Singapore Raises the Local Qualifying Salary (LQS) to $1,800 from 1 July 2026

What employers hiring foreign workers in Singapore need to know and do before the new threshold takes effect.

Disclaimer: This advisory is provided for general informational purposes based on guidance issued by the Ministry of Manpower (MOM), Singapore, and does not constitute legal or professional advice. Employers should verify current requirements via MOM's official channels or consult their K. Merleone advisor for guidance specific to their circumstances.

The Ministry of Manpower (MOM) has announced that with effect from 1 July 2026, the Local Qualifying Salary (LQS), the minimum monthly wage a full-time local employee must earn to be counted toward a firm's foreign worker quota, will rise from $1,600 to $1,800. This adjustment, first flagged at Committee of Supply 2026, is intended to keep the LQS in step with wage growth and to ensure that local employees are not engaged in token roles purely to unlock foreign worker headcount.

For businesses in Singapore that employ Work Permit, S Pass, or Employment Pass holders, this change directly affects how local workforce counts are calculated, and in turn, how many foreign workers a firm is entitled to hire. Below, we set out what the change involves, how it affects quota computation, and the practical steps employers should take now.

1. Understanding the LQS Requirement

Firms that hire foreign workers must satisfy two conditions to qualify for a foreign worker quota:

1. Pay Progressive Wage Model (PWM) wages to local employees covered under the relevant Sectoral or Occupational PWMs; and

2. Pay all other local employees not covered under the PWMs at least the LQS.

The number of local employees paid at or above the LQS directly determines a firm's foreign worker quota entitlement. Because the LQS is reviewed periodically to track wage growth, employers should expect it to be adjusted again in future and should build this into long-term workforce planning.

2. What Is Changing from 1 July 2026

From 1 July 2026, the LQS thresholds will be:

•       Full-time local employees: at least $1,800 per month (up from $1,600).

•       Part-time local employees: at least $10.50 per hour.

These new thresholds apply uniformly to Singaporeans and Permanent Residents employed full-time, and determine how each local worker is weighted in a firm's foreign worker quota calculation.

3. Revised Computation of Foreign Worker Quota

MOM determines the number of local employees, and therefore a firm's Work Permit and S Pass quota based on wages declared to the CPF Board. From 1 July 2026, local employees will be counted as follows:

Local Employee's Monthly Salary	Counted As
$1,800 and above	1 local employee
$900 to less than $1,800	0.5 local employee
Less than $900	0 local employee

In practical terms, a local employee must now be paid at least $1,800 a month (rather than $1,600) to count as a full local headcount. Employees paid between $900 and just under $1,800 continue to count as half a headcount, and those paid below $900 do not count toward the quota at all.

Example: Hiring a Part-Time Local Worke

• Suppose you hire a part-timer working 10 hours a week at $500 a month, that works out to $11.50/hour.

• This meets the LQS requirement for part-time employees.

• As a result, you remain eligible to hire new foreign workers and renew existing foreign workers.

• However, since this worker's monthly gross wage is below $800, he will not count toward your foreign worker quota entitlement.

  
  

Key takeaway: Meeting the LQS hourly rate keeps you compliant, but it doesn't automatically mean the part-timer contributes to your quota. It depends on the $800 monthly gross wage threshold.

4. Why Timing Matters in the Three-Month Average Calculation

A firm's quota entitlement is not based on a single month's payroll, it is based on a three-month rolling average of local employees' CPF contribution data. This means the timeliness and accuracy of salary declarations and CPF contributions has a direct, time-lagged effect on quota entitlement. For example:

If Salary Declaration & CPF Contribution Is Done	Quota for Aug 2026 Is Based On
By 14 Jul 2026	May, Jun, and Jul 2026 data
After 14 Jul 2026	Apr, May, and Jun 2026 data

Late CPF declarations effectively push a firm back to an older, and potentially less favourable, three-month data window. Employers should treat prompt, accurate CPF filing as a quota-management issue, not merely a payroll administration task.

5. Consequences of Insufficient Quota

Firms that do not maintain sufficient local workforce headcount under the revised LQS thresholds face real operational consequences. Specifically, organizations without sufficient quota:

•       Will not be able to apply for new Work Permits or S Passes;

•       Will not be able to renew existing Work Permits or S Passes; and

•       Will be required to cancel any excess Work Permits and/or S Passes already held.

Given the operational disruption this can cause particularly for foreign-worker-dependent sectors such as construction, manufacturing, F&B, and services, early review is strongly advised.

6. Recommended Actions for Employers

In light of the upcoming change, employers should take the following steps ahead of 1 July 2026:

1. Review existing local payroll. Identify any full-time local employees currently paid below $1,800 per month, or part-time staff paid below $10.50 per hour, and assess the cost and quota impact of bringing them up to the new thresholds.

2. Audit CPF declaration timeliness. Confirm that salary declarations and CPF contributions are submitted promptly and accurately each month, given the three-month rolling average used in quota computation.

3. Model the quota impact. Recalculate projected Work Permit and S Pass quota entitlement under the new $1,800 / $900 thresholds, and identify any shortfall before it affects pass renewals.

4. Use MOM's Foreign Employee Quota Calculator. This tool allows firms to check their quota entitlement under the revised LQS ahead of the effective date.

5. Plan for upcoming renewals. Where pass renewals fall close to or after 1 July 2026, factor the revised quota rules into renewal timelines to avoid last-minute shortfalls.

   
   

How K. Merleone Can Help

K.Merleone advises businesses operating in Singapore and across the region on regulatory compliance, workforce and licensing matters, and corporate administration. Our team can assist with reviewing your current local payroll structure against the new LQS thresholds, projecting your foreign worker quota position ahead of 1 July 2026, and coordinating CPF declaration practices to protect your quota entitlement.

If you have questions about how this change affects your organisation's specific workforce composition, please reach out to your K. Merleone advisor for a tailored review.