Hiring staff in Singapore offers many advantages but also comes with strict obligations that employers must meet to remain compliant. With clear guidelines for employee rights, work passes, contributions, and statutory leave, Singapore provides a highly regulated framework for employers. This article explores these key employer obligations, from understanding essential employment laws to ensuring compliance with mandatory contributions.
Key Employment Laws for Employers in Singapore
To ensure fair and safe working conditions, Singapore has specific laws in place for employers and employees. At the center of these regulations is the Employment Act, which sets minimum standards for working conditions, protection, and entitlements.
Understanding the Employment Act
The Employment Act is Singapore’s primary labor law that defines the rights and responsibilities of employers and employees. The Act provides essential guidelines on aspects like working hours, overtime pay, rest days, and public holidays, ensuring fair treatment across the workforce. While most employees are covered under the Act, there are exceptions for specific roles, such as executives and managers earning above SGD 4,500 a month, domestic workers, and seafarers.
Employers must ensure compliance with these standards, including:
- Minimum wage requirements
- Working hours (up to 44 hours per week)
- Rest days and overtime pay
- Paid public holidays
Who is Covered Under the Employment Act?
The Act broadly covers local and foreign employees, particularly for those who are lower-wage or non-executive workers. Employees earning less than SGD 2,600 monthly in manual or administrative roles receive full coverage under the Act. For these employees, employers must follow the outlined requirements for hours, leave, and minimum wages. Higher-paid and executive-level employees are also protected under certain parts of the Act, though some provisions, such as working hours and overtime pay, may not apply.
Work Passes and Employment Eligibility
Foreign professionals are a significant part of Singapore’s workforce, making up a considerable portion of the labor pool across industries. However, every foreign worker must hold a valid work pass to be employed legally. Singapore offers several types of work passes, each catering to different job levels and skill requirements.
Types of Work Passes for Foreign Employees
- Employment Pass (EP): The Employment Pass is for foreign professionals, managers, and executives who earn at least SGD 4,500 per month. This pass is highly sought after and generally applies to skilled roles requiring degrees or specialized knowledge. The EP application process requires employers to provide proof of salary and qualifications to meet MOM criteria.
- S Pass: This pass is designed for mid-skilled workers who earn at least SGD 2,500 monthly. The S Pass has its own quotas and levy requirements, and the MOM applies a points-based system to evaluate eligibility based on factors like salary, qualifications, and work experience.
- Work Permit: For semi-skilled workers in industries like construction, manufacturing, and marine shipyard, Work Permits are essential. This pass has stringent requirements and eligibility criteria, including sector-specific quotas, health screenings, and insurance coverage. Additionally, employers must pay a Foreign Worker Levy (FWL) to hire these permit holders.
Each work pass application requires careful documentation, including employment contracts, qualifications, and records of salary to verify eligibility.
Foreign Worker Quotas and Levies
Singapore implements quotas and levies for foreign employees based on the sector and type of work pass. For instance, the S Pass and Work Permit come with foreign worker levies to manage the number of foreign workers across industries. Understanding and adhering to these levies and quotas is critical to remain compliant and avoid penalties.
Statutory Obligations for Employers
Singapore’s statutory obligations are comprehensive, ensuring that both employees and employers contribute to the workforce’s stability and well-being. Some of the primary statutory obligations include contributions to the Central Provident Fund (CPF), the Foreign Worker Levy (FWL), and adherence to itemized payslip requirements.
Central Provident Fund (CPF) Contributions
The CPF is a mandatory social security savings scheme that ensures Singaporeans and Permanent Residents have retirement, healthcare, and housing funds. CPF contributions are required from both employers and employees, with contribution rates varying based on the employee’s age and wage level.
- Contribution Rates: Employers typically contribute 17%, while employees contribute up to 20% of their monthly wages (for employees aged 55 and below).
- Payment Deadlines: CPF contributions are due by the 14th of the following month, and penalties may apply for late payments.
For foreigners, CPF contributions are not required. However, companies with foreign workers on S Pass or Work Permits must pay the Foreign Worker Levy.
Payslips and Employment Contracts
Singapore mandates that employers issue itemized payslips to employees and provide written employment contracts. The payslip requirements help ensure transparency in salary calculations and deductions, protecting both the employer and the employee. Each payslip must include key details such as basic salary, deductions, CPF contributions, overtime pay, and allowances.
- Contracts: Employment contracts should outline terms of employment, benefits, notice period, and any additional company policies to avoid disputes.
Statutory Leave Types and Public Holidays
Employers are required to provide statutory leave in Singapore, ensuring employees have access to sufficient rest and recuperation. These leave types are regulated under the Employment Act and apply to all employees covered by the Act.
Annual Leave
Employees in Singapore are entitled to paid annual leave after completing three months of service. The minimum annual leave entitlement starts at seven days and increases with length of service, adding one day per year up to a maximum of 14 days.
Medical Leave and Hospitalization Leave
Employees who have worked at least three months are eligible for paid medical leave, which requires certification from a doctor. Entitlement is based on the length of service and can range up to 14 days of outpatient sick leave and 60 days of hospitalization leave per year. Employers must also bear the cost of medical consultation fees for these approved sick leaves.
Maternity and Paternity Leave
Under the Employment Act, mothers are entitled to up to 16 weeks of maternity leave if the child is a Singapore citizen. Paternity leave is also provided, giving fathers two weeks of paid leave to spend time with their newborns. These family-friendly policies aim to support work-life balance and family bonding.
Public Holidays
Singapore mandates 11 public holidays annually. If an employee is required to work on a public holiday, employers must compensate them with an extra day’s pay or an alternative day off. This provision helps maintain fair work practices and provides essential breaks for employees.
How ATHR Can Help Employers in Singapore
Managing the compliance requirements of hiring staff in Singapore—from CPF contributions and statutory leave to work pass applications and payslips—can be complex. Outsourcing payroll services to a reliable provider, like ATHR, helps employers remain compliant while freeing up resources to focus on core business activities. By managing payroll and statutory obligations, ATHR supports businesses in meeting Singapore’s employment regulations effectively and efficiently.
Book a call with ATHR today to learn how our payroll solutions can simplify compliance and ensure your business meets all employment obligations.
