Understanding Employee Benefits in Singapore: A Comprehensive Guide

With the impact of globalisation, companies can now recruit talent from around the world, irrespective of location with the rise of remote workers worldwide. Due to advancements in the times, remote work is more popular than ever bringing in more employee benefits. Although some businesses have returned to the office, flexible and fully remote teams remain a part of the new normal. One compelling reason is that remote workers often tend to be more efficient than those working in an office.

Singapore, an APAC regional hub, has welcomed remote working. This nation is popular with international employers, offering a wealth of highly skilled professionals with global experience. In June 2022, 73% of Singaporean workers expressed a strong preference for a hybrid work model over the next 12 months. However, before hiring, companies must ensure compliance with local labour laws.

Many firms utilise an Employer of Record (EOR) to navigate the complexities of employment regulations, avoiding the need to establish a legal entity in Singapore. It handles everything from employee onboarding, payroll processing, and tax filings to ensuring compliance with Singapore’s labour laws. This not only simplifies the process of entering the market but also ensures that all legal and regulatory requirements are met.

This guide covers key areas for understanding employee benefits in Singapore:

  • The Employment Act and eligibility for benefits
  • Statutory benefits required in Singapore
  • Additional benefits to attract top Singaporean talent
  • Best practices for managing benefits and compensation for international employees

Read also: Guide to Hiring in Singapore

Singapore’s Employment Act

The Employment Act is Singapore’s primary labour law, setting out basic conditions and benefits that employers must provide. Learn more about how to hire and stay compliant with the Employment Act Singapore.

Coverage under the Employment Act

The Act covers all employees, both local and foreign, under a contract of service, whether they are full-time, part-time, or temporary. Employees can be paid hourly, daily, monthly, or by piece-rate. However, civil servants, domestic workers, and seafarers are not covered, as their conditions and benefits are stipulated in their contracts.

Significant amendments to the Act on April 1, 2019, included coverage for managers and executives earning over S$4500 a month, such as lawyers, accountants, doctors, and dentists.

Benefits Provisions

Employees covered by the Employment Act (EA Employees) are entitled to specific benefits, including annual leave, paid medical leave, and public holiday pay. Independent contractors, however, are not entitled to statutory benefits, with their remuneration determined by contractual agreements.

It’s crucial to understand this distinction to avoid misclassification risks and potential penalties.

Offering Benefits to Contractors

Even though benefits are not legally required for contractors, offering a benefits package can demonstrate commitment and strengthen connections, especially in a remote working context. However, ensure these benefits do not trigger permanent establishment or misclassification risks. Value-based benefits like paid time off, flexible hours, and parental leave are often safe options.

An EOR provider can provide specific advice on minimising associated risks according to Singapore’s employment legislation.

EOR Services

Statutory Benefits under Singapore’s Employment Act

Statutory benefits, or mandatory benefits, are those employers must provide by law. These include paid annual leave, parental leave, worker’s compensation insurance, and paid sick leave.

Central Provident Fund (CPF) – Retirement and Health Benefit

Employers must contribute about 17% of an employee’s basic salary to the CPF, supporting retirement and health benefits. Singaporean residents working for overseas companies must pay taxes in Singapore, with rates scaling up to 22%.

Although Singapore lacks minimum wage laws, the Employment Act defines what constitutes basic and gross pay rates, regulating payments for work on rest days, public holidays, and overtime.

Leave Entitlements

Employees are entitled to paid annual leave after three months, increasing with service length, and 11 paid public holidays annually. Sick leave entitlements include 14 days paid leave and 60 days hospitalisation leave, with consultation fees reimbursed by the employer.

Childcare leave provisions differ based on the child’s citizenship, and maternity leave varies between 16 weeks for Singaporean citizens and 12 weeks for foreign residents. Fathers are entitled to two weeks of Government-Paid Paternity Leave, with shared parental leave options available.

Social Security

Singapore’s social security system is comprehensive, with monthly CPF contributions divided among Ordinary, Special, and Medisave accounts. Recent changes include an increased retirement age, ensuring employees cannot be terminated on age grounds before reaching the statutory retirement age.

Health Insurance

Employers can enhance their attractiveness by offering private health insurance, supplementing the Basic Healthcare Sum. Additional insurance benefits, such as dental and vision insurance, can further differentiate an employer’s offer.

Termination and Severance

Termination terms are typically outlined in employment contracts, with notice periods varying based on service length. Severance pay is not specifically regulated but often included in contracts as “retrenchment benefits.”

Attracting Singaporean Talent: Additional Benefits

To attract top talent in Singapore, companies must offer competitive and locally attractive employee benefits. Beyond statutory requirements, consider flexible working hours, home working allowances, and value-based workplace benefits like learning and development budgets, therapy allowances, mentorship programs, and gym memberships.

Managing Benefits for Global Employees

Creating a compliant and competitive benefits package for global employees can be streamlined by using an EOR. This approach allows companies to manage benefits delivery, compliance, and termination processes efficiently across multiple jurisdictions.

When to Use an Employer of Record?

An EOR is ideal for managing global hiring complexities, offering expertise to create robust benefits packages and compliant employment contracts. Link’s EOR service combines local HR expertise with a user-friendly software platform to handle the intricacies of international employment, allowing you to focus on business growth.

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

In Singapore, remote working is being implemented more than ever – offering strong employee benefits. Interested to know more about how EOR can help you hire in another location? Contact us to help you scale your distributed team faster.

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