Comprehensive Guide to Employment Laws in Singapore

Employment-related rules are one of the many legal criteria that businesses in Singapore must meet. When it comes to hiring, supervising, and terminating staff, you have responsibilities as a business owner and employer to abide by Singapore’s Labor laws.  Singapore’s principal employment law is the Employment Act. With a few exceptions, it establishes the fundamental terms and conditions of employment for all categories of employees. The Employment of Foreign Manpower Act, which outlines an employer’s obligations and responsibilities for employing foreigners, also applies to foreign employees with a work permit.

Employment law in Singapore 

The term “employees” in the Employment Act does not necessarily refer to all categories of employees. It does, however, apply to both local and foreign workers who work full-time, part-time, or on a temporary basis. Employees are covered by the legislation regardless of how they are paid: monthly, daily, hourly, or on a piece rate basis. 

A few of these labor types are not protected under the employment act: 

• Civil servants employed in Accounting and Corporate Regulatory Authority (ACRA), Monetary Authority of Singapore (MAS), and other statutory boards
• Domestic workers
• Seafarers
• Manager and executives who carry out supervisory or decision-making functions
• Professionals with tertiary education and specialized skills such as lawyers, accountants, doctors, and others
• Independent contractors who carry out services on his/her terms

The Employment (Part-Time Employees) Regulations apply to part-time employees who work less than 35 hours per week.

To avoid penalties such as a $5,000 fine, six months in prison, or both, it is best to follow best practices as a business owner. The penalties rise to $10,000, a year in prison, or both for successive violations.

Employment Contract: 

An employment contract (sometimes called an employment agreement, appointment letter, or appointment offer) is a legally binding document. It lays forth the rules and circumstances of the employer-employee relationship and contains key clauses on:

• Employee’s scope of work
• Duration of employment
• Date of employment commencement
• Probation clause if there is any
• Remuneration package
• Hours of work and overtime pay
• Employee benefits
• Code of conduct
• Termination

It’s vital to remember that the employment contract’s terms and conditions should not be less favourable than the Employment Act’s legal stipulations.

Labor Code Provisions in Singapore

Employees are entitled to several benefits under the Employment Act. Annual paid leave, sick leave, maternity benefits, paid public holidays, and other benefits are included. Employers must ensure that they meet all of the Act’s standards and that the contract conditions reflect this. 

Minimum Age: 

To be eligible for employment, a person must be at least 13 years old. However, the age restriction varies based on the sort of work performed by the employee. 

Minimum Wage Payment: 

Singapore law does not mandate a minimum wage for all employees; this is a matter for negotiation between the employer and the employee. The salary must, however, be paid at least once a month, within seven days after the end of the wage period. If overtime compensation is due, it must be paid within 14 days of the salary period.

Working Hours and overtime law in Singapore: 

The following are the legal requirements for working hours and overtime:

• Employees are only allowed to work a total of 44 hours per week or eight hours each day.
• Employees are not allowed to work for more than six hours without taking a break.
• Except in particular circumstances such as an actual or threatened accident, national defence or security, or other unanticipated events that resulted in stopped work, employees cannot work more than 12 hours per day – including overtime.
• Employees on the shift are not permitted to work more than 12 hours a day under any circumstances.
• Every week, employees are entitled to a non-working, unpaid rest day.
• Two rest days should not be separated by more than 12 days.

Singapore Employment Act’s aforementioned restrictions do not apply to employees earning more than SGD 2,600 per month, according to usual practise, and should be freely established between the employee and the employer. Singapore’s usual working hours are 9 a.m. to 6-7 p.m. On weekdays, most workers work nine to ten hours, and on Saturdays, they work half-day.

Paid Annual Leave: 

If a worker has worked for a company for at least three months, he or she is entitled to paid yearly leave under the Employment Act. The length of paid yearly leave is determined by the employee’s length of service with the company.

Singapore Sick Leave Rules: 

The statutory requirement and common practice for sick leave and hospitalization leave in Singapore are as follows:

Upon return to work, the employee is also required to present a medical certificate from an appointed company doctor or any doctor from an approved hospital.

Public Holidays: 

According to the Act, Singapore employees are entitled to 14 paid public holidays for 2023. If the employee is compelled to work on a public holiday, the employer shall compensate him or her with an extra day’s pay or a day off in lieu. If a public holiday falls on a rest day, the following working day is treated as a paid holiday.

Health Insurance:

Private health insurance is not required by the MOM Employment Act. Citizens and Permanent Residents (PRs) of Singapore are automatically covered by MediShield, a low-cost basic insurance plan. Employees’ MediSave accounts are automatically funded with a percentage of their Central Provident Fund (CPF) contributions, allowing them to pay for medical treatments for themselves and their dependents.

Providing supplemental private medical insurance is a widespread practice among Singapore employers, and it is at the employer’s option. This is widespread in large corporations, but less so in smaller businesses. In addition, larger organisations that hire foreign workers with an Employment Pass frequently provide private health insurance benefits.

Singapore’s Parental Leave: 

Female employees who have been employed for more than three months are subject to regulatory obligations and customary practice. They are entitled to paid maternity leave as well as the following benefits:

• A maximum of 16 weeks of leave is available to eligible female employees.
• Employers are not allowed to fire female employees who are on maternity leave.
• Employers are expected to pay maternity leave in full if they give a notice of dismissal without cause within three months of the leave.
• Female employees who have worked for more than three months and have a kid under the age of seven are eligible to six days of paid childcare leave each year.

Singapore Law on Probation Period: 

There are no clauses in the Singapore Employment Act on probation periods, but the common practice is to ask employees to serve a probation period of three to six months.

Singapore’s Employment Law on Termination 

By terminating the contract of service, either the employee or the employer can cease the employment relationship. Termination may occur for the following reasons:

• The employee resigns; the employer fires the employee; or the employee is fired.
• When a project or contract period is over, the contract conditions have expired.
• Both parties must adhere to the termination terms and circumstances outlined in the service contract. If this process isn’t specified, the EA’s provisions should be followed.

Notice Period: 

There is no legal necessity for the number of days of notice, thus it will be determined by what was agreed upon in the contract, which should be the same for both the employer and the employee. A contract can be terminated by either side issuing a written notice or paying salary in lieu of a notice. However, if there is a deliberate breach of contract, both parties can terminate the employment contract without notice. Employees can also use accrued annual leave to make up for the notice period.

In Singapore, it is usual practice to request 2 weeks’ notice during probation and 1 month’s notice when legally hired. 

Layoffs, Retrenchment or Downsizing

The following are the legal criteria for employees earning less than SGD 2,600 per month:

• On the last day of work, the employer is expected to pay the employee’s wages and benefits.
• The length of the notice period will be determined by the employment contract.
• Retrenchment benefits are available to employees who have worked for the organisation for at least three years. However, the Employment Act makes no provision for the form or amount of such benefits, which must be agreed upon by both the employer and the employee.
• Retrenchment benefits are not available to employees who have worked for less than three years.
• Retrenchment benefits are frequently calculated based on the company’s size and financial situation in Singapore.

Central Provident Fund Contributions (CPF) 

The following are the regulatory requirements and typical practise for the required retirement savings plan:

• CPF is mandatory for Singapore citizens and permanent residents, and both the employer and the employee must contribute every month.
• For international employees with an Employment Pass or Work Permit, CPF is not required.
• Employers can contribute up to 17 percent of their salary to the CPF, while employees can contribute up to 20 percent. Age, PR status, and other factors can all influence the rate.
• On the 14th of the next month, employers must submit the monthly payment for both employers and employees.

Non Statutory Benefits or Perks:

Employees in Singapore can also receive additional non-statutory perks at the discretion of their employers. 

The following are a few of the most common:

• Private Medical Insurance 
• Per Diem for Travel-related jobs 
• Relocation Package – Expat packages that include shipping fees, airfare, housing, utility bills, and childcare and education fees for the children. These packages are divided into three categories: full expat, semi-expat, and full local. Employees are also temporarily housed in hotels or service apartments paid for by the employer if housing is not readily available.
• Employee Stock Purchase Plans – In some organisations, this is a benefit that is normally only available to top staff.
• Corporate memberships
• Continuing education
• Leisure activity coupons
• Gym memberships
• Telecom plans

Penalties: 

For each infraction, a company’s failure to comply with the Act’s provisions may result in a fine of S$5,000 or imprisonment for 6 months for the managers found guilty, or both. A third infraction can result in a fine of up to $10,000 or a year in prison, or both.

Conclusion

Hiring a HR manager is the strategic approach who will be in charge to ensure all the policies are in place. To protect both the company and the employee, one of the many best practises when hiring is to establish standard contracts, offer letters, or employment contracts. Contracts should also be reviewed on a regular basis to verify that the terms and conditions remain compliant.

Even better is to outsource the hiring and compliance chores to a reputable partner and relieve yourself of the stress. You can relieve your employees of the responsibility of creating labour documents and conducting frequent compliance audits.  You can outsource all aspects of employment to a corporate services provider to ensure full compliance and avoid penalties. 

While you partner with Multiplier, you can concentrate on your business while our HR professionals ensure that best practises are followed when hiring personnel in Singapore.