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Employment in Singapore

Singapore employment law appears complex and confusing when looking from an outside view although in some ways there are many similarities to other countries. Both Singapore nationals and foreign workers are subject to Singapore employment law, but there are differences in certain benefits required for each. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Singapore.

Key points on employment in Singapore

There are several key areas to be aware of within Singapore’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the Singapore laws and rules for both Singapore employees as well as foreign nationals.

In Singapore, it is reportedly known for foreign talent being very welcome and immigration laws as the least restrictive in the world. This section applies to all employees who are covered under the Employment Act. The official site for employment law in Singapore is the Ministry of Manpower (MOM).

  1. Probation Period

    No limits on probation periods appear to be specified in Singaporean law. However, typical periods are around 3-6 months. Regular employee entitlements such as annual leave legally begin to apply after three months of service (whether still on probation or not).

  2. Termination

    The party who intends to terminate the contract must give notice to the other party in writing, or payment in lieu of notice.

    The notice period normally is based on what is agreed in the employment contract. If no period was agreed upon, the following periods apply.

    Length of Service Notice Period
    Less than 26 weeks 1 day
    26 weeks to less than 2 years 1 week
    2 years to less than 5 years 2 weeks
    5 years and above 4 weeks

     

    Notice can be waived by mutual consent. An employer may also terminate an employment relationship without notice if the employee breaches the employment contract, performs gross misconduct or is absent from work continuously for more than two working days, without approval or good reason.

    Severance Pay

    Additional compensation for terminating an employment contract early is purely a contractual term and not governed by the Singapore Employment Act. In the event of disputes it would need to be heard at the civil court.

  3. Leave

    An employee is entitled to Annual Leave if they have worked for the employer for at least three months. The annual leave entitlement is as follows.

    Year of service Days of leave
    1st 7
    2nd 8
    3rd 9
    4th 10
    5th 11
    6th 12
    7th 13
    8th and thereafter 14

     

    Sick Leave

    Employees are entitled to paid sick leave, including medical leave issued by a dentist if they have served the employer for at least three months and inform the employer of their sickness-related absence within 48 hours. The number of days of paid sick leave are as follows:

    No of months of service completed of a new employee Paid Outpatient non-hospitalisation leave (days) Paid hospitalisation leave (days)*
    3 months 5 15
    4 months 5 + 3 = 8 15 + 15 = 30
    5 months 8 + 3 = 11 30 + 15 = 45
    6 months 11 + 3 = 14 45 + 15 = 60
    thereafter 14 60

    Maternity Leave

    A mother is entitled to up to 16 weeks maternity leave in most circumstance if they have worked for their employer for at least 3 months before the child’s birth. However this only applies if the parents are lawfully married and the child is a Singapore Citizen. The father is entitled to share 1 week of the maternity leave. This is just a general outline as there are however various exceptions to these rules, depending on which law(s) apply to the worker and a number of other factors.

    Six days of childcare leave per year is also available. The first 3 days are employer-paid and the last three days are Government-paid (capped at SGD$500 per day).

  4. Pension

    The Central Provident Fund is a mandatory social security savings scheme funded by contributions from employers and employees. The contributions are not required for foreign workers. Contribution rates are:

    Employee’s Age (Years) Contribution Rate(for monthly wages ≥ $750)
    Contribution by Employer(% of wage) Contribution by Employee(% of wage) Total Contribution(% of wage)
    35 & below 17 20 37
    Above 35-45 17 20 37
    Above 45-50 17 20 37
    Above 50-55 16 19 35
    Above 55-60 12 13 25
    Above 60-65 8.5 7.5 16
    Above 65 7.5 5 12.5

Outsourcing Employment Through a GEO Employer of Record Service

Companies entering Singapore can make a decision whether to use their own resources or to use a Global Employment Organization to handle employment and payroll responsibilities. A GEO solution is particularly beneficial when a company is looking to setup an office quickly with a manageable cost. The complexity of employment regulations in Singapore makes the use of a GEO advisable to ensure full compliance with employment laws, including the drafting of local employment contracts for workers.

The company that is expanding into Singapore contracts with the GEO to employ and payroll their staff on their behalf. The GEO then assumes the legal responsibility for these employees, sponsoring them on work permits if necessary, complying with local employment law and running their monthly payroll. This is especially useful to fulfill all of the specific withholding requirements for pensions and benefits, as well as documenting termination, probation periods and leave requests.

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