What Changes for Singapore Employers on 1 July 2026: LQS, Retirement Age and COMPASS Guide

The first day of July 2026 brings a cluster of labour law changes that every Singapore employer needs to prepare for. The changes span the Local Qualifying Salary (LQS) threshold, retirement and re-employment ages, and COMPASS salary benchmarks for Employment Pass renewals. This guide explains each change and what your business must do before and after 1 July 2026.

1. Local Qualifying Salary (LQS) Increases to S$1,600 Per Month

The Local Qualifying Salary (LQS) is the minimum salary an employer must pay a full-time local (Singapore citizen or PR) employee for that employee to count towards the company’s quota entitlement for Work Permit and S Pass holders. From 1 July 2026, the LQS increases from S$1,550 to S$1,600 per month (S$10.67 per hour for part-time workers).

This matters because:

• Every Work Permit or S Pass you hold requires a minimum number of qualifying local employees in your workforce (the Man-Year Entitlement and quota system).
• If you pay any local employees below S$1,600 per month, they no longer count towards your local headcount for quota purposes.
• This could cause you to be over-quota for Work Permits or S Passes, triggering non-compliance.

What to do: Audit your local employee payroll immediately. Identify anyone below S$1,600/month and assess whether to increase their salary or accept the quota implications. Note that the increase must be genuine — paying an employee S$1,600 but then clawing it back is a serious compliance breach.

2. Retirement Age Increases to 64, Re-employment Age to 69

Under the Retirement and Re-employment Act (RRA), Singapore employers are prohibited from dismissing employees solely on grounds of age before the statutory retirement age. From 1 July 2026:

• The minimum retirement age increases from 63 to 64
• The minimum re-employment age increases from 68 to 69

This means:

• You cannot require an employee to retire before age 64 (unless they voluntarily choose to do so).
• You must offer re-employment to eligible employees who turn 64 up to the age of 69, unless there are genuine performance or business reasons not to.
• Re-employment offers must be at the same or similar capacity, and the contract must be for at least one year at a time.

These changes are part of Singapore’s phased increase towards a retirement age of 65 and re-employment age of 70 by 2030, announced under the Committee of Supply debates.

Impact on HR Policies and Employment Contracts

If your employment contracts or HR policies reference the old retirement age of 63, these must be updated. Contracts that set retirement at 63 will be void to the extent they conflict with the new statutory minimum. Employers should also update:

• HR policy manuals and employee handbooks
• CPF contribution tables (CPF rates differ for employees above 55, 60, and 65)
• Any company retirement benefit or pension plan rules
• Company administrative documents referencing retirement ages

3. COMPASS Salary Benchmarks Updated from 1 July 2026

For Employment Pass renewals and new applications, the COMPASS salary benchmarks (used for the C1 salary criterion) are updated to reflect 2025 survey data. The benchmark is the median salary of local PMETs in the same occupation and age group.

Practical impact on EP management:

• An EP holder whose salary was comfortably above the old benchmark may now fall below it if their salary has not kept pace with local wage growth.
• This reduces their C1 score, potentially dropping their total COMPASS score below the 40-point minimum.
• If a renewal is submitted after 1 July 2026 for a pass expiring then or later, the new benchmarks apply regardless of when the renewal was due.

Employers with EP holders due for renewal from July 2026 should run COMPASS self-assessments now using the new benchmarks to identify anyone at risk.

4. S Pass Quota and Levy Changes

From 1 July 2026, the S Pass quota for the Services sector is reduced. Companies in the Services sector will face a lower ceiling on the proportion of S Pass holders relative to local workers. Employers in retail, hospitality, and food & beverage sectors should review their current S Pass headcount against the new quota level and plan accordingly.

The S Pass levy for mid-skilled workers also increases. Budget for the higher levy costs when forecasting labour costs for the second half of 2026.

5. Fair Consideration Framework: Ongoing Obligations

The Fair Consideration Framework (FCF) requires all employers with 10 or more employees to advertise job vacancies on MyCareersFuture for at least 14 days before submitting an Employment Pass application, unless the position is exempt. MOM has been ramping up FCF enforcement, and companies on the FCF watchlist face heightened scrutiny for all EP applications.

From 2026, MOM’s monitoring of employers’ PMET employment practices has become more systematic. Employers with a high proportion of EP holders relative to local PMETs in the same occupation are more likely to attract FCF audit. Maintaining good HR and payroll records — including documentation of all local candidate assessments — is essential for audit readiness.

Employer Action Checklist for 1 July 2026

To prepare for these changes, your business should:

1. Payroll audit: Identify all local employees currently paid below S$1,600/month. Decide on salary adjustments.
2. Work Permit/S Pass quota check: Recount your qualifying local employees at S$1,600 threshold. Confirm you remain within quota limits.
3. HR policy update: Replace all references to retirement age 63 with 64, and re-employment age 68 with 69.
4. Employment contract review: Update template contracts and any individual contracts that reference old retirement ages.
5. COMPASS pre-assessment: Run COMPASS self-assessments for all EP holders with renewals due from July 2026 onwards.
6. S Pass quota review: For Services sector employers, verify your S Pass headcount against the new quota.
7. CPF table update: Ensure payroll software applies correct CPF rates for employees moving into new age brackets.

Consequences of Non-Compliance

Failing to comply with these changes can have serious consequences:

• Quota exceedance: Work Permits or S Passes held in excess of the correct quota may be cancelled by MOM and future quota entitlements reduced.
• Unlawful dismissal claims: Dismissing an employee before the new retirement age without proper grounds exposes the employer to wrongful dismissal claims under the Employment Act and RRA.
• FCF watchlisting: Employers who fail to meet FCF obligations face being placed on MOM’s watchlist, which restricts future EP and S Pass applications.

Given the breadth of changes taking effect on a single date, a structured pre-July 2026 compliance review is strongly recommended for any employer with a foreign workforce or employees in the older age brackets.

Last updated: June 2026. Verify all current thresholds and ages at mom.gov.sg.