comply with their basic obligations under the TGFEP.
  • Slow Lane: for employers on the Watchlist whose work pass applications will be subject to delayed processing and who risk having their work pass privileges curtailed if they do not get off the Watchlist after 6 months.

Getting on the Watchlist – what to expect

  • "Triple weak" factors

An employer risks being placed on the Watchlist if it is deemed to be "triple weak", that is:

  • Weak Singapore core - a significantly lower concentration of local workforce at the PMET level compared with industry norms;
  • Weak commitment to nurture and strengthen the Singaporean core for the future; and
  • Weak relevance to Singapore's economy and society (determined in consultation with the relevant economic agencies).
  • Watchlist notice

An employer which is deemed to be "triple weak" will receive a letter from TAFEP that it has been placed on the Watchlist.

Currently, there is no process for the employer to provide its explanation as to why it should not be placed on the Watchlist before it is notified that it is on the Watchlist.

  • Impact on Company’s EP applications/renewals

An employer which has been placed on the Watchlist can expect to have its EP applications affected in the following ways:

  • MOM will closely examine all EP applications.
  • MOM may require more information on the company's HR practices.
  • Processing time for EP applications will be longer – 3 months or more (compared with the published norm of up to 10 working days).
  • The duration of a renewed EP may be shortened to one year (compared with the norm of 2 years).
  • 6 months to improve

An employer will generally be given 6 months to come off the Watchlist by showing TAFEP that it has improved its employment practices for example by:

  • Having a comprehensive plan to improve fair employment practices;
  • Considering all candidates fairly and developing employees based on merit.

The employer may contact TAFEP for guidance on how to achieve the required improvement and for agencies which may be able to assist the employer with hiring Singaporeans.

If an employer on the Watchlist shows no improvement after 6 months, the company can expect to have its EP applications rejected by MOM.

Some steps HR/Legal Department can take to minimise risk of being placed on Watchlist

  • Ensure Management is briefed on the TGFEP and implications of the Watchlist.
  • Review the Company's local and foreign workforce profile and HR practices to identify and address areas of risk.
  • Proactively develop policies on fair employment practices which meet or exceed the TGFEP.
  • Go to the HCP website for HCPartners' best practices.
  • Engage with TAFEP for guidance and connection to agencies, programmes and initiatives to support employers in identifying and considering potential candidates.

1 Minister of Manpower, Committee of Supply speech 8 August 2016
2 Minster of Manpower, Committee of Supply speech 8 August 2016

This article is produced by our Singapore office, Bird & Bird ATMD LLP, and does not constitute legal advice. It is intended to provide general information only. Please contact our lawyers if you have any specific queries.

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