After setting up a company, hiring employees may be the next task on your to-do list. As an employer, it is important to be aware of the do’s and don’ts of recruitment in Singapore. In this article, we will cover the key labour laws, recruitment practices in Singapore as well as hiring guidelines.
What is the Singapore Employment Act?
The Singapore Employment Act is the main labour law that spells out the terms and conditions of recruitment, as well as the rights, duties and responsibilities of employers and employees.
Who is Covered Under the Singapore Employment Act?
All local and foreign employees under a contract of service with an employer are covered under the Act, whether or not your employee is employed on a full-time, part-time, temporary or contract basis.
In addition, part-time employees (i.e. employees who work less than 35 hours a week) are covered by the Employment of Part-Time Employees Regulations, while foreign employees holding a work pass are also covered by the Employment of Foreign Manpower Act.
Who is Not Covered Under the Employment Act?
Seafarers, domestic workers and civil servants (or statutory board employees) are not covered under the Act. Hence, terms and conditions of their employment will be as per their agreed-upon employment contract.
What is Part IV of the Singapore Employment Act and who Does it Cover?
Part IV of the Singapore Employment Act, which provides for rest days, hours of work and other conditions of service, applies to most employees and does not cover managers or executives. (Managers and executives are defined as employees with executive and supervisory functions, who can make decisions on issues such as recruitment, discipline, termination of employment and performance assessment, etc.)
In general, employees in Singapore are not required to work more than 6 consecutive hours without a break. If longer hours are required, breaks must be provided. Employees usually work for 44 hours a week. Employees are not allowed to work more than 12 hours a day, except for urgent work or work that is essential to the community, national defence or security.
What Should Go into an Employment Contract?
If your employee is covered under the Employment Act, your contractual terms should abide by the requirements under the Act. Key components of a contract include the (i) appointment position, (ii) duration of contract, if applicable, (iii) date of employment commencement, (iv) remuneration package, (v) hours of work, (vi) employee benefits, (vii) probation clause, if applicable, (viii) code of conduct and (ix) termination clause.
What are my Obligations as an Employer?
Apply for work passes or permits
If you wish to employ foreign employees, they must hold a valid work pass or permit before starting work. For an overview of the different types of work passes or permits, click here.In general, there are three main groups of foreign employees:
- Skilled professionals (such as doctors, engineers etc.), who are issued with an Employment Pass.
- Semi-skilled professionals (e.g. chefs, technicians etc), who are issued with the S Pass.
- Unskilled Professionals (e.g. construction workers, domestic helpers etc), who are issued with a work permit.
Depending on the work visa that you apply for, you may be obliged to buy and maintain medical insurance for your employees, particularly for Work Permit and S Pass holders. You will need to submit the medical insurance details to MOM before the work visas can be issued.
Report employees’ income
As an employer, you are required to prepare tax forms for all employees employed in Singapore and report their remuneration to the Inland Revenue Authority of Singapore (IRAS). From Year of Assessment (YA) 2020, participation in the Auto-Inclusion Scheme for Employment Income is compulsory for employers with 7 or more employees or who have received a notification from IRAS.
Make CPF contributions
As an employer, you are required to make Central Provident Fund (CPF) contributions for all local employees (citizens and PRs). The current CPF contribution rate for employer and employee is 17% and 20% respectively, and can be lowered depending on the employee’s citizenship, age and total wages. CPF contributions are not applicable for foreign employees.
Employers in Singapore are required to pay a monthly Foreign Worker Levy (FWL) for Work Permit and S Pass holders. FWL was introduced as a pricing mechanism aimed at regulating the number of foreign workers in Singapore. FWL is collected by the Central Provident Fund Board (CPF).
If your foreign employee ceases employment with you in Singapore, goes on an overseas posting or plans to leave Singapore for more than three months, you are required to seek tax clearance for the employee. This entails filing Form IR21 with IRAS and withholding all monies due to the employee. Once IRAS completes its assessment and issues a tax clearance certificate, confirming that all taxes have been paid, you can release the payment due to your employee. This step applies to all work pass holders including Personalised Employment Pass (PEP) holders.
The Skills Development Levy (SDL) is a compulsory levy that employers have to pay for all employees working in Singapore, on top of CPF contributions and FWL. You can use the Skills Development Levy Calculator hosted on the SkillsFuture Singapore Agency (SSG) website to compute the total SDL payable.
Get Expert Guidance from Corporate Services Singapore
Although you can draft employment contracts and comply with the various obligations on your own, it is advisable to seek guidance from a HR consultant or corporate services provider who is familiar with the process. Starting a business and hiring employees in Singapore can be easy and seamless when you engage Corporate Services Singapore.
At Corporate Services Singapore, we help entrepreneurs and business owners navigate Singapore’s employment policies while advising you on pre-application requirements for work visas. To set up an entity or work in Singapore, give us a call at 6602 8286 or email firstname.lastname@example.org to get started today.