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The Singapore Employment Act is the country’s foremost labor law. All employers in the country are required to abide by it. By doing so, employers in Singapore will ensure that all their employees are treated fairly, justly, and legally.

This guide aims to serve as a general introduction to the statutory requirements regarding the Singapore Employment Act and other applicable practices that pertain to an employment contract, wages, and benefits accrued to persons employed in Singapore. This guide excludes the blue-collar workforce and specific industries that involve manual labour.

An effective employee compensation and benefit plan is one that seeks to reward the best employees. Such benefits can boost productivity, increase employee retention, and have an overall positive effect on the company bottom line. Small and medium-sized enterprises  (SMEs) in Singapore commonly struggle to match the employee packages and benefits of larger companies. Thus, they should aim to offer competitive employee benefit packages comparable to those of other similar-sized companies.

People to Whom the Employment Act Applies

Employers and employees in Singapore are subject to the contractual terms agreed between both parties. However, contracts must comply with the Employment Act and specific regulations. The Singapore Employment Act applies to only ‘employees’ as stated by the act.

To be more precise, the Employment Act does not cover;

  • Executive and managerial positions: such positions are defined as those in which the person has direct authority and influence in the recruitment, management, and training of employees or managing and running of the business operations. This also applies to professionals of similar qualification and experience that carry out similar role or responsibilities. Such professionals may include accountants, lawyers, doctors, and dentists.
  • Maritime workers
  • Domestic workers
  • Most government employees

Also, employees that earn below S$2,000 per month may receive additional benefits pertaining to public holidays, rest days, annual leave, hours of work, overtime, retirement benefits, retrenchment benefits, sick leave, and annual wage supplement amongst other payments, as stated in Part IV of the Employment Act.

Importance of the Employment Contract

Also known as an appointment letter or an employment agreement, an employment contract is a written agreement between the employer and the employee that specifies the terms and conditions of the job. In Singapore, employees and employers are advised to sign an employment contract. Usually, only senior management employees have the privilege of negotiating specific terms in their contract. Any violation or failure to honor any terms of the contract by employer or employee is deemed a breach of contract. Typically, an employment contract should contain several clauses including:

  • Duration and terms of employment (where applicable)
  • Appointment position
  • Date and resumption of employment
  • Work period
  • Remuneration package
  • Code of conduct
  • Employee benefits
  • Probation clause (where applicable)
  • Terms of termination

The employment contract must meet the minimum standards as defined by the Employment Act.

Wages, Bonuses, and Benefits – Statutory and Common Practices

Employment benefits or fringe benefits are benefits and compensations that are accrued to employees. These benefits are separate from their respective standard wage or salary structures. Some of such applicable benefits in Singapore include annual, maternity, and sick leave; relocation assistance; housing allowance; allowances for children; healthcare benefits; retirement benefits; and childcare benefits, among others.

Salary and Bonuses

There is no minimum salary that an employer must pay an employee according to the Employment Act. An employee’s salary must be agreed to by both the employer and employee. However, employees must be paid monthly and not later than seven days after the end of the salary period. The Employment Act in Singapore does not also specify any bonus payments for employees.

Companies decide what employees are paid based on their skill, position, and experience. The 13th salary is a common practice in Singapore. This policy allows employees to receive an extra month (but sometimes more) of their salary as an annual bonus. This bonus is unofficial and will vary from company to company. Such bonuses will usually be specified in the employment contract.

Hours of Work and Overtime

Only those who earn below S$2,000 per month have their hours of work and overtime regulated by the Singapore Employment Act. Under the Employment Act, such employees must not work for more than 44 hours weekly and eight hours daily. Also, the act also strictly states that workers must not work for more than six consecutive hours without a break, inclusive of during their overtime periods. Again, this act highlights that workers must also not work for more than 12 hours daily except during extreme and unusual circumstances such as an actual or threatened accident, national security, or any emergency related to safety. Workers who work shifts must also not work longer than 12 hours per day. All such employees are also to have at least one rest day weekly.

Only employees that earn below S$2,000 monthly are covered under this part of the Employment Act. Employees that make more than S$2,000 monthly are exempted and must negotiate their work schedule with their employer. The most common work hours in Singapore are 9am to 7pm on Mondays to Fridays.

Public Holidays

Since Singapore is a very culturally diverse country, a variety of public holidays are observed to accommodate various cultures and religions. Some of them include New Year’s Day, Good Friday, Chinese New Year, Christmas Day, Deepavali, Hari Raya Puasa, National Day, Vesak Day, Hari Raya Haji, and Labour Day.

Employees that earn below S$2,000 per month are covered under the Employment Act and are therefore entitled to paid public holidays. These dates may be swapped for others if necessary. Should the public holiday fall on a Sunday or any other non-working day, the employee must be compensated with an extra off day or day of pay.

The Employment Act does not cover employees that earn more than S$2,000 per month. Thus, their employers are not mandated to abide by it. However, most employers in Singapore observe public holidays and give similar benefits to their employees.

Annual Leave

Employees that earn less than S$2,000 per month are covered under the statutory yearly leave stipulated under the Employment Act. However, employees must have worked for at least 180 days under an employer to qualify for annual leave. The duration of the annual leave often varies depending on the employer, but a seven-day amount of annual leave is often the case for the first year. An extra day for every additional year that the employee spends with the employer is usually added. In the cases of absence for more than 20% of the working days in a month, dismissal from work, or unused leave period over a 12-month working period, employees are obligated to forfeit their annual leave unless otherwise stipulated in the employment contract.

In Singapore, most employees are given 14 days of annual leave, which easily exceeds the seven-day minimum annual leave stipulated by the Singapore Employment Act.

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Sick Leave

For employees that earn below S$2,000 per month, the sick leave entitlements under the Employment Act are highlighted below;

Where the employee has worked for six months:

  • 14 days’ sick leave and 60 days’ (inclusive of the 14 days) of hospitalization leave annually.

Where the employee has worked for five months;

  • 11 days’ sick leave and 45 days’ hospitalisation (inclusive of the 11 days) leave annually.

Where the employee has worked for four months;

  • eight days’ sick leave and 30 days’ hospitalisation (inclusive of the eight days) leave annually.

Where the employee has worked for three months;

  • five days’ sick leave and 15 days’ hospitalization (inclusive of the five days) leave annually.

For the sick leave mentioned above to be honored by the employer, the employee is required to produce a valid medical certificate from a company doctor, government doctor, or doctor from a certified medical institution.

In Singapore, the typical sick leave coincides with the above minimum requirement as laid out by the Employment Act.

 

Health Insurance

There are no special statutory requirements or arrangements for health insurance under the Singapore Employment Act. However, Medishield, a low-cost, basic-tier insurance package, is available for all employees in Singapore. A certain portion of employees’ salaries is dedicated to their Medisave account. The Medisave account enables employees to treat themselves in the event of a severe illness or during their old age. Premiums for Medishield are deducted from the employee’s Medisave account.

Health insurance benefits in Singapore are strictly dependent on the employer. Most large companies that can afford to provide private health insurance schemes for their employees usually do so. Employers may also seek to offer their employees, whether local or foreign, private health insurance plans beyond the basic Medishield insurance scheme.

 

Maternity and Childcare Leave

Under the Employment Act, all female employees that have been with an employer for longer than three months automatically qualify for 16 weeks of maternity leave with paid benefits and are exempted from being dismissed from their job during this period. Employers are strictly mandated to pay all maternity benefits in full should a dismissal be issued to the employee within three months of their leave period. Also, a female employee is eligible for six days of childcare leave annually as long as she has worked for the employer for longer than three months and is a parent to a child younger than seven years old.

Employers generally subscribe to the maternity and childcare leave stipulated under the Singapore Employment Act.

 

Probation Period

Probation periods are not covered by the Singapore Employment Act. Generally, employers will subject employees to a probation period of three to six months. This usually precedes a shorter termination period.

 

 

Employment Termination

Where there is a clear breach of contract, the employment contract may wilfully be terminated by either party with or without notice. Either employer or employee may also terminate the employment contract with a written notice or paying salary in notice of the other party. The Employment Act does not stipulate how long employment contract termination should be; this will be agreed upon by both parties in the employment contract.

In Singapore, a two weeks’ notice is issued for an employer in the probation period, and one month following the recruitment of an employee. While either party may cancel the contract by notifying and paying salary to the other party, the Singapore courts have since ruled that this may be impractical, especially for an employee, to fulfill.

 

 

Retrenchment, Layoffs, and Downsizing

For all employees that earn below S$2,000 monthly, the Singapore Employment Act stipulates the following during instances of retrenchment, layoffs, or downsizing:

  • Employees must be paid their benefits and salaries in full on their last working day.
  • The duration must be the same as that agreed upon in the employment contract.
  • Employees that have served for more than three years in a company are entitled to a form of retrenchment benefit (although the exact amount isn’t stipulated in the Employment Act). Employees that have served for less are not eligible for retrenchment benefits.

Since retrenchments are rarely a good thing for the economy, the Ministry of Manpower advises companies to go about it as honestly and responsibly as possible.

In Singapore, retrenchment benefits typically depend on the employer. Smaller companies will usually be unable to offer more than the minimum requirements stipulated by the Employment Act. Therefore, employers and employees are urged to agree to the benefits beforehand in the employment contract.

 

Education and Training

Education and training, while encouraged and on some occasions supported by the Ministry of Manpower, is not a statutory requirement and not covered in the Employment Act.

Training and education of employees are to be conducted entirely at the discretion of the company.

 

Non-Statutory Benefits and Perks

Apart from the standard statutory benefits covered under the Singapore Employment Act, some companies provide extra perks and benefits to their employees that can sometimes extend to their close family members. Some popular ones include the following:

Personal, healthcare, and wellbeing benefits – Most companies in Singapore provide additional health insurance packages and schemes for their employees that cover hospitalization and personal accidents.

Travel benefits – For employees that frequently travel for company duties, some employers provide transportation reimbursements and allowances to cover travel expenses.

Relocation packages – Employees that have had to move to Singapore for work are often compensated via a relocation allowance or package. Such expatriation packages may include paid shipping of personal items, paid airfare, payment of utility bills, children’s tuition, and subsidized housing, among other things.

Employee stock purchase plans – Usually accrued to only senior employees, some companies avail their staff to stock purchase plans.

Extra perks – Some additional perks offered by some companies include the following: sponsoring employee training and education, paid corporate memberships, paid mobile phone plans, paid gym memberships, and restaurant vouchers, among others.

 

Singapore Employment Act FAQs

Are S Pass Holders Also Covered Under the Employment Act?2020-07-03T10:11:43+08:00

Foreign employees that hold a valid work pass in Singapore are also covered under the Singapore Employment Act, specifically under the Employment of Foreign Manpower Act. This act stipulates an employer’s obligation and duties to their foreign employees in Singapore.

Does the Employment Act Cover Foreigners?2020-07-03T10:11:16+08:00

The Singapore Employment Act covers both local and foreign employees that fall under the working terms and contracts as stipulated byr the Employment Act.

What is the Singapore Employment Act?2020-07-03T10:10:40+08:00

The Singapore Employment Act is the main labor law that outlines the basic working condition and terms for all employees in Singapore. Employers are obligated by law to abide by the Employment Act with regard to how they treat all employees covered under it.

2021-02-04T13:13:35+08:00May 23, 2019|0 Comments
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