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Facts About Hiring Employees in Singapore

What is needed to start hiring employees in Singapore?

After setting up a Singapore company, the employers must next hire employees in Singapore. The hiring of employees is essential to the success of the business because it involves critical decision-making processes. The employers and employees need to abide by the protocol specified in Singapore’s Employment Act. Most employees in Singapore today are well-versed with their rights protected under the country’s laws. Once the employees have been hired, the following must then be considered:

  • What do the company owners need to know about the labor laws and their binding effects upon the owners and the employees?
  • Are the employees to be hired on a full-time, temporary, contract, or part-time basis?
  • Are there any formalities involved in hiring foreign or local employees?
  • What is the restriction on the number of foreign employees that can be employed?
  • What is the cost of hiring an employee?
  • Do the business owners need to pay any Provident Funds or levies?
  • Are there any employment contracts to be terminated?
  • What are the recruitment guidelines of which the company owners need to be aware?
  • In the absence of official statutory requirements, what are the standard business practices that need to be followed?

 

Overview of the Employment Act

Employees who want to work in Singapore and employers need to be aware of the Singapore Employment Act. It is the country’s primary labor law. It specifies the basic employment terms and conditions. The latest version of this Act came into effect on April 1, 2014.

Employees who want to work in Singapore and employers need to be aware of the Singapore Employment Act. It is the country’s primary labor law. It specifies the basic employment terms and conditions. The latest version of this Act came into effect on April 1, 2014.

What is the Singapore Employment Act?

  • It is the all-important legislation that regulates the issues related to labor and employment. The employees and employers are required to adhere to the rights, responsibilities, and duties mentioned the legislation.
  • If a company’s employees are covered under the Singapore Employment Act, then the terms drawn out in the employment contract cannot be less favorable. The terms must be in line with the rules set in the Employment Act.
  • In cases where an employee is not covered under the Employment Act, the terms and conditions of the employment must be negotiated and finalized by the two parties. These terms must be specified in the employment contract that will bind both the parties.

 

People to Whom the Employment Act Applies

Every employee is covered under the Employment Act regardless of nationality or any other personal details. However, there are some exceptions, which are the following:

  • Managers or executives are those who have authority and perform tasks such as those of hiring, promoting, firing, rewarding, transferring, punishing, and disciplining. They also have other duties related to running and managing the business.
  • Some professionals possess tertiary education, managerial responsibilities, or specialized skill or knowledge. These professionals include dentists, lawyers, physicians, accountants, marine workers, domestic workers, statutory board members, and certain government staff members.
  • Additional protections are provided to certain employees earning less than S$2,000 monthly. The additional protections cover areas such as:

 

  1. Hours of work and overtime
  2. Rest days
  3. Annual leave
  4. Public holidays
  5. Retrenchment and retirement benefits
  6. Sick leave
  7. Annual wage supplements
  8. Variable payments

 

Key Features of the Employment Act

The table below displays detailed information.

Key FeaturesManagers / ExecutivesEmployees earning >S$2,000 monthlyEmployees earning <S$2,000 monthly
Maximum Working Hours WeeklyAs per the contract, commonly 40-50 hoursAs per the contract, commonly 40-50 hours44 hours
Maximum Days of Work WeeklyAs per the contract, commonly 5 daysAs per the contract, commonly 5 days6 days
OvertimeAs per the contract, commonly Not requiredAs per the contractMaximum of 72 hours monthly, employees to be paid at 1.5 times the basic
hourly rate
Central Provident Fund (CPF) for PRsRequiredRequiredRequired
Singapore Citizens Annual BonusAs per the contract, equivalent to 1-4 months of salaryAs per the contract, equivalent to 1-4 months of salaryAs per contract
Paid Annual LeaveAs per the contract, commonly 15 daysAs per the contract, commonly 15 days1st year – 7 days 2nd year- 8 days 3rd year- 9 days (Increased to 14 days)
Paid Sick LeaveAs per the contract, commonly 14 days annuallyAs per the contract, commonly 14 days annuallyOutpatient: 5-14 days (employment period served)
Hospitalized: 15-60 days (employment period served)
Paid Maternity Leave (if applicable)16 weeks First 8 weeks paid by the employer for 1st two confinements16 weeks First 8 weeks paid by the employer for 1st two confinements16 weeks First 8 weeks paid by the employer for 1st two confinements
Paid Annual Childcare Leave (Until the child turns seven years old)6 days 1st three days paid by the employer6 days 1st three days paid by the employer6 days 1st three days paid by the employer
Unpaid Infant Care Leave (Until the infant turns two years)6 days6 days6 days
Probation PeriodAs per contract, commonly 6 monthsAs per contract, commonly 6 monthsAs per contract. commonly 6 months
Paid Public Holidays11 days11 days11 days
Medical InsuranceAs per the contractAs per the contractAs per the contract
Termination Notice PeriodAs per the contract, commonly 1-3 monthsAs per the contract, commonly 1-3 monthsAs per the contract, commonly: 1 month
RetrenchmentAs per the contractAs per the contractEligible to receive salary on last working day as well as retrenchment benefits

 

Duties and Obligations of Employers

Formalizing the Employment Contract

It is necessary to abide by the terms and conditions laid down in the contract when hiring employees in Singapore. It is advisable to use the services of a reputed HR worker or lawyer while framing the contract. If a company’s employees are covered under the Singapore Employment Act, then it is necessary to meet the stated requirements. Some of the essential points to be included in the contract include the following:

  • Duration of the employment contract
  • Appointment positions
  • Date of commencement of the employment
  • Working hours
  • Salary or remuneration package
  • Benefits provided to employees
  • Code of conduct
  • Probation clause for employees
  • Termination of employment

 

Reporting the Earnings of Employees

The employers need to prepare the tax forms of all employees. In these forms, the employers need to disclose to the government authorities how much salary is paid to employees as required by the Singapore Income Tax Act. Employers must report this every year.

CPF Contributions

  • For local employees: According to the CPF Board,employers need to contribute towards the CPF of PRs and Singaporean citizens alike. The maximum contribution rate is 16% for employers and 20% for employees. The rate varies depending on the factors such as the employee’s age, permanent resident status or lack thereof, and other important details. The employees must activate their CPF account immediately so that they do not miss out on any payments.
  • For foreign employees: CPF contributions are not required.

 

Skills Development Levy

The skills development levy is 0.25% of the first S$4,500 of monthly gross remuneration. It is S$2 for all employees including casual, full-time, part-time, temporary, and foreign employees providing full-time or part-time services in Singapore. Gross remuneration includes the following:

  • Salary
  • Wages
  • Bonuses and commission
  • Paid Leave
  • Overtime pay
  • Housing and other types of allowances
  • Other types of cash payments

 

Hiring of Students

  • Students who are PRs or Singapore citizens: These students can be employed full-time or part-time without any restrictions. They are also entitled to the Central Provident Fund contributions unless they are exempted. If the students are part of an internship program, then there is no need to contribute to CPF as students are undergoing training in the company as a part of their curriculum. In such cases, they are to be paid a monthly allowance.
  • Foreign students: They are not allowed to work during their term or vacation time unless they possess a work pass exemption, as specified in the Employment Act. Employers who are willing to accept foreign students as interns or under an industrial attachment program must obtain a training work permit or training employment pass on the students’ behalf. They will not be paid a foreign work levy as they are just undergoing training in the industry as part of the curriculum. They are to be paid a monthly allowance.

 

Hiring of Part-Time or Contractual Employees

  • Part-time employees are those who work for less than 35 hours in a week.
  • Contractual employees are those who are on a fixed-term employment contract as well as those who are on casual or on-call employment. They are employed on an ad-hoc basis when the company needs an additional workforce. The job contract is only for a specific period and ends when a particular task or job is completed.
  • Unlike in other countries, in Singapore part-time employees and contractual staff members are protected in the same ways as full-time employees. Employers and employees may negotiate regarding certain topics such as:
  1. Annual leave
  2. Pro-rating of employment benefits
  3. Rest days
  • There are certain exceptions to the benefits that are provided to part-time and contractual employees. These include:
  1. Medical coverage for employees
  2. Payment of bonuses
  3. Perks normally reserved for other employees

 

Age Restrictions

The legal working age in Singapore is 17. However, certain businesses are allowed to employ people between the ages of 13 and 16. It is worth noting that there is a government-mandated restriction on the type of work that young people and children can carry out. The retirement age in Singapore is 62.

 

How do I employ a foreigner in Singapore?

To supplement their existing workforce, most Singapore companies employ foreign staff members. The reasons for hiring foreigners include the following:

  • Decline in birth rate
  • Aging population
  • Shortage of local talent in certain job sectors
  • Unprecedented economic growth

 

Industries such as R&D, IT, and finance have a shortage of local human resources, so they resort to hiring employees from foreign countries.

Furthermore, jobs such as those of domestic help and construction worker are not preferred by the Singaporean citizens, so the foreigners need to be employed. On the whole, the country attracts foreign professionals in massive numbers due to its liberal immigration policies. There are adequate provisions for foreigners living in Singapore.

Foreigners can only be hired if they have the appropriate work visa as specified in the Singapore Employment Act. Companies can only hire a foreign employee if they apply for the valid work visa or work permit on the employee’s behalf. However, certain work passes impose a restriction on the number of foreign employees that a company can hire.

The following are the categories of foreign workers in Singapore.

  • Skilled Professionals: Includes doctors, software engineers, R&D specialists, and the like. They are eligible for the Personalized Employment Pass or Employment Pass.
  • Semi-Skilled Employees: Includes chefs, administrative professionals, technicians, and the like. They are eligible for the S Pass.
  • Unskilled Workforce: Includes domestic help, construction workers, and the like. They are eligible for the R Pass.

 

Tax Issues Related to Foreign Employees

The tax issues are related to foreign employees are as follows:

  • Going to another foreign country for a job-related posting
  • Getting fired
  • Leaving the job on their own terms
  • Not being in Singapore for at least three months

Tax clearance is required for employees to whom any of these apply. Employers need to inform the Inland Revenue Authority of Singapore (IRAS) and withhold any further payments to these foreign employees. IRAS will go through the records and assess the proper amount of tax that the employees must pay. After this, IRAS will issue the tax clearance certificate which confirms the payment of all the due taxes against the foreign employees. The payment due can be revealed to the employee after the employer receives clearance from IRAS.

 

Paying the Foreign Levy to Workers

Singapore companies can hire low-skill foreign workers. If such is the case, the government will collect the foreign worker levy (FWL) from the company. The FWL is a price control mechanism that is imposed by the government against the companies in Singapore to regulate the demand of foreign workers in the country. Companies that want to know how much FWL the government will accept can refer to the Ministry of Manpower’s website.

 

What is the minimum salary for a work permit in Singapore?

If you are Hiring Employees in Singapore, then you need to keep yourself abreast with the regulations that are concerned with the work permits. Below is the tabular representation of the employees passes the employers need to apply for depending on the foreign talent category. Let us take a sneak peek:

 

Pass TypeEmployment PassS PassR Pass (Work Permit)
SuitabilityIncludes skilled workers with tertiary-level education, relevant work experience, and a monthly salary of over S$3,600Includes mid-skilled workers with diploma-level education, relevant work experience, and a monthly salary of over S$2,000Includes unskilled workers with relevant work experience and a monthly salary of less than S$2,000
Valid forinitially issued for 1-2 years and is renewableinitially issued for 1-2 years and is renewableinitially issued for 1-2 years and is renewable
Eligible for Dependant’s PassYesYesNo
Quota SystemNoYes (20% of the company’s total workforce)Yes (varies depending on industry)
LeviesNoForeign Worker LevyForeign Worker Levy
Restriction on NationalityNoNoYes

Note: The employers need to pay their Work Permit holders the fixed monthly salary that is declared in the application form of the Work Permit or during the later revisions. They must be paid even if there is no work for them. The only times the employers are not required to pay these workers are when they are on non-paid leave outside Singapore. For more information, refer to the Singapore Ministry of Manpower’s website.

 

General Recruitment Procedures

The Singaporean workforce is comprised of people of different races, genders, ages, and sexualities. This means the employers are to follow fair HR practices that are directly related to the recruitment of foreign or local employees. To abide by the rules and regulations, the Singapore Ministry of Manpower has issued some guidelines on fair employment practices. These general guidelines are provided below:

  • Employers need to follow a merit-based system when recruiting or hiring candidates
  • Job applicants must know every relevant aspect of the selection criteria
  • The employee’s skills, ability to do the job, and experience must be considered without regard for race, age, gender, family status, disability, or religion
  • The job advertisements of your company must refrain from listing features such as age, race, gender, marital status, language, and religion unless required for the job
  • Only tests and job interviews that involve the company’s job requirements only can be conducted
  • Job applications must only ask for general information from the applicant that is required for the purposes of the job; if there is any personal data requested, it may only be for administrative purposes

 

Conclusion

These are the steps and guidelines involved in hiring of employees in Singapore, whether they be Singapore citizens, PRs, or foreigners. Recruitment of employees can be done via employment agencies, online websites, classified advertisements in newspapers, campus recruitment, or even job or career fairs. Employers also need to use the right employment policies by utilizing the services from lawyers or HR consultants from reputed agencies such as Paul Hype Page & Co. We have a team of qualified and trained professionals that will help you from incorporation to policy-making. We always follow the rules specified in the Singapore Employment Act. We also offer affordable corporate packages for both foreign and local companies in Singapore.

 

Don’t leave your Employment Pass application to chance

Paul Hype Page & Co have our in-house licensed employment agency registered with the Ministry of Manpower and offer a full spectrum of work pass services. We will provide a thorough assessment of all factors of your application and ensure that they meet MOM current standards of review. Our reliable guidance and high success rate come with years of experience and continually staying abreast with Singapore’s immigration regulatory updates.

Call us at +65 6221 4711 or contact us now for a free consultation.

Posted on March 15, 2019 at 6:27 am
Categories: About Singapore

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