Guide to Hiring in Singapore

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Guide to Hiring in Singapore

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Home to international business opportunities, even more after the global pandemic when it stepped forward as one of the very first few countries in Asia to open its borders, Singapore boasts low tax rates, excellent legal framework and equally importantly, great infrastructure and a strategic location in Asia.

Looking to expand your business into Singapore? Links International has compiled a guide for you that includes labour laws and best practices in Singapore you are required to follow when operating a business in the Garden City.

Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Singapore employment laws and regulations, please visit the official governmental websites.

Labour Law – Basics

What are the basic requirements for employers in Singapore?

  • Singapore’s primary labour law is the Employment Act. It provides the basic terms and conditions at work for employees covered by the Act.
  • All employees under a contract of service with an employer are covered including both local and foreign workers, but there are certain exceptions.
  • A contract of service defines the employer-employee relationship, including the terms and conditions of employment.
  • The agreement can be in writing, verbal, expressed or implied. It can be in the form of a letter of appointment or employment, or an apprenticeship agreement. However, no minimize disputes on the agreed terms and conditions, the contract should be in writing.
  • If employees are not covered by the Employment Act, the terms and conditions of employment will be according to employee’s employment contract. Employees not covered by the Act include:
    • Seafarer
    • Domestic worker
    • Statutory board employee or civil servant

 

Employment Act

  • Employment Act is divided into two categories:
    • The Core Provisions – This is applied to all categories of employees. They refer to employee entitlements such as:
      • Salary payment
      • Paid annual leave
      • Paid sick leave
      • Paid public holidays
      • Dismissal
      • Employment of records

 

  • Part IV Provisions – This provides for rest days, hours of work and other conditions of service. It only applies to:
    • A workman (doing manual labour) earning a basic monthly salary of not more than S$4,500.
    • An employee who is not a workman, but is covered by the Employment Act and earns a monthly basic salary of not more than S$2,600.
    • This act does not cover managers or executives.

What is the different work permits and visas in Singapore?

All foreigners who intend to work in Singapore must have a valid pass (commonly known as a working visa) before they start employment in Singapore. There are different passes for different types of workers who stand at different skill-levels:

  • Professional
    • Employment Pass – This is for foreign professionals, managers, and executives who must earn at least S$5,000 a month.
    SectorCurrent minimum qualifying salary for new applications, and for renewals from 1 September 2023Minimum qualifying salary for renewals before 1 September 2023
    All (except financial services)At least S$5,000 (increases progressively with age from 23, up to S$10,500 at age 45 and above)S$4,500 (increases progressively with age from 23, up to S$8,400 at age 45 and above)
    Financial servicesAt least S$5,500 (increases progressively with age from 23, up to S$11,500 at age 45 and above)At least S$5,000 (increases progressively with age from 23, up to S$9,300 at age 45 and above)

Source: Ministry of Manpower

 

  • Skilled and semi-skilled workers
      • S Pass – This is for skilled workers who must earn at least S$3,000 a month.
    SectorCurrent minimum qualifying salary for new applications, and for renewals from 1 September 2023Minimum qualifying salary for new applications from 1 September 2023, and for renewals from 1 September 2024Minimum qualifying salary for new applications from 1 September 2025, and for renewals from 1 September 2025
    All (except financial services)S$3,000 (increases progressively with age from 23, up to S$4,500 at age 45 and above)S$3,150 (increases progressively with age from 23, up to S$4,650 at age 45 and above)At least S$3,300 (to be finalised)
    Financial servicesS$3,500 (increases progressively with age from age 23, up to S$5,500 at age 45 and above)S$3,650 (increases progressively with age from age 23, up to S$5,650 at age 45 and above)At least S$3,800 (to be finalised)

Source: Ministry of Manpower

 

    • Work Permit for Migrant Worker – This is for semi-skilled migrant workers in the construction, manufacturing, marine shipyard, process, or services sector.
    • Dependant’s Pass – This is for spouses and children of eligible Employment Pass or S Pass holders.
  • Trainees and students
  • Family members

 

  • As of 1 September 2022, Singapore carried out some important changes to the country’s work passes:
    • Increase in Salary:
      • Updates to Employment Pass (EP) Qualifying Salary:
        • The EP qualifying salary will be benchmarked to salaries of the top 1/3 of the local PMET workforce to ensure the quality of EP holders.
        • EP Holders must meet a higher qualifying salary from 1 September 2022.
        • The Financial Services Sector will continue to have a higher qualifying salary due to higher wage norms. The revised qualifying salary will apply to:
          • New applications from 1 September 2022
          • Renewals from 1 September 2023

 

SectorsCurrent minimum qualifying salaryRevised minimum qualifying salary
All (except financial services)S$4,500 (Increases progressively with age, up to S$8,400 for candidate in mid-40s)S$5,000 (Increases progressively with age, up to S$10,500 for candidate in mid-40s)
Financial servicesS$5,000 (Increases progressively with age, up to S$9,300 for candidate in mid-40s)S$5,000 (Increases progressively with age, up to S$11,500 for candidate in mid-40s)

 

  • From 1 September 2023, Employment Pass (EP) candidates must pass a two-stage eligibility framework, Complementarity Assessment Framework (COMPASS) which lets employers select high-quality foreign professionals. This will apply to:
    • New applications from 1 September 2023
    • Renewals from 1 September 2024

Source: Ministry of Manpower

What to note for existing employees?

  • Benefits in Kind –
    • All gains and profits derived by an employee due to his employment are taxable. Benefits are “gains and profits” and are taxable unless exempted or given an administrative concession.
  • Share Options –
    • Gains and profits arising from Employee Share Options (ESOP) and other forms of Employee Share Ownership (ESOW) are subject to tax.
        • Employee Share Option (ESOP) plans give employees the right to purchase shares in the company at a specific predetermined price within a time frame. An employee who is granted share options by an employer will be taxed on any gains or profits arising from the exercise of the share option.
        • Other Forms of Employee Share Ownership (ESOW) plans allow an employee of a company to own or purchase shares in the company or in its parent company. They include share awards and other similar forms of employee share purchase plans (excluding phantom shares and share appreciation rights). An employee who is granted ESOW by the employer is subject to tax on any gains or profits when the ESOW plan vests on the employee.

 

What to remember when hiring new employees?

  • Save and load your employees’ details, as well as easily amend them for your monthly CPF submissions via CPF EZPay.
  • For non-residents, employers are responsible to apply for the Employment Pass. See here for more information on the Employment Pass.

 

What are the different discrimination laws in Singapore?

The Ministry of Manpower will take legal and punitive measures towards workplace discrimination. MOM refers to the TAFEP in the promotion of fair and responsible workplace practices.

 

What are the working hours in Singapore?

For common work arrangements, the normal contractual hours of work are as follows:

    • Up to 8 hours a day of 44 hours a week, if employees are required to work more than 5 days a week.
    • Up to 9 hours a day or 44 hours a week, if employees are required to work 5 days of less a week.

 

What is the legal probation period in Singapore?

No provision in Singapore specifies a probation period, however, standard practice is to have a 3-6 month probation period.

 

What are the minimum wage requirements in Singapore? How do salaries work in Singapore?

  • Singapore does not have a minimum wage. Employee salary is subject to negotiation and agreement between employer and employee or trade union. Whether wages should increase or decrease is best determined by market demand.
    • Salary refers to remuneration, including allowance, paid for work done under a contract of service.

 

  • Employees must be paid at least once a month and within 7 calendar days after the end of the salary period. There are exceptions for overtime, resignation without notice and other situations. Employers should pay employees based on their qualifications, skills, and competencies. However, Singapore adopts the Progressive Wage Model (PWM), which prescribes minimum wages for certain sectors.

 

  • For overtime work, employees must be paid within 14 calendar days after the end of the salary period.
    • Overtime work is classified by all work in excess of the normal hours of work (excluding breaks). You can claim overtime if you are:
      • A non-workman earning up to S$2,600.
      • A workman earning up to S$4,500.
    • Overtime pay = Hourly basic rate of pay x 1.5 x number of hours worked overtime
    • As an employee, you are not allowed to work more than 12 hours a day.
    • If an employer requires employees to work more than 12 hours a day must apply for an overtime exemption.
    • An employee can only work up to 72 overtime hours in a month.
    • Work on rest day or public holidays is not counted in the 72-hour overtime limit.
    • Payment must be made within 14 calendar days after the last day of the salary period.

 

  • The final salary payment could vary depending on several factors:
In this situationEmployees final salary must be paid
Employee resigns and serves the required notice periodOn the last day of employment
Employee resigns without notice and doesn’t serve the notice periodWithin 7 days of the last day of employment
Dismissal on grounds of misconductOn the last day of employment

If this is not possible, then within 3 working days from the date of dismissal.

Employer terminates the contractOn the last day of employment

If this is not possible, then within 3 working days from the date of termination.

  • No unauthorized deductions shall be made by employer from employee’s salary with exception on below:
    • By court order, or other valid authority
    • If your employer is declared an agent for the recovery of income tax, property tax or goods and services tax (GST) payable by you.

 

  • Employer can deduct salary only for the following reasons:
    • Absence from work
    • Damage or loss of money or goods
    • Supplying of accommodation or amenities or services
    • Recovery of advances
    • Loans or overpaid salary
    • CPF contribution
      • The Central Provident Fund (CPF) is a comprehensive social security system that enables working Singapore Citizens and Permanent Residents to set aside funds for retirement, home ownership, healthcare, family protection and asset enhancement according to the below accounts:

 

Uses of CPF Savings
Ordinary Account (OA)For housing, insurance, investment and education.
Special Account (SA)For old age and investment in retirement-related financial products.
Medisave Account (MA)For hospitalisation expenses and approved medical insurance.
Retirement Account (RA)On your 55th birthday, a fourth account, the Retirement Account (RA), is automatically created.
    • Payment to any registered co-operative society
    • Any deduction with written consent
  • Employer cannot deduct more than 50% of your total salary payable in any one salary period with exceptions to absence from work, recovery of advances, loans, overpaid salary, or payments with your consent, registered co-operative societies for subscriptions, entrance fees, loan instalments, interest and other dues payable.
  • When the contract of service is terminated, the total authorized deduction may exceed 50% of employee’s final salary payment.
  • Employer can only reduce foreign worker salaries, or increase or make new deductions to salaries, if:
    • They get employee written consent.
    • They inform MOM of the change in employee’s salary using WP Online (for Work Permit holders) or submit the request to MOM through EP online one month before the salary is reduced (for EP or S Pass holders).

 

Termination of Employment – Tax, Severance Payment & Long Service Payment

  • Both employer and employee have the power to terminate a contract of service. The termination can take place due to:
    • Employee resignation
    • Employer dismissal
    • Contract expiration (such as when a project or contract period has been completed)
    • Both parties must follow the terms and conditions for termination as stated in the contract of service.

 

  • Tax:
    • When a non-Singapore Citizen employee ceases employment in Singapore or plans to leave Singapore for more than three months, the employer is responsible to ensure that he/she pays all taxes. Applies to all work pass holders including Personalised Employment Pass (PEP) holders.
    • Filed IR21 at least one month before the employee ceases employment in Singapore and withhold any monies due to the employee at this time.
    • There will be a Late Filing Fee penalty if the employer files Form IR21 late or fail to file. The employer may even be summoned to Court.
    • Once IR21 has been processed, a tax bill will be sent to the employee. He/she will need to pay the difference if the amount withheld by the employer is insufficient to pay his/her taxes.
    • Please obtain a Letter of Undertaking (LOU)from the employee stating that he will not leave Singapore permanently. With the LOU, you are not required to file the Form IR21 for the employee.

 

  • Severance Payment & Long Service Payment:
    • Employees who serve the company for at least 2 years are eligible for retrenchment benefits. Those with less than 2 years’ service could be granted an ex-gratia payment out of goodwill.
    • The amount of retrenchment benefit will depend on the employment contract or collective agreement (for unionised companies). If there is no provision, it will have to be negotiated between the employees (or their union) and the employer.
    • The prevailing norm in Singapore is to pay a retrenchment benefit of between 2 weeks to 1 month salary per year of service, depending on the company’s financials.
    • If the retrenchment comes shortly after a salary cut, the salary before the cut should be used to determine the amount of compensation.
    • Both employee and employer don’t have to pay CPF contributions for retrenchment benefits.

 

What is the retirement age in Singapore?

In Singapore, the Retirement and Re-employment Act (RRA) states that the minimum retirement age is 63 years old. However, as of 1 July 2022, employers must offer re-employment to eligible employees who have turned 63 to continue their employment until they turn 68. The re-employment age was increased from 67 to 68 as of 1 July 2022.

 

AgeRetirement AgeRe-employment Age
Born before 1 July 1955 (>67 years old on 1 July 2022)6267
Born between 1 July 1995 and 30 June 1960 (between 62-67 years old on 1 July 2022)6268
Born after 1 July 1960 (<62 years old on 1 July 2022)6368

 

Employment dispute channels

Tripartite Alliance for Dispute Management (TADM)

 

Is employment insurance compulsory in Singapore?

  • Work injury compensation insurance for manual workers is required regardless of salary and non-manual workers earning SG$2,100 or less a month.
  • Medical insurance is not compulsory for Employment Pass (EP) holders. However, it is compulsory for Work Permit and S Pass holders.

Labour Law - Leave

  • Employees are entitled to 7 days of minimum annual leave.
  • Employees covered under Part IV of the Employment Act are allowed to carry forward any unused annual leave to the next year.
  • To be eligible for the above, employee must have worked for employer for at least 3 months.
  • Under Singapore law, one’s annual leave entitlement is dependent on how many years of service the employee has with their employer. Year 1 begins from the first day or work.
Year of ServiceDays of Leave
1st7
2nd8
3rd9
4th10
5th11
6th12
7th13
8th and thereafter14

 

  • Outpatient Sick Leave –
    • Employees are entitled to 14 days of outpatient sick leave and this cannot be carried to the next year if not used up within the respective year.
    • To be eligible for the above, employee must have worked for employer for at least 3 months.
      • Employee must try to inform employer within 48 hours of absence.
      • Employee must produce a medical certificate and be certified to be unfit for work by a registered doctor or dentist.

 

  • Hospitalisation Leave –
    • Employees are entitled to 60 days of hospitalization leave and this cannot be carried to the next year if not used up within the respective year.
    • The 60 days of paid hospitalization leave includes the 14 days paid outpatient sick leave entitlement.

 

  • For new employees, the sick leave is pro-rated according to their length of service. Their pro-rated entitlement is calculated as follows:
Number of months of service completedPaid outpatient non-hospitalisation leave (days)Paid hospitalisation leave (days)
3515
4830
51145
6 and thereafter1460
  • Working moms are entitled to 16 weeks of maternity leave if the newborn child is a Singaporean citizen and 12 weeks if the newborn child is not a Singaporean citizen.
  • To be eligible for maternity leave, working moms would need to:
    • Have worked for the employer for at least 3 months before the birth of the child
    • Child is a Singaporean citizen
    • Must provide employer with at least 1 weeks’ notice before going on maternity leave.
  • The first 8 weeks of maternity leave would be paid by the employer and the last 8 weeks of maternity leave would be reimbursed by the government for the 1st and 2nd For every 3rd and subsequent child, all 16 weeks will be reimbursed by the government.
  • Paternity Leave –
    • Working fathers are entitled to 2 weeks of paternity leave depending on the number of working days in a week. For example, if employee works 6 days a week, then employee will get 12 days of Government-Paid Paternity Leave (GPPL).
    • To be eligible for paternity leave, working fathers would need to:
      • Have worked for the employer for at least 3 months before the birth of the child
      • Child is a Singaporean citizen
      • Be lawfully married to the child’s mother between conception and birth
      • Each week of GPPL is capped at S$2,500, including CPF contributions.

 

  • Childcare Leave –
    • Singaporean citizens get 6 days per year until the child turns 7 years old.
    • Parents of non-citizens get up to 2 days a year of childcare leave.
    • To be eligible for childcare leave, employees would need to have worked for the employer for at least 3 months.
      • Childcare leave is capped at 42 days for each parent.
      • The first 3 days will be paid by employer, the remaining 3 days will be paid by the Government.
      • Payments are capped at S$500 per day, including CPF contributions.

 

  • Shared Parental Leave –
    • Singaporeans are entitled to 4 weeks of shared paternal leave, subject to wife’s agreement.
    • To be eligible:
      • Child must be a Singaporean citizen.
      • The child’s mother must be qualified for the Government-Paid Maternity Leave.
      • Employee is lawfully married to the child’s mother.

 

  • Adoption Leave –
    • Singaporeans are entitled to 12 weeks of adoption leave.
    • To be eligible:
      • Employee must have worked with the employer for at least 3 months.
      • Adoption child is younger than 12 months of age.
      • The adopted child is a Singaporean citizen or at least one of the parents is a Singaporean citizen and the child becomes a citizen within six months of being adopted.
      • The adoption order is passed within one year of the point of ‘formal intent to adopt’.
      • The government will reimburse employers up to a cap of S$10,000, including CPF contributions.
  • Employees must be provided 1 rest day per week. Rest days should be 1 whole day, it is not a paid day. The employer determines the rest day, which can be on a Sunday, or any other day of the week.
  • In the case of shift workers, the rest day can be a continuous period of 30 hours. In Singapore, the week is counted from Monday running into Sunday. A 30-hour rest period that starts before 6pm on a Sunday is considered as 1 rest day within the week, even if it extends into the Monday of the following week.
  • Unless there is any exception, employers are not allowed to compel their workers to work on a rest day.
  • Payment for work on a rest day is calculated as:
    • If work is done at the employer’s request:
      • Employee is eligible to 1 day’s salary for up to half the normal daily working hours
      • Employee is eligible to 2 days’ salary for more than half of normal daily working hours
      • Employee is eligible to 2 days’ pay + overtime pay for working hours beyond the normal daily ones.
    • If work is done at the employee’s request:
      • Employee is eligible to half day’s salary for up to half the normal daily working hours
      • Employee is eligible to 1 day’s salary for more than half of normal daily working hours
      • Employee is eligible to 1 day’s salary + overtime pay for working hours beyond the normal daily ones.

What are the public holidays in Singapore?

Singapore Public Holidays 2024

Employees are entitled to public holidays as follows:

 

HolidayDate
New Year’s Day1 January
Chinese New Year10 February – 11 February*
Good Friday29 March
Hari Raya Puasa10 April
Labour Day1 May
Vesak Day22 May
Hari Raya Haji17 June
National Day9 August
Deepavali31 October
Christmas Day25 December

* Monday, 12 Feb 2024, will be a public holiday.

 

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In the meantime, stay updated on Labour Law updates throughout the year through our Labour Law Insider. For more news and insights into the market, make sure to subscribe to our blog so you don’t miss out on the latest HR news, or contact our team to learn more about the latest changes!

*Please note that all the information listed above are to be used as a general guideline. For more detailed accounts of Singapore employment laws and regulations, please visit the official governmental websites.

Interested to explore the idea of payroll outsourcing, EOR, or Visa application services?

Links International is a leading payroll outsourcing provider across Asia Pacific and supports payroll in over 17 countries. Please do not hesitate to contact us.

Relevant Links:

 
  • Work Permits and Visas in Singapore –
    • Complementarity Assessment Framework (COMPASS) – https://www.mom.gov.sg/passes-and-permits/employment-pass/upcoming-changes-to-employment-pass-eligibility/complementarity-assessment-framework-compass
  • Employment Insurance – https://www.mom.gov.sg/faq/employment-pass/are-employers-required-to-buy-medical-insurance-for-employment-pass-holders
  • Rest Day – https://www.mom.gov.sg/employment-practices/hours-of-work-overtime-and-rest-days