C4 Small Firm Exemptions and the Local Employment Criterion: EP Compass Nuances

Under Singapore’s COMPASS framework for Employment Pass (EP) applications, Criterion 4 (C4) scores a firm’s proportion of local PMET employees relative to its sector. A small firm, defined in 2026 as one with fewer than 25 PMET employees in total, receives a default 10 points on C4. This automatic score eliminates the need for a ratio comparison against the sector benchmark, preventing outlier effects from small denominators. The policy acknowledges that adding even one foreign professional to a micro-entity can distort the local share dramatically.

The 2026 Threshold: Fewer than 25 PMET Employees

For C4, the exemption kicks in when a firm’s total PMET headcount—locals and foreigners combined—is fewer than 25. This threshold has remained unchanged since COMPASS launched in September 2023 and continues through 2026. A firm must count all employees in roles classified as professional, managerial, executive, or technical. Administrative or support staff at non-PMET levels are excluded. MOM draws headcount data primarily from CPF contribution declarations and ACRA records, cross-referencing with EP/S Pass databases. Firms close to the boundary should verify their classification meticulously: misreporting can trigger a clawback of the default score and potential enforcement action.

Default 10 Points: How It Works

A qualifying small firm automatically scores 10 points on C4, exactly the benchmark needed to pass any single COMPASS criterion. The total COMPASS threshold is 40 points across four foundational criteria (C1 salary, C2 qualifications, C3 diversity, C4 local PMET share) plus any bonus points from C5 (skills bonus) and C6 (strategic economic priorities bonus). With C4 guaranteed at 10 points, the remaining 30 must be sourced from the other criteria. In practice, C1—where salary is rated against age- and sector-specific benchmarks—becomes the decisive lever. A competitive salary can deliver 20 points on C1 alone, halving the required balance.

Documenting Small-Firm Status

To claim the default C4 score, a firm must provide evidence that its PMET headcount is below 25. MOM typically requests:

• The latest ACRA business profile detailing paid-up capital and ownership, alongside a statutory declaration of total employee count.
• CPF contribution records for all local employees, with clear identification of PMET roles.
• A breakdown of employee categories by job description to demonstrate which positions qualify as PMET.
• For firms with no local PMETs (e.g., early-stage startups), a letter of undertaking explaining the hiring plan and the absence of local PMET staff may supplement the submission.

MOM’s COMPASS portal verifies this data against tax and social security databases. Discrepancies often lead to a manual review, extending processing to eight weeks or more.

C3 and C5: No Automatic Relief for Small Firms

The exemption applies solely to C4. C3 (diversity) evaluates the share of the applicant’s nationality among the firm’s PMETs. A firm with fewer than 25 employees and a concentrated nationality mix can score 0 on C3 if the applicant’s nationality already dominates. For instance, a fintech startup with 10 PMETs, 8 of whom share the applicant’s nationality, would face a steep diversity penalty. C5 (skills bonus) awards extra points for occupations on the Shortage Occupation List. Small firms benefit here because the bonus is independent of size; a candidate qualified for a tech shortage role can add 10 or 20 points, reducing the need to maximize other criteria.

Strategic Implications for EP Applications

With C4 locked at 10 points, small firms should design the application package to minimize risk elsewhere. A practical path:

• Ensure the offered salary surpasses the 65th percentile of local PMET wages in the sector, securing 20 points on C1. The 2026 benchmark for tech professionals aged 30–34 stands at S$9,600 per month.
• If the candidate holds a degree from a top-tier institution (C2), aim for 20 points; otherwise, target at least 10 from a recognized qualification.
• For C3, if the firm’s workforce is too small to achieve diversity on its own, consider whether the candidate can bring additional value through C5 to offset a low C3 score.
• File early: MOM’s service standards for small-firm EP applications relying on the default C4 score average 5–7 weeks, slightly longer than straightforward cases, so plan around employment start dates.

FAQ

Q: Does the 25-PMET threshold count only local employees?
No. The threshold is based on total PMET employees (local and foreign). A firm with 10 local PMETs and 15 foreign PMETs has 25 and does not qualify as small. It must be under 25 in total.

Q: Can a firm with exactly 25 PMETs claim the default 10 points?
No. The exemption requires “fewer than 25.” At exactly 25, the firm is subject to the normal C4 scoring based on its local share compared to the sector benchmark, which generally demands a local PMET share of roughly 30–50% depending on the sector.

Q: What if a small firm’s headcount fluctuates above 25 during the EP application?
MOM uses the firm’s PMET headcount at the time of application, as supported by the most recent CPF filing. If the headcount crosses 25 after applying, the original default score remains valid for that application. However, subsequent applications will be assessed under the standard rules.

Q: Is there any similar default score for C3?
No. The small-firm exemption is unique to C4. C3 is always assessed on the actual nationality mix. A micro-firm risks a 0 on C3, so EP candidates from dominant nationalities may need strong C1 and C5 scores to compensate.

References

• Ministry of Manpower, COMPASS Framework and Eligibility, 2026
• Ministry of Manpower, Employment Pass Sector Benchmarks, 2026
• Singapore Economic Development Board, Guide to Manpower Policies, 2026
• WongPartnership LLP, Employment Pass Compliance Advisory, 2026

This article does not constitute legal or migration advice.