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Human Resource and Immigration | Guide to Hiring Staff in Singapore

Guide to Hiring Staff in Singapore | Guide to Hiring Employees in Singapore | Employee Hiring Guide for Singapore Companies – Now that you have successfully incorporate a Singapore company, you are ready to begin hiring employees. Singapore is known for its workers who are loyal, well-educated and hard-working. The Government of Singapore has enacted laws to govern and protect the interests of both employers and employees.

If your knowledge of Singapore hiring practices is a little fuzzy, you have come to the right place. 3E Accounting is an expert in this field and offers valuable services and support. This guide will help you comprehend the key labour laws and the ways to go about hiring local and foreign employees the Singaporean way. We target an audience of new Singapore businesses that are hiring employees for the first time to assist you in avoiding costly and time-consuming mistakes. The following are some general guidelines which should not substitute professional advice.

 

Employment Act Matters

1. What is Employment Act?

The Employment Act is Singapore’s main labour law providing the basic terms and conditions at work for employees covered by the Act. Foreign employees holding a work pass are also covered by the Employment of Foreign Manpower Act, which outlines an employer’s responsibilities and obligations for employing foreigners.

2. Who is covered under the Employment Act?

Local and foreign employees under a contract of service with an employer are covered under the Employment Act. An employee can be employed as Full-time, Part-time, Temporary or Contract and can be paid based on Hourly, Daily, Monthly or Piece-rated.

3. What are the key changes to the Employment Act with effect from 1 April 2019?

Core provisions under the Employment Act now extends to all employees in Singapore, with the exception of seafarers, domestic workers and public officer. These includes minimum days of annual leave, paid public holiday and sick leave entitlements, as well as protections for timely salary payment and wrongful dismissals.

Salary threshold and salary capped for overtime for non-workmen qualifying under Part IV of the Employment, which provides for rest days, hours of work, annual leave and other conditions of service have changed and shown in the table below:

BEFORE Amendments to EA	AFTER Amendments to EA
Workmen earning up to $4,500/month	No change
Non-workmen earning up to $2,500/month	Non-workmen earning up to $2,600/month
Non-workmen: The monthly basic salary used to calculate the hourly rate for overtime work is from a salary level of $2,250/month to not more than $2,500/month	Non-workmen: The monthly basic salary used to calculate the hourly rate for overtime work is capped at the salary level of $2,600/month

 

Note: Part IV of the Employment Act only applies to:

• Workmen (i.e. doing manual labour) earning a basic monthly salary of not more than $4,500.
• Non-workmen earning a monthly basic salary of not more than $2,600.

Wrongful dismissal claims to be heard by Employment Claims Tribunal (ECT) instead of the Minister for Manpower. As the ECT already hears salary-related claims, this shift provides a more convenient one-stop service to both employees and employers. Similar to the existing process for salary-related claims, employees have to register their wrongful dismissal claims at TADM for mediation. If the claims cannot be resolved through mediation, they will be referred to the ECT.

Wrongful dismissal claims under the Employment Act and Child Development Co-savings Act will be heard by the ECT followed by the Tripartite Alliance for Dispute Management (TADM). 

For more detailed information on the Employment Act and the amendments, please visit the MOM website.

4. What are the common features to note when hiring employees?

 

Important Duties And Obligations Of Employers In Singapore

1. Formalizing Employment Contract

It is important for employers to abide by the terms and conditions specified in the employment contract. If you are unfamiliar with the employment regulations in Singapore, it may be wiser to engage a lawyer or HR consultant who has the expertise to assist you in this area. If your employees are covered by the Employment Act, you must, at minimum, meet the requirements set forth in the Act.

It is a requirement for all employers to issue key employment terms (KETs) in writing or include the following items in the Employment Contract to employees covered by the Employment Act.

• Full name of employer
• Full name of employee
• Job title, main duties and responsibilities
• Start date of employment
• Duration of employment (if employee is on fixed-term contract)
• Working arrangements, such as:
  • Daily working hours (e.g. 8.30am – 6pm)
  • Number of working days per week (e.g. six)
  • Rest day (e.g. Saturday)
• Salary period
• Basic salary
• Fixed allowances and deductions
• Overtime payment period (if different from salary period)
• Overtime rate of pay
• Other salary-related components such as bonuses and incentives
• Type of leaves such as annual leave, sick leave, hospitalization leave, maternity leave, childcare leave, etc.
• Other medical benefits such as insurance, dental, etc.
• Probation
• Notice Period
• Place of Work (Include if the work location is different from the employer’s address)

2. Issuing Itemized Payslips

It is a requirement for all employers to issue itemized payslips to employees covered by the Employment Act.

3. Paying Central Provident Fund (CPF) Contributions

For employees who are Singapore citizens or Permanent Residents, CPF contributions are mandatory. You are required to pay for your employees’ CPF contributions every month if they are earning more than $50 per month, and your employees’ have to contribute to CPF if they are earning more than S$500 per month. However, you might be able to save some money depending on various factors, including the age of the employees and residential status. Be sure to activate your CPF account right away so that you don’t miss any payments. For more information, please see the Payroll Services section.

4. Paying Foreign Worker Levy (FWL)

You can hire foreign workers with little or no skills and Foreign Worker Levy (FWL) shall apply. If you surmise that the government is discouraging you from bringing low-skilled foreign workers to Singapore, you are correct. If you would like more information on how much the government will siphon off through the levy, refer to the MOM web site.

5. Paying Skills Development Levy (SDL)

SDL is a compulsory levy that you have to pay on a monthly basis for all your employees working in Singapore, including foreign employees and employees employed on a casual, part-time, or temporary basis. The SDL is computed up to the first S$4,500 of each employee’s total monthly wages at a levy rate of 0.25% or a minimum of $2 (for total wages of $800 or less), whichever is higher.

CPF Board collects SDL on behalf of the SkillsFuture Singapore Agency (SSG), previously known as Singapore Workforce Development Agency (WDA). The SDL collected is channelled to the Skills Development Fund (SDF), which provides grants to employers who send their employees for training under the National Continuing Education Training system. For more details, refer to the CPF website.

6. Reporting Employee Earnings

Employers must prepare tax forms for all employees on a yearly basis before 1 March. These forms are for the employees to file their personal tax returns to the Inland Revenue Authority of Singapore (IRAS) as required under the Singapore Income Tax Act. See the Personal Income Tax section for more information.

7. Tax Clearance for Foreign Employees or Singapore Permanent Residents Leaving Singapore Permanently

According to IRAS, employers are supposed to seek tax clearance by filing Form IR21 at least 1 month before the non-citizen employee:

• cease employment in Singapore; or
• is on overseas posting; or
• leaves Singapore for any period exceeding three months.

Otherwise, reasons must be stated in the Form IR21. Unless there are valid reasons such as employee’s immediate resignation, employers who do not file or are late in filing the Form IR21 may be liable for a fine of up to $1,000.

All monies (e.g. salary, overtime pay, allowances, leave pay, reimbursements, gratuities, lump sum payments, etc.) that are due to the employee have to be withhold from the date that you are aware of the employee’s impending cessation of employment or departure from Singapore. Or else, you may be liable for the tax that is owed by the employee.

After the tax clearance has been processed, IRAS will issue either a Directive to Pay Tax or a Notification to Release Monies.

 

Hiring / Recruitment

Foreign Employees

For certain obvious reasons, you may need to look beyond Singapore to fill jobs in IT, business and finance, and research and development. Certain jobs are of little interest to locals, such as domestic help and construction, so employers may be forced to hire foreign talents. Singapore is proud of its ability to attract foreign professionals for hire, as witnessed by the Government’s liberal immigration policies and adequate provisions for foreigners.

In the process of hiring a foreigner, do ensure that a valid employment pass or work permit is secured as required under the Singapore Employment Act before work commences. You need to observe any work pass restrictions on the number of foreigners you can hire for work.

The Singapore work pass system distinguishes three levels of employees, in descending order:
*** Professionals (e.g. software engineers, doctors, R&D specialists etc.) who are eligible for an Employment Pass or Personalised Employment Pass.
** Mid-level skilled (e.g. technicians, chefs, administrative professionals) who are eligible the S Pass.
* Semi-skilled (e.g. construction workers, retail assistants) who must settle for a work permit.

The following table tells you what you need to know to secure the correct pass for the type of foreigner you hire.

 

Part Time and Contractual Employees

• You are classified as a part-time employee if you work for less than 35 hours a week and have fixed working hours.
• You are considered a contract worker if you have a fixed-term employment contract or a casual ad hoc relationship in which the company brings you in when needed. The contract expires at the end of its well-defined term when the specified work is finished.
• Here in Singapore, we protect part-time employees, contract employees, etc. almost as well as we do our permanent full-time employees. Employers and employees have some latitude in negotiating various terms, including:
  • Proration of employee benefits
  • Annual leave
  • Rest days

Young and Older Employees

You can hire children as young as 13 years old to work in Singapore. However, be aware of certain types of work are off limits to young children workers aged 13 to 16. Mature employees are normally turned out to pasture at age 62, but eligible employees can receive a reprieve up to age 67.

Students

Students who are citizens or permanent residents of Singapore are unrestricted full-time and part-time hire. Unless they receive an exemption, students are entitled to CPF contributions. This doesn’t apply to interns you bring on for training as part of the student’s course of study. You normally pay these interns a monthly allowance, nothing more.

You cannot put foreign students to work in Singapore during the school term or during vacation time unless they receive a Work Pass Exemption through the Employment of Foreign Manpower (Work Pass Exemptions) Notification Program. You can accept interns and members of an industrial attachment program, but you must first apply for and receive either a Training Employment Pass or a Training Work Permit for them. You don’t have to pay the Foreign Worker Levy for these students. You normally pay these foreign students a monthly allowance, nothing more.

 

General Recruitment Guidelines

Singapore has them all: diverse ethnicities, various ages and different nationalities around the world. The Government encourages fair and progressive HR practices among recruiters. To curb abusive practices, the Ministry of Manpower (MOM), has promulgated a series of edicts that we summarize here:

• Hire based on merit.
• Age, race, gender, religion, family status and disability are less important than the ability, experience and skills to do the job.
• Inform all job applicants about the job-related selection criteria, and make sure those criteria remain relevant.
• Information on age, race, gender, religion, family status, language and disability should not be the focus of job advertisements unless it’s important for the job.
• You can ask personal questions, but only for administrative purposes. Otherwise, your job application forms should limit questions to those relevant to weeding out good hires.
• Conduct interviews and tests that relate to the job requirements.

Some of the commonly used recruitment channels in Singapore are:

• Employment Agencies/Recruitment Firms — Headhunters often help large- and medium-sized companies hire the right candidates. You can save time and effort with this approach. However, play it safe by finding out in advance the recruiting firm’s policies and how much you will pay (commonly, it’s an amount equal to the candidate’s salary). You can use a local agency or one of the big international ones with a presence in Singapore, including Hudson, Hays, and Robert Walters, all of whom service a large MNC base.
• Newspaper Advertisements — You can place ads in The Straits Time, which is Singapore’s leading rag. Both recruiters and job seekers often take this approach. Before investing your cash, first find out how much you’ll pay and how well the advertisement will reach your target audience.
• Internet Websites — There are a handful of fee-based websites popular with the job-seeking crowd. These sites serve the Singapore market and are a good place to troll for regional positions and applicants. A couple of leading names are JobStreet and JobsDB.
• Job/Career Fairs — These venues have become popular here, attracting over 400,000 applicants per year. Employers can meet and interview applicants on the spot. You will do best if you use this method to recruit applicants with the specialized skills and talent to match the job.
• Campus Recruitment — When all else fails, you can sample the student population. You will find most of Singapore’s educational institutions will eagerly welcome your efforts to hire graduates and post-graduates through on-campus interviews and recruitment seminars.