The foreign worker levy is a pricing mechanism rather than a tax on the worker. Employers pay it monthly for each S Pass and Work Permit holder they employ, and it is a genuine employer cost on top of salary and CPF for local staff.
How the rate is set
The levy varies by pass type, by sector, by the worker's skill classification and by how heavily the employer relies on foreign labour. Employers closer to their dependency ratio ceiling pay a higher tier, which is deliberate: the levy rises as reliance increases. Rates are adjusted periodically as part of labour policy.
- Not payable for Employment Pass holders
- Payable monthly for as long as the pass is held, including some periods of absence
- Non-payment can affect an employer's ability to renew or apply for passes
Why it matters when hiring internationally
Cost models for Singapore hires frequently include salary and CPF but omit the levy, which can be substantial for S Pass holders. It also interacts with the dependency ratio ceiling, so the marginal cost of an additional foreign hire is not constant — it rises as the employer's foreign share grows.