Singapore's employment laws are mainly covered by the Employment Act, labor laws, and the Employment of Foreign Manpower Act. These laws provide guidelines for hiring employees in Singapore, ensuring fairness and equity in the employer and employee relationship.
However, navigating Singapore's employment laws can be daunting for foreign companies seeking expansion in the country. With strict regulations and compliance requirements, companies often face challenges in setting up and managing local operations efficiently. This is where an Employer of Record (EOR) comes in. By handling payroll, benefits, and legal compliance, EOR Singapore decreases the burden of regulatory complexities while hiring.
But first, let’s explore the employment laws in Singapore in more detail.
Foundations and Framework of Singapore’s Employment Law
The Employment Act (EA) sets out terms and conditions that employers need to abide by when hiring workers in Singapore. The EA covers all employees under a contract of service, including full-time, part-time, temporary, or contract terms.
Here are the key ones:
1. Working hours
Contractual working hours cannot exceed 8 hours per day or 44 hours per week.
2. Salary
Payment of wages must occur at least once a month and within seven days after the end of the salary period.
3. Leave and medical benefits
Apart from public holidays, employees who have worked for at least three months are entitled to paid annual leave, paid sick leave, paid maternity leave, paid paternity leave, paid childcare leave, and paid adoption leave. Employees who have worked for at least six months are entitled to 14 days of paid outpatient sick leave in each year and 60 days of paid hospitalization leave.
Other terms and conditions
The EA also covers dismissal, maintenance of employee records, and other terms and conditions of employment.
Other legislation covering employment practices in Singapore includes:
- Employment Claims Act
- Employment (Part-Time Employees) Regulations 1996
- Employment (Children and Young Persons) Regulations
- Employment (Female Workmen) Regulations
- Retirement and Re-employment Act
- Industrial Relations Act (Cap 136) (Revised Edition)
Hiring Practices and Employment Contracts
Employers wishing to hire employees in Singapore need to adhere to and fulfill certain conditions laid down by the law.
To hire a local employee, an employer needs to:
- 1. Apply for a CPF Submission Number to make CPF contributions as an employer.
- 2. Write a contract that complies with the Employment Act.
- 3. Get Work Injury Compensation Insurance for certain groups of employees through MOM's designated insurers.
Employment Contracts
There are two types of employment contracts in operation in Singapore: fixed-term contracts and indefinite-term contracts.
1. Fixed Contract
A term contract is a fixed-term contract of employment that terminates upon the expiry of a specific term or period unless renewed.
2. Indefinite Contract
Indefinite-term contracts are the standard type of employment contract in Singapore. With no specified end date, they offer greater security to both the employer and the employee. Term or indefinite-term employment contracts can be full-time or part-time.
An employment contract should encompass the following key elements:
- 1. Commencement of employment
- 2. Appointment details (including job title and responsibilities)
- 3. Work hours
- 4. Potential probationary period
- 5. Compensation structure
- 6. Employee benefits (e.g., sick leave, annual leave, maternity leave)
- 7. Contract termination terms (including notice periods)
- 8. Code of conduct guidelines (e.g., punctuality, workplace conduct expectations
Wage Regulations and Benefits
Unlike in many countries, Singapore does not have a national or regional statutory minimum wage for most sectors. Instead, wages are primarily determined by labor supply, market demand, the cost of living, and collective agreements between employers and employees. In most cases, employers are expected to pay employees based on their experience, skills, and competencies.
Employers are also required to pay about 17% of an employee's basic salary to the Central Provident Fund (CPF). This contributes to retirement and health benefits provided by the government.
What are the Employee Benefits in Singapore?
Employee benefits in Singapore typically include mandatory benefits such as contributions to the Central Provident Fund (CPF) and health insurance for Work Permit and S Pass holder employees. For Employment Pass holders, health insurance is not a requirement.
Apart from these, there are various non-mandatory benefits that employers may offer including additional health insurance coverage, extra paid vacation days, stock options for eligible employees, annual bonuses tied to performance, retirement fund contributions, housing allowance, allowance for children's education, childcare benefits, transportation reimbursements, relocation packages, and more.
Workplace Health and Safety
Singapore's Workplace Safety and Health Act (WSHA) was enacted in 2006 to cover the safety, health, and welfare of people at work. The WSHA covers a range of areas, including:
- Responsibilities of stakeholders
- Hazardous substances
- Machinery and equipment
- Maximum penalties for failure to comply
- Duties of stakeholders
The WSHA requires employers to take reasonable measures to ensure employees' safety and health. This includes:
- Assessing the risk for any potential hazards
- Implementing effective risk control measures
- Reducing the risks of potential hazards in the workplace
Termination and Dispute Resolution
Singapore has many options for dispute resolution, including alternative dispute resolution (ADR) schemes, mediation, and neutral evaluation.
Some of them are:
1. Mediation
A private process where both parties agree to refer their dispute to a mediator.
2. Arbitration
A dispute arising out of or in connection with an agreement can be referred to and resolved by arbitration.
3. Alternative dispute resolution
This includes methods of alternative dispute resolution, such as mediation or arbitration, to help both parties reach a mutually agreeable settlement.
4. SIMC
Focuses on international commercial disputes and has a panel of international mediators.
5. SMC
Focuses on domestic commercial disputes and maintains a panel that comprises largely of local mediators.
Termination Guidelines
If either the employer or the employee wishes to terminate an employment contract they need to give a written notice to the other party. The notice period to be given must be as per contractual terms agreed upon at the time of employment.
BGC, Your Trusted EOR Ally for Global Hiring
Planning to hire staff in Singapore? Excellent decision! Singapore's strategic location and talented employees make it an ideal base for businesses with international ambitions. However, navigating the employment laws in a foreign land can prove to be challenging.
At BGC, we understand the challenges of global expansion firsthand. With over a decade of experience providing EOR services in the APAC region, including Singapore, we've established ourselves as trusted partners for numerous renowned companies. Headquartered in Singapore, our deep-rooted expertise and strong presence in the country make us the ideal choice for businesses seeking reliable EOR Singapore solutions.
With a proven track record of success for over a decade, BGC ’s EOR Singapore can guide you and help you build a strong employee base in Singapore to facilitate your global expansion. Get in touch with us today!
