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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 are loyal, well-educated and hard-working workforce. 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 labor 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 Overview
The Employment Act is Singapore’s main labour law. It provides for the basic terms and working conditions for all types of employees, with some exceptions.
With effect from 1 April 2014, the penalty for failure to pay salary in accordance with the EA will be raised. A first-time offence will be liable to a fine of between $3,000 and $15,000 and/or 6 months’ jail. A subsequent offence will be liable to a fine of between $6,000 and $30,000 and/or 12 months’ jail.
What is the Singapore 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 covered by the Employment of Foreign Manpower Act, which outlines an employer’s responsibilities and obligations for employing foreigners.
Who Does the Employment Act Cover?
All employees under a contract of service with an employer are covered under the Act, but with exceptions. For example, previously, Part IV of the Act which provides for rest days, hours of work, annual leave and other conditions of service, does not cover managers or executives.
Previously one is not covered under the Act if you are employed as a:
- Manager or executive with monthly basic salary of more than $4,500.
- Domestic worker.
- Statutory board employee or civil servant.
With effect 1 April 2019, core provisions under the Act now extends to professionals, managers, executives and technicians (PMETs). These include annual leave, paid public holiday and sick leave entitlements, as well as protections for timely salary payment and wrongful dismissals.
From 1 April 2019, the following are key amendments to Part IV:
Table 1: Changes to coverage of employees under Part IV of the EA
|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 cap for the monthly basic salary used to calculate the hourly rate for overtime work is $2,250/month||Non-workmen: The cap for the monthly basic salary used to calculate the hourly rate for overtime work is now $2,600/month|
An employee can be employed in the following terms:
An employee can be paid on the following basis:
Part IV of the Employment Act, which provides for rest days, hours of work, annual leave and other conditions of service, only applies to:
- A workman (doing manual labour) earning a basic monthly salary of not more than $4,500.
- An employee who is not a workman, but who is covered by the Employment Act and earns a monthly basic salary of not more than $2,500.
With effect from 1 April 2019, salary threshold for non-workmen to qualify as Part IV employees will be raised from $2,500 to $2,600. The cap for overtime rate payable for non-workmen covered under Part IV will be raised to $2,600. There will be no change to Part IV coverage of workmen earning a monthly basic salary of up to $4,500.
Key Features of Employment Act
|Features||Managers / Executives positions||Employees earning more than $2,600/month||Employees earning $2,600/month or less|
|Max. Hours of Work per Week||As per contractCommon practice: 40-50 hours||As per contractCommon practice: 40-50 hours||44 hours|
|Max. Days of Work per Week||As per contractCommon practice: 5 days||As per contractCommon practice: 5 days||6 days|
|Overtime||As per contract||As per contract||Maximum 72 hours per monthPaid at 1.5 times of the basic hourly rate|
|Central Provident Fund Contribution for Singapore Citizens and PRs||Required||Required||Required|
|Annual Bonus||As per contract||As per contract||As per contract|
|Paid Annual Leave||As per contractCommon practice: 14 days||As per contractCommon practice: 14 days||1st year – 7 days2nd year – 8 days
3rd year – 9 days
(annual increase up to a max. 14 days)
|Paid Sick Leave||As per contractCommon practice: 14 days per annum||As per contractCommon practice: 14 days per annum||Outpatient: 5-14 days (depending upon the period of employment served)Hospitalisation: 15-60 days (depending upon the period of employment served)|
|Paid Maternity Leave (if eligible)||16 weeksFirst 8 weeks employer payable for first 2 confinements||16 weeksFirst 8 weeks employer payable for first 2 confinements||16 weeksFirst 8 weeks employer payable for first 2 confinements|
|Paid Annual Childcare Leave (until child turns 7 years old) (if eligible)||6 daysFirst 3 days employer payable||6 daysFirst 3 days employer payable||6 daysFirst 3 days employer payable|
|Unpaid Infantcare Leave (until infant turns 2 years old) (if eligible)||6 days||6 days||6 days|
|Paid Public Holidays||11 days||11 days||11 days|
|Probation Period||As per contractCommon practice: 3 to 6 months||As per contractCommon practice: 3 to 6 months||As per contractCommon practice: 3 to 6 months|
|Termination Notice Period||As per contractCommon practice: 1-3 months||As per contractCommon practice: 1-3 months||As per contractCommon practice: 1 month|
|Retrenchment||As per contract||As per contract||Eligible to:-receive salary on last working day
-receive retrenchments benefits
-serve notice period
|Medical Insurance||As per contract||As per contract||As per contract|
@ With effect from 1 April 2019, core provisions cover all employees with the removal of the $4,500 salary threshold.
For more detailed information on the Employment Act, please visit the MOM website.
Important Duties and Obligations of Employers in Singapore
Formalizing the Employment Contract
It is important for employers to abide by the terms and conditions specified in the employment contract. Maybe you think you can draw up a contract by yourself, but its wiser to use a lawyer or HR consultant who has the expertise to assist you in this area. If you have employees covered by the Singapore Employment Act, you must, at minimum, meet the requirements set forth in the Act. Here is a sampling of the Key Employment Terms (effective 1 April 2016) to be covered by the contract:
- 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 item 7 salary period).
- Overtime rate of pay
- Bonuses and incentives
- Type of leaves
- Probation and Notice Period
- Place of Work
Reporting Employee Earnings
Employers must prepare tax forms for all Singapore employees. These forms allow you to tell the Government how much each employee was paid, as required under the Singapore Income Tax Act. See the Personal Income Tax section for more information.
Tax issues for Foreign Employees
This pertains to foreign employees who are:
- Fired or otherwise leaving the job
- Going overseas on a job-related posting
- Skipping the country for at least three months
These employees must get tax clearance to prove that they have settled payable taxes to the Inland Revenue Authority of Singapore (IRAS) Employers must notify the IRAS tax authority and immediately withhold all further payments to employee who fits the descriptions listed above. IRAS will issue a Tax Clearance Certificate that confirms payment of taxes due. Employers should refrain from releasing the remaining monies to your employee until after you receive a copy of the Certificate.
Making Central Provident Fund (CPF) Contributions
For any local employees (citizens and PRs) that you pay more than S$50 per month, you must contribute to the CPF – 17 percent employee contribution and 20 percent employer contribution for employees of 55 years of age and below. However, you might be able to save some money depending on various factors, including the age of the employee 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.
You don’t make CPF contributions for foreign employees.
Paying the Foreign Worker Levy
You can hire foreign workers with little or no skills, but the Government will then collect a Foreign Worker Levy (FWL). If you surmise that the Government is discouraging you from bringing low-skilled foreign workers to Singapore, you are correct. If you’d like more information on how much the Government will siphon off through the levy, refer to the MOM web site.
Paying the Skills Development Levy
- Here’s another levy. It’s called the Skills Development Levy and it’s equal to 0.25 percent of the first $4,500 of monthly gross remuneration, but at least $2, for all employees, including:
- foreign workers rendering services wholly or partly in Singapore
- Gross remuneration includes the following:
- paid leave
- overtime pay
- housing and other allowances
- other cash payments
- The Skills Development Levy collected by the CPF Board ends up in the accounts of the Singapore Workforce Development Agency. This money augments the Skills Development Fund, which puts up grant money for companies to get their workers trained.
- For details, read these FAQs provided by the Workforce Development Agency.
- 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.
Hiring Part Time Employees and Contractual Staff
- You are classified as a part-time employee if you work for less than 35 hours a week.
- 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 our part-timers and contractors 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
- It is the Singaporean custom not lavish certain benefits on part-timers and contractors, including:
- Medical coverage
- Other perks reserved for real employees
You can put children as young as 13 to work in Singapore, although the legal work age is 17. However, be aware of certain types of work are off limits to young children workers. Mature employees are normally turned out to pasture at age 62, but eligible employees can receive a reprieve up to age 67.
Hiring Foreign Employees
You would not be out of step by hiring foreigners to supplement your local staff. You might need to pursue this course for several reasons, including:
- an ageing population
- declining birth rate
- unprecedented economic growth
- shortage of enough local talent for certain job sectors
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 Singaporean caste system distinguishes three levels of employees, in descending order:
*** Skilled professionals (e.g. software engineers, doctors, R&D specialists etc.) who are eligible for an Employment Pass or Personalised Employment Pass.
** Semi-skilled professionals (e.g. technicians, chefs, administrative professionals) who are eligible the S Pass.
* Unskilled professionals (e.g. construction workers, domestic help) who must settle for a work permit, also known as R Pass.
The following table tells you what you need to know to secure the correct pass for the type of foreigner you hire.
|Pass Type||Employment Pass||S Pass||R Pass (Work Permit)|
|Suitable For||Skilled employees with tertiary level education and relevant work experienceMonthly salary > $3,600||Mid-skilled employees with diploma level education and relevant work experience Monthly salary > $2,300||Unskilled workers with relevant work experience. No minimum required|
|Validity||Issued for 1-2 years initiallyRenewable||Issued for 1-2 years initiallyRenewable||Issued for 1-2 years initiallyRenewable|
|Quota System||No||Yes 15% of the company’s total workforce||Yes, 8% for PRC work permit holders out of company’s total workforce|
|Eligibility for Dependants Pass||Yes||Yes||No|
|Restrictions on Nationality||No||No||Yes|
|Levies||No||Foreign Worker Levy||Foreign Worker Levy|
General Recruitment Guidelines
Singapore has them all: diverse ethnicities, various ages and sexual identities. The Government encouragesfair 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.