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Guide on Setting up an Employment Agency Company Business in Singapore

Industry Guide | Opening an Employment Agency Company in Singapore

An employment agency is a company that helps other with their recruitment and staffing needs, normally acting as the middle party between employer and potential employee. An employment agency could be engaged in placement of local and foreign candidates starting from junior level positions to top management level. With Singapore encouraging foreigners from executive and middle-management levels to manual labours to work in the country, there are numerous small and big placement agencies and head hunting firms to help Singapore companies meet their staffing needs.

All employment agencies in Singapore require an Employment Agency License (EAL) prior to starting its business activities. This is the basic license required for all categories of recruitment agencies and is governed by the Ministry of Manpower (MOM) of Singapore. Any person or EA who abets an unlicensed EA or abets the commission of an offence would be liable to the same punishment accorded to the offence committed.

The purpose of this guide is to provide information on how to start an employment agency and get the required license. Note that an employment agency license is not required if you are hiring staff under your company’s direct employment.

 

Who needs an Employment Agency License?

All entities and individuals that are engaged in employment agency activities in Singapore must apply for the Employment Agency License. This is irrespective of whether the agency is based in Singapore or overseas and regardless of whether it deals with jobs in Singapore or overseas. Employment agency activities constitute the following:
– Communicating with prospective candidates regarding their job applications;
– Collating the resume of prospective candidates who are seeking employment;
– Submitting Singapore Work Visa applications to the authorities on behalf of employers or candidates; and
– Facilitating the placement of candidates with employers.

Depending upon the profile of candidates that an employment agency deals with, it can choose to apply for either a Comprehensive License or a Select License. The Select License is designed for employment agencies that place local or foreign candidates who earn a monthly base salary of more than S$7,000. The Comprehensive License is meant for all other employment agencies that do not qualify for the Select license.

 

Employment Agency Setup – Key Facts & Requirements

First Step: Register Singapore company

You must first incorporate a Singapore company and select business activity code that’s appropriate for the type of recruitment activities you will be undertaking.
78103 (maid agencies)
78104 (employment agency – exclude maid agencies)
78105 (executive search)

Second Step: Setup a business office

The company must establish an operating business office. There are various office space options you can choose from depending upon your business needs and budget. Note that you will need to seek approval from the Urban Redevelopment Authority of Singapore (URA) if you plan to make additions or alterations to a conservation building. Prior approval from the Building and Construction Authority (BCA) is required in order to display signs on your conservation building. If you plan to execute any fire safety works, approval from the Singapore Civil Defence Force must be obtained.

Third Step: Apply for Employment Agency License:

The company must obtain Employment Agency License, either a Comprehensive License or a Select License, issued by Singapore Ministry of Manpower. The license is only issued to legal entities and not individual persons. For the details, please refer to How to Apply for an Employment Agency Licence

The following is summarised the steps involved for application of Employment Agency License:-

Pay security deposit

Companies that are issued with a Select License must furnish a Security Deposit of S$20,000 in the form of Banker’s Guarantee while companies that are issued with a Comprehensive License will have to pay a security deposit ranging between S$20,000 to S$60,000 depending on their placement volume and track record.

Certification of employment agency personnel

In order to work in an employment agency that is issued with a Comprehensive License, all employees (whether permanent, temporary, or on a contractual basis), including key appointment holders (e.g. CEO, CFO, COO, General Managers), must be certified under the Certificate for Employment Intermediaries (CEI) course. Certification is required prior to obtaining an employment agency license. Key appointment holders will have to attend the 40-hour course while other employment agency personnel need to attend the 32-hour course. Note that certification of key appointment holders is mandatory, irrespective of whether they perform or do not perform employment agency related work. All other personnel need to be certified only if they perform employment agency related work.

Key appointment holders of employment agencies that were licensed prior to 1 April 2011 will be given time until 31 March 2012 to attain certification while other personnel will be given time until 31 March 2014. The certification deadline for new employment agencies licensed between April – June 2011 is 30 September 2011. Existing Certificate for Employment Agencies (CEA) holders and those who had previously been exempted from CEA are required to attend a shorter “bridging” programme, available from 1 June to 15 July 2011. Those who fail to attend the bridging programme by 15 July 2011 will need to attain the CEI. Note that certification is not required for Select Licensed agencies.

Registration of employment agency personnel

All employment agency personnel, including key appointment holders, who perform employment agency related work, regardless of whether they work for Comprehensive licensed agencies or Select licensed agencies, must be registered with the Singapore Ministry of Manpower and be issued with a standardised registration card. An employee can only work for and be registered under one employment agency at any point in time. A non-refundable, one-time fee of S$160 is payable for each registration. The registration is not transferable from one employer to another. If the employee of one particular recruitment firm wants to switch jobs and join another agency (s)he will have to de-register himself/herself and reapply for registration under the new company. Registration is not required for key appointment holders and other agency personnel if they do not perform employment agency related work.

The personnel of employment agencies that were licensed before 1 April 2011 will be given time until 30 June 2011 to register themselves with the Ministry of Manpower.

Eligibility criteria for employment agency personnel

Employment agency personnel, including key appointment holders, must either be a Singapore citizen, Singapore permanent resident or a foreigner with a valid Singapore work visa. In addition (s)he must be certified (if applicable). Furthermore, the person should be free of bankruptcy and court convictions.

Employment Agency License – Application Procedure

The application procedure involves submitting an application form to the Ministry of Manpower along with a license application fee of S$400.

The application processing time for employment agency license application is approximately 1-3 weeks. You will be notified via email and if your application is approved, an in-principle-approval (IPA) letter will be attached. After receiving the IPA letter, you will need to submit the following documents in order for the license to be issued:
– Obtain a Security Bond in the form of Banker’s Guarantee from a bank in Singapore. In order for the bank to issue you a Banker’s Guarantee, you need to open a fixed deposit (FD) account for the said amount with bank. Banker’s Guarantee must cover 15 months from the start date.
– A clear copy (both sides) of your Singapore ID (for Singapore Citizens and Permanent Residents) or your Employment Pass.
– Latest copy of your company’s business profile from ACRA
– A recent passport size photograph
– Copy of your In-Principle-Approval letter
– Copy of approval letter from the relevant authority if you will be operating under the HomeOffice scheme
– A copy of the certificate stating that you have passed the Certificate for Employment Intermediaries (CEI) course
– Completed checklist form
– Any additional documents requested in your In-Principle-Approval letter.

Once you have submitted the necessary documents and assuming all documents are in order, you should receive an email notification approximately within 7 days of submission of the documents stating that your application is approved. At this point, you will need to make a payment of S$100 for the issuance of the license. The license will be mailed to the address as indicated in the original application. The license is valid for up to 3 years from the date of issue and is renewable thereafter.

Employment agencies are required to comply with the revised Employment Agency Rules. The revisions include modifying fee caps and introducing a new fee refund policy. Details of the modifications are as follows:
– Fee cap: Employment agencies may charge their clients (i.e. the employer as well the selected candidate) a fee, provided it is within the designated fee cap. There will be no cap on the fee charged to employers for services provided. However, fee charged to the candidate who is selected for employment should not be more than one month’s worth of salary per year for the duration of the approved work pass or employment contract, whichever is shorter. This is subject to a maximum of two months’ worth of salary. The fee cap will cover all agency fees collected by employment agencies in Singapore, even if they are collected from candidates via an overseas intermediary employment agency. Note that the fee cap does not apply to agency fees collected and retained by overseas intermediary employment agencies. Certain items are not subject to the fee cap such as training expenses incurred overseas, medical check-ups overseas and travel expenses to Singapore. Candidates are not liable to pay fees incurred in Singapore such as training, medical check-ups, etc. as they are to be borne by the employer or employment agency.
– Fee refund: If the employer (that was a client of the employment agency) terminates the candidate (who was hired by the employer via the employment agency) within 6 months of employment, then the employment agencies must refund 50% of the agency fees that was collected from the candidate. This rule does not apply if employment termination is candidate-initiated. The employment agency must refund the fees within 7 working days of employment termination or before the foreign worker is repatriated, whichever is earlier.

Errant and unlicensed employment agencies will soon face tighter enforcements and penalties.

Employment Agency License – Rejected Applications

Under normal circumstances, if you have accurately submitted your employment agency license application, there shouldn’t be any reason for rejection of your application. If however for some reason your application is rejected, not all is lost. You can submit an appeal letter within 30 days. Your appeal will be reviewed by a senior officer and the processing could take 1-2 weeks. You may be asked to furnish additional documents in support of your application on a case-by-case basis.

Other Information

A practical timeline considering all the steps involved would be about 3-5 weeks.

Employment agency license is issued for 3 years and is renewable thereafter. About two months before the expiration date of your license, you will receive a renewal notice from authorities. The renewal notice will be sent to you via email on record. If your email id has changed, you should update it in your license by using the same online license management portal that you used to submit your original application.

The eligibility criteria for renewal of your Singapore employment agency license is simple and consists of:
– Your agency must have a good track record i.e. you should not have too many complaints against you and you should not have broken any laws
– The officers of the company continue to be ‘clean’ i.e. free of bankruptcy and court convictions

Setup an Employment Agency Company