Employment Act Singapore: How to Hire and Stay Compliant

In the wake of the recent surge in remote work due to the pandemic, many companies are looking to extend their hiring beyond local borders. If your organisation is considering hiring remote employees in Singapore, it’s crucial to understand the country’s employment laws to avoid legal and financial issues.

Singapore is an attractive destination for expanding your team, ranking first among 39 countries in the Asia-Pacific region on the 2023 Index of Economic Freedom. With a high standard of living, excellent human development indicators, and a skilled workforce, it’s an ideal location for remote hiring.

However, understanding and adhering to the Employment Act Singapore and other labour regulations is essential. Non-compliance can lead to severe complications. This guide will help you grasp the rights of employees in Singapore and your responsibilities as their foreign employer. We’ll also discuss key labour laws and how partnering with an Employer of Record (EOR) can ensure compliance.

Read also: Understanding the Role of Employer of Record (EOR) Services

Key Labour Laws in Singapore

Singapore has several laws governing employment, including the Employment Act Singapore, Common Law, Child Development Co-Savings Act, Employment of Foreign Manpower Act, Work Injury Compensation Act, and Workplace Safety and Health Act.

Uniform Employment Laws

Unlike many countries, Singapore enforces employment laws at the national level, as it is a sovereign city-state without subdivisions into states.

Hiring Singaporean Employees: Key Considerations

Singapore is multilingual, with English, Malay, Mandarin, and Tamil being the most common languages. Approximately 90% of employers provide supplementary health insurance to employees, complementing the public health system. Companies wishing to hire in Singapore must either establish a legal business entity in the country or engage an EOR. An EOR assumes the legal responsibilities for hiring and paying employees on your behalf.

Links’ EOR services facilitate hiring employees or HR services provider in Singapore, managing global payroll, taxes, benefits, offboarding, and ensuring legal compliance.

Employment Costs

To estimate the cost of hiring an employee in Singapore, you can use Employee PEO/EOR Cost Calculator. This tool helps budget for global hires effectively.

Statutory Employment Rights

Singapore grants specific statutory rights to its workforce. The country does not have a statutory minimum wage, but the Progressive Wage Model mandates minimum wages in various sectors, such as S$1320 for cleaning sector workers and S$1650 for security guards.

Working Hours and Overtime

The Employment Act Singapore regulates working hours, entitling employees to breaks, overtime, and rest days. Employees covered under Part IV of the Act cannot work more than 12 hours per day, with exceptions requiring official approval. Overtime is paid at a minimum of 1.5 times the basic hourly rate, with a cap of 72 hours per month.

Probation Periods and Discrimination

There is no mandated probation period in Singapore, though it typically ranges from three to six months. While specific anti-discrimination legislation is pending, employers are advised to follow the Tripartite Guidelines on Fair Employment Practices.

Union Membership and Collective Bargaining

Employees in Singapore have the right to join trade unions. The Trade Unions Act regulates union activities, and the Industrial Relations Act governs collective bargaining agreements.

Drug Testing and Workers’ Compensation

Employers can conduct drug tests, and the Work Injury Compensation Act (WICA) allows employees to claim for work-related injuries or illnesses without legal action. Employers must insure local or foreign employees performing manual work or non-manual work earning below S$2600.

Offboarding Employees

Terminating an employee requires adherence to Singapore’s regulations. Both parties can terminate with or without notice, depending on the circumstances, with specific guidelines for breaches of contract and misconduct.

Differentiating Employees and Contractors

It is vital not to misclassify employees as independent contractors. An employee has a contract of service, whereas a contractor has a contract for service. Misclassification can lead to severe penalties, including fines and imprisonment.

Simplified Hiring with an Employer of Record

Hiring and understanding the Employment Act Singapore can be complex, but partnering with Links EOR service can simplify the process. Links offers expertise in visa application, payroll, PEO/EOR Services, Recruitment and benefits management, making global expansion seamless.

Ready to streamline your HR processes and elevate your business? Reach out to us today for personalized solutions tailored to your needs.

Related Blogs:

  1. What is PEO and How Does it Work Compared to EOR?
  2. Top 5 Things to Know About Singapore Working Hours & Overtime Pay
  3. The Right Way to Use an Employer of Record in Singapore