The Ultimate Guide to Hiring Employees in Singapore

Singapore’s strategic location, robust economy, and pro-business environment have attracted numerous multinational corporations and local enterprises to set up their operations, making it an attractive destination for employers and job seekers alike. Understanding the local hiring practices and legal requirements is crucial for businesses to navigate the competitive labor market and find the right talent to drive their growth and hire in Singapore. This guide aims to provide you with an overview of the hiring process in Singapore, the legal requirements, and some best practices to help you find the right candidates for your business.

Overview

Local Currency: Singapore Dollar (S$) 1 SGD = 0.72 USD

GDP: 3.1% growth rate (2018)

Time Zone: Locally, Singapore follows SGT (Singapore Time) & falls in the GMT +8:00 time zone. 

Spoken Language: English, Mandarin, Malay & Tamil

In Singapore, freelancing communities fall entirely outside the ambit of the Employment Act (EA) and cannot avail of any employment protections set out therein. For a contractual employee, any benefits enjoyed are visible in their relevant contract for the services.

Singapore Employment Laws and Regulations

Singapore has a well-defined and structured employment framework that ensures a fair and ethical work environment for employees. As an employer, it is essential to comply with legal requirements to avoid penalties, fines, or legal action.

Discover how to hire in Singapore with an Employer of Record here.

Singapore Employment Act

The Employment Act is the primary labor law in Singapore, which lays down the basic Singapore employment terms and conditions that apply to all employees covered under the Act. It sets out the minimum requirements that employers must adhere to, including:

• Hours of work
• Rest days
• Public holidays
• Annual leave
• Sick leave
• Maternity leave
• Termination and dismissal

The Act also provides for dispute resolution mechanisms, such as mediation and adjudication, to address any employment disputes that may arise.

Work Passes and Permits

Foreign employees who wish to work in Singapore require a work pass or permit. The type of pass or permit required depends on the employee's qualifications, work experience, and salary. The Ministry of Manpower (MOM) is the agency responsible for issuing work passes and permits.

Fair Consideration Framework

The Fair Consideration Framework (FCF) is a government initiative aimed at promoting fair employment practices in Singapore and reducing workplace discrimination. The FCF requires employers to advertise job vacancies on the National Job Board for at least 28 days before they can apply for a work pass for a foreign employee. This is to encourage employers to consider Singaporeans fairly for job opportunities.

Central Provident Fund (CPF) Contributions

Employers in Singapore are required to contribute to the Central Provident Fund (CPF) for their local employees. The CPF is a social security savings scheme that provides for retirement, healthcare, and home ownership needs. The contribution rates vary depending on the employee's age and monthly salary.

Hiring Foreign Employees

Singapore is a cosmopolitan city-state that attracts a diverse pool of talent from around the world. Hiring foreign employees can be an excellent way for employers to tap into this talent pool and bring in new skills and perspectives. However, hiring foreign employees comes with its unique set of challenges, including understanding work passes and eligibility criteria.

Types of work pass and eligibility criteria

Foreign employees require a work pass to work in Singapore. The type of work pass required depends on the employee's salary, qualifications, and job scope. The three main types of work passes are:

1. Employment Pass: The Employment Pass is for foreign professionals, managers, and executives who earn a minimum salary of $4,500 per month and have acceptable qualifications.
2. S Pass: The S Pass is for mid-level skilled workers who earn a minimum salary of $2,500 per month and have an acceptable level of education and work experience.
3. Work Permit: The Work Permit is for semi-skilled foreign workers in sectors such as construction, manufacturing, and marine industries.

Application process for work passes

The application process for work passes in Singapore involves several steps and requires employers to provide the necessary supporting documents. The following is an overview of the application process:

1. Preparing the necessary documents: Before applying for a work pass, employers must prepare the necessary documents. These may include the candidate's passport, educational certificates, employment contracts, and other supporting documents.
2. Submission of the application
3. Application review
4. Issuance of In-Principle Approval (IPA)
5. Collection of work pass
6. Activation of work pass
7. Renewal of work pass

Dependent passes for family members

Foreign employees who hold a work pass can apply for dependent passes for their spouses and children. Dependent pass holders can live and study in Singapore but cannot work without a valid work pass.

Local employee quotas and Fair Consideration Framework

Employers who hire foreign employees must comply with the Fair Consideration Framework (FCF). The FCF requires employers to advertise job vacancies on the National Jobs Bank for at least 14 days before applying for an Employment Pass. The MOM also sets a quota for the number of foreign employees that a company can hire based on its industry and workforce profile.

Hiring foreign employees in Singapore requires an understanding of the various work passes and eligibility criteria. Employers must also comply with the Fair Consideration Framework and local employee quotas. Employers who hire foreign employees can benefit from the unique skills and perspectives that they bring to the workforce, but it is essential to ensure that the hiring process is compliant with local regulations.

Onboarding and Integration

Effective onboarding and integration are crucial to the success of any new hire in Singapore. Onboarding refers to the process of integrating new employees into the organization, while integration refers to the process of assimilating the new employee into the team and culture. In Singapore, onboarding and integration are particularly important due to the country's diverse workforce.

Discover more on effective onboarding strategies for distributed teams here.

Probationary period and performance reviews

Employers in Singapore typically have a probationary period of between three and six months. During this period, the employer can assess the employee's suitability for the job. Employers should provide regular feedback and conduct performance reviews to ensure that the employee is meeting expectations.

Employee Compensation and Benefits

Employee compensation and benefits are an essential part of any employment package. In Singapore, there are various compensation and benefit requirements that employers must comply with, including determining competitive salaries, CPF contributions, and statutory requirements, insurance and healthcare benefits, and employee stock options and bonus schemes.

Determining competitive salaries

Employers in Singapore must offer competitive salaries to attract and retain the best talent. Salaries should be based on factors such as the employee's experience, qualifications, and job scope. Employers should also take into account the industry and job market to ensure that their salaries are competitive.

CPF contributions and other statutory requirements

Employers in Singapore are required to make Central Provident Fund (CPF) contributions for their employees. The CPF is a social security savings scheme that provides retirement, healthcare, and housing benefits. The employer must contribute a minimum of 17% of the employee's monthly salary to the employee's CPF account.

Employers must also comply with other statutory requirements, such as providing employee insurance and complying with workplace safety and health regulations.

Annual leave, sick leave, and other paid time off

In Singapore, employees are entitled to a certain amount of paid time off for various reasons such as annual leave, sick leave, maternity leave, and paternity leave. Employers must comply with the statutory requirements outlined by the Ministry of Manpower (MOM) and provide their employees with the appropriate amount of paid time off.

Annual Leave

In Singapore, the minimum annual leave entitlement is seven days for the first year of employment, and this increases to 14 days after eight years of service. Employers can choose to offer additional leave benefits to attract and retain employees. The duration of the annual leave entitlement varies according to the length of service and the seniority of the employee.

Sick Leave

In Singapore, employees are entitled to 14 days of paid sick leave per year. Employees can use their sick leave entitlement for themselves or to take care of their immediate family members. Employers must ensure that they comply with the MOM's guidelines on sick leave entitlement.

Maternity Leave

Female employees in Singapore are entitled to 16 weeks of maternity leave, and this can be taken anytime within the 12 months after the child's birth. The first eight weeks of maternity leave are paid for by the employer, while the remaining eight weeks are paid for by the government.

Discover the various maternity leave around the world in 2023 here.

Paternity Leave

Male employees in Singapore are entitled to two weeks of paternity leave. Paternity leave can be taken any time within the 16 weeks after the child's birth. The first week of paternity leave is paid for by the employer, while the second week is paid for by the government.

Insurance and healthcare benefits

Employers can offer insurance and healthcare benefits to their employees, such as medical insurance and dental insurance. Employers can also provide additional benefits such as wellness programs, health screenings, and health and fitness facilities to promote employee well-being.

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Payroll and Taxes in Singapore

Payroll and taxes are essential aspects of managing a business in Singapore. This section provides an overview of payroll in Singapore, payroll frequency, income tax, and income tax returns in the city-state, highlighting the key points that businesses and employees need to be aware of.

Frequency of Payroll in Singapore

In Singapore, there is no strict regulation on the frequency of payroll. However, it is common practice for businesses to process payroll on a monthly basis. Employers are required to pay their employees within seven days of the end of the salary period, according to the Employment Act. In case of termination or resignation, employers must pay all outstanding wages within the following time frames:

• For involuntary termination: within three working days.
• For voluntary resignation with notice: on the last day of employment.
• For voluntary resignation without notice: within seven days of the last day of employment.

Employers must provide their employees with itemized payslips, which can be in electronic or printed format, detailing gross salary, deductions, and net salary.

Income Tax

Singapore adopts a progressive income tax system for individuals, with rates ranging from 0% to 22% as of 2021. Residents are taxed on income earned in Singapore and overseas income remitted to the country, while non-residents are taxed only on income earned within Singapore. Foreign income received in Singapore is generally exempt from tax, subject to certain conditions.

The income tax rates for resident individuals are as follows (as of 2021):

Non-residents are taxed at a flat rate of 15% or the resident tax rates, whichever yields a higher tax amount. Employment income for non-residents is taxed at a flat rate of 15% or the progressive resident rates, depending on the period of employment in Singapore.

Income Tax Returns

In Singapore, individuals are required to file their income tax returns annually. The tax year runs from January 1 to December 31, and tax returns must be submitted by April 15 of the following year. Late submissions may result in penalties.

Employers are responsible for submitting Form IR8A, which details the employee's earnings, to the Inland Revenue Authority of Singapore (IRAS) by March 1 of each year. This information is used by IRAS to compute the employee's tax liability. Employers may also be required to withhold tax from certain types of payments made to non-resident individuals, such as director's fees and professional fees.

Termination and Severance

Termination and severance are an inevitable part of the employment relationship. Employers in Singapore must comply with the Ministry of Manpower's (MOM) guidelines on termination and severance. The following are key factors employers should keep in mind when terminating an employee's employment.

Understanding the termination process

Termination can occur due to various reasons, such as poor performance, misconduct, redundancy, or mutual agreement. Employers must follow due process and provide employees with appropriate notice and compensation, where applicable.

Notice periods and severance payments

The notice period is usually stipulated in the employment contract or the Employment Act. The length of the notice period depends on the length of service of the employee. Employers must also provide employees with severance payments in certain situations, such as when an employee is terminated due to redundancy. The amount of severance pay depends on the length of service of the employee.

Handling layoffs and retrenchments

Layoffs and retrenchments can occur due to various reasons, such as economic downturns or restructuring. Employers must ensure that they comply with the Fair Consideration Framework and other regulations when carrying out layoffs and retrenchments.

Hire in Singapore with Skuad

Hiring in Singapore can be a challenging task, particularly for employers who are unfamiliar with the legal requirements and regulations. However, with a global employment and payroll platform like Skuad, employers can find the right candidates and create a productive and ethical work environment for their employees. 

Skuad is a global employment and payroll platform that enables organizations to hire full-time employees and contractors in over 160 countries without setting up subsidiaries or legal entities. Skuad’s platform also helps organizations onboard talent, manage payroll, and ensure compliance with country-specific employment laws and tax regulations. 

To know more about Skuad, book a demo today.

FAQs

Can a foreign company hire employee in Singapore?

Yes, a foreign company can hire employees in Singapore, but they must comply with the relevant laws and regulations governing the employment of foreign workers in Singapore. They may also need to obtain appropriate work passes for their employees.

How much does it cost to hire foreign workers in Singapore?

The cost of hiring foreign workers in Singapore can vary depending on various factors such as the type of work pass required, the level of skill and experience of the worker, and the industry in which the worker will be employed. The cost can range from a few hundred to several thousand Singapore dollars per year, and employers are also required to pay various levies and fees.

Is it easy to work in Singapore as a foreigner?

Working in Singapore as a foreigner can be relatively easy if the individual has the necessary qualifications and skills that are in demand in Singapore. However, the process of obtaining a work visa can be complex, and employers must meet specific criteria to be able to hire foreign workers. Additionally, there are regulations governing the employment of foreign workers in Singapore, and non-compliance can result in penalties and consequences.