Employer of Record Singapore
Working in Singapore
Singapore might be one of the smallest countries in the world when measured in square kilometres, but it punches well above its weight in terms of global business significance and is an ideal steppingstone for expanding businesses from the West.
Ranked in the top five countries for GDP per capita and second in the World Bank’s ratings for ease of doing business, Singapore is a top destination for companies looking to expand into the Asian markets.
The Singaporean work ethic is also highly attractive to businesses looking to recruit in this island nation. Seen as hard working, reliable and trustworthy, the productive Singaporean workforce can be expected to yield a strong return on investment. Singapore has also traditionally been open to expat workers, making it the perfect location for growing a multilingual, multicultural workforce.
With low levels of bureaucracy, multiple free trade agreements and various types of government support for businesses, it’s easy to see why business is booming for foreign investors across a variety of sectors in Singapore.
The Employment Act
In Singapore, labour laws are governed by the Employment Act. Prior to the 1st of April 2019, managers and executives with a monthly basic salary of more than $4,500 were not covered by this legislation. Now, all employees (with the exception of seafarers, domestic workers and public officers) are covered for by core provisions such as:
Key changes to the act include:
Overview of provisions in Singapore
Salary
The Employment Act does not regulate the minimum salary every employee must be paid. In other words, there’s no minimum salary requirement and it’s subject to negotiation between the employer and the employee. However, the salary must be paid at least once a month within seven days after the end of the salary period. Overtime pay, if applicable, must be paid within 14 days of the stipulated salary period.
13th month payment/annual bonus
The salary paid to an employee obviously depends on the position and skills required. An annual bonus (equivalent to at least one month’s salary, commonly known as 13th month payment) has become a common practice in Singapore. The exact amount of annual bonus can vary from employee to employee as per the company policies and will normally be tied to the employee’s performance as well as performance of the company.
The details of the annual bonus policy will normally be specified in the employment contract. It’s not uncommon to see employees in Singapore receiving annual bonuses of two to three times their monthly salary during good economic times.
Probationary period
The Employment Act does not have any clauses pertaining to the probation period for employees. As a common practice, employees are asked to serve a probation period of three to six months. The probation period is usually reflected by a shorter termination notice period.
Working hours
Hours of work and rest days only apply to those employees governed by Part IV of the Employment Act. Managers and executives are not included in these provisions, so for this category of employees, working hours are free to be determined by agreement between the employee and the employer.
As a general rule in Singapore, office employees work from Monday through to Friday, from 9am to 6pm or 7pm, depending on the industry and company policies. It’s not uncommon for Singapore employees to work nine to 10 hours during the weekdays and half a day on Saturdays.
Paid time off
In addition to the traditional holiday entitlement (see below), employees in Singapore enjoy a wide range of statutory benefits including:
Sick leave eligibility and entitlement
Employees are entitled to paid outpatient sick leave and paid hospitalisation leave if:
The number of days of paid sick leave employees are entitled to depends on their length of service but can be up to 14 days for paid outpatient sick leave and 60 days for paid hospitalisation leave. The 60 days of paid hospitalisation leave includes the 14 days of paid outpatient sick leave entitlement.
Employers must provide paid sick leave to their employees if they are issued with a medicate certificate by any registered doctor or dentist indicating that they are unfit for work. Employees must have worked for at least three months to be entitled to paid outpatient sick leave or paid hospitalisation leave.
Between three and six months of service, entitlement is pro-rated as follows:
| Number of months of service completed | Paid outpatient sick leave (days) | Paid hospitalisation leave (days) |
|---|---|---|
| 3 | 5 | 15 |
| 4 | 8 | 30 |
| 5 | 11 | 45 |
| 6 and thereafter | 14 | 60 |
Central Provident Fund (CPF)
The Central Provident Fund (CPF) is a key pillar of Singapore’s social security system. It was created under the Central Provident Fund Act and was originally enacted in 1955. The CPF administers the comprehensive social security savings plan that provides different types of benefits. These benefits include retirement, healthcare and family protection amongst other things.
Employers and employees make monthly contributions to the CPF which go into three different accounts:
For employees that are Singapore citizens or permanent residents, the employer is also required to make contributions to the CPF fund.
Monthly contributions are made by both the employee and employer. The employer is responsible for sending the monthly payment (which includes both the employer’s and the employee’s respective contributions) by the 14th of the following month. The employee’s portion is then deducted from their salary.
The maximum CPF contribution rate for employers and employees is 17% and 20% respectively; however, this can be lower depending on certain factors such as the employee’s age, permanent resident status etc.
There’s no CPF contribution for foreign employees holding an employment pass or work permit in Singapore (if a foreign worker levy is paid). Clients wishing to hire resident employees will need to make CPF contributions for them which will help employees meet their retirement, housing and healthcare needs.
Skills Development Levy (SDL)
SDL is a compulsory levy that employers have to pay for employees working in Singapore, on top of CPF contributions and a foreign worker levy (if applicable). The CPF Board collects SDL on behalf of the Singapore Workforce Development Agency (WDA).
The funds collected from SDL are channelled into the Skills Development Fund (SDF), which is used to support workforce upgrading programmes and to provide training grants when sending employees for training under the national Continuing Education and Training (CET) scheme.
Both the SDL and SDF are administrated by the Singapore Workforce Development Agency (WDA).
Healthcare
Medical insurance
There’s no statutory requirement to provide private health insurance benefits to employees in Singapore under the Employment Act. Working professionals who are Singapore citizens or permanent residents are automatically provided with a low-cost medical insurance called MediShield — a basic tier of insurance protection for all Singaporeans.
As part of making contributions to the employee’s retirement fund called CPF, a certain portion of the contribution is automatically allocated to the employer’s MediSave account. The MediShield insurance scheme helps MediSave account holders and their dependents meet the cost of treatment during old age or serious illnesses. MediShield premiums are deducted from the MediSave accounts.
Private healthcare
When it comes to healthcare insurance benefits, it really depends on the employer. In Singapore, most large companies offer additional private medical insurance benefits to their employees; however, most smaller companies don’t offer such benefits.
TopSource Worldwide can offer a comprehensive private group health and life assurance package through AVIVA to provide a higher level of healthcare benefits than what is provided under the basic Singapore scheme. We can also offer medical insurance benefits for employment pass holders (foreign employees).
MediSave
Introduced in 1984, MediSave is a national medical savings scheme which helps individuals put aside part of their income into their MediSave accounts to meet their future personal or immediate family’s hospitalisation, day surgery and certain outpatient expenses.
Under the scheme, every employee contributes between 8–10.5% (depending on age group) of their monthly salary to their personal MediSave account. The savings can be withdrawn to pay the hospital bills of the account holder and their immediate family members.
Terminations
Employers can legitimately dismiss their employees with notice or salary in lieu of notice in situations such as:
Employers can legitimately dismiss their employees without notice due to misconduct. For example, if after due inquiry their employee was established to have committed theft, engaged in dishonest or disorderly conduct at work, was insubordinate or brought the company into disrepute.
If an employer is found to have wrongfully dismissed his employee, the ECT can:
The ECT will take reference from a prescribed compensation framework in determining the compensation order.
Important to note: as the Employer of Record, the responsibility for assessing the legal basis and issuing appropriate legal documentation for a potential termination is owned by TopSource Worldwide. It’s imperative that the work-side employer (client) consults TopSource Worldwide prior to any individual discussions taking place around possible termination of contracts.
Holiday entitlement
Annual leave entitlement depends on how many years of service the employee has held with the employer. The year of service begins from the day an employee starts work with the employer.
| Number of Years of Service | Number of Days Holiday of entitlement |
|---|---|
| 1st | 7 |
| 2nd | 8 |
| 3rd | 9 |
| 4th | 10 |
| 5th | 11 |
| 6th | 12 |
| 7th | 13 |
| 8th and thereafter | 14 |
Public holidays in Singapore
Considering Singapore’s multicultural diversity, public holidays are designed to accommodate many different ethnic communities.
| 2020 | 2021 | |
|---|---|---|
| New Year’s Day | Wednesday 1st January | Friday 1st January |
| Chinese New Year | Saturday 25th January Monday 27th January |
Friday 12th February Saturday 13th February |
| Good Friday | Friday 10th April | Friday 2nd April |
| Labour Day | Friday 1st May | Saturday 1st May |
| Vesak Day | Thursday 7th May | Wednesday 26th May |
| Hari Raya | Puasa Monday 25th May | Thursday 13th May |
| Polling Day | Friday 10th July | — |
| Hari Raya Haji | Friday 31st July | Tuesday 20th July |
| National Day | Monday 10th August | Monday 9th August |
| Deepavali | Saturday 14th November | Thursday 4th November |
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