Singapore Employment Act

• As an employer, you only need to conform to the Singapore Employment Act stipulations while hiring local employees, provided your employees are covered by the Act. This naturally brings us to the question of who is covered by the Employment Act?
  • The Employment Act is applicable to all employees, except those holding managerial or executive positions; domestic workers; seamen; and government staff.
  • The Employment Act has stipulated certain basic terms and conditions for employees whose monthly salary is less than s$2,000 per month.
• Some of the factors you need to take into account while hiring local employees are:
  • Your employment contract terms must conform to the minimum requirements stipulated under the Employment Act such as provisions for paid maternity leave, paid public holidays, etc.
  • You must prepare the tax forms for all your employees and report their earnings to the tax department.
  • You are required to make mandatory Central Provident Fund contributions for all local employees who earn more than S$50 a month.

Hiring foreign employees in Singapore is a relatively easy and hassle-free process. You just need to bear in mind a few important factors:

• The most important factor to bear mind while hiring foreign employees is that (s)he requires a valid Singapore work permit before (s)he can commence working in your company.
• There are separate work passes issued for skilled professionals, semi-skilled foreign talent and unskilled workers. Additionally, you may have to pay a foreign worker levy if you hire semi-skilled for unskilled foreign workers.
• Furthermore, you will bear the onus of tax clearance for your foreign employees who are ceasing their employment with you.
• Other rules that apply to all employees such as reporting their income to the tax department and drawing up an employment contract in accordance with the Singapore Employment Act apply to foreign employees as well.

Employees in Singapore are usually entitled to the following benefits:

• Bonus: In addition to their salary, Singapore employees usually receive an annual bonus that can range from one month's salary to several month's salary, depending upon the particular organization's HR policy.
• Public Holidays: All employees are entitled to the 11 public holidays in Singapore. Employees who are required to work on public holidays are usually allowed to take a day-off on any other working day or are granted two paid holidays in lieu of having to work on the public holiday. This purely depends on the company's HR policy.
• Annual leave: Most employees enjoy 12-14 days of annual leave.
• Sick leave: Employees who are attached to a company for at least 3 months are usually entitled to 2 weeks of sick leave in a year and 60 days (including the 2 weeks) of hospitalization leave.
• Maternity leave: If employed for more than 6 months with a company, female employees can enjoy 16 weeks of maternity leave. Normally, employers do not have the right to fire female employees  who are on maternity leave.
• Other benefits: Depending upon the specific company policy, some employees enjoy medical insurance coverage, per diem for business travel, equity in the company, sponsored training or educational courses, staff referral schemes, corporate gym memberships, etc.

Note: The Employment Act spells out certain statutory benefits for employees earning <S$2,000 per month. For all other employees the benefits are as per the above mentioned common practice.

• The following are the most common terms that are covered by most employment contracts in Singapore:
  • The position or job title being offered,
  • Role, responsibilities and duties of the employee including code of conduct,
  • Date of commencement of employment,
  • Basic monthly salary,
  • Bonus, allowances, perquisites and other remuneration details,
  • Working hours,
  • Annual leave details,
  • Sick leave details,
  • Maternity and child-care leave details,
  • Conditions regrading employment termination and notice period, including retrenchment and retirement,
  • Probation clause,
  • Confidentiality terms, and
  • Law governing the employment contract.
• The Employment Act specifies the minimum terms of employment for employees earning <S$2,000 per month. If the employees you propose to hire are covered by the Employment Act, then the terms of your employment contract must abide with the minimum stipulations.
• For all other employees, you are free to negotiate the terms of employment prior to finalizing the employment contract.

• The Employment Act lays down the maximum working hours and days for employees earning <S$2,000 a month, as follows:
  • Maximum hours of work per week: 44
  • Maximum number of working days per week: 6
  • Maximum hours allowed for overtime in a month: 72
• For all other employees, the hours of work and working days are according to the common practice, as follows:
  • Most companies follow a 5 day work week. Some follow a work week of 5.5 days, while very few deploy a 6-day work week.
  • The normal working hours are from 9 am to 6 pm. Most employees leave by 7 pm latest, unless there is a specific deadline or project that demands overtime. A lunch break of  30 minutes to 1 hour anytime between 12 noon to 2 pm is the norm.
  • Note that some industries or professions may demand slightly altered working hours. Teachers for instance, work from 7:30 am until 3 pm. Employees of retail stores work from 10 or 11 am until 9 or 10 pm.

You will be happy to note that the Singapore government encourages a work-life balance and most companies in Singapore try to promote this culture.

According to Singapore employment law, it is not mandatory for a Singapore corporation to provide health insurance as part of the benefits package to its employees. It purely depends upon the respective firm's HR policy. Most large sized MNCs tie up with private insurance companies to offer health insurance benefits to employees, while SMEs usually don't provide insurance benefits.

• Yes, if you own a Singapore Corporation you must make certain statutory monthly contributions to a retirement savings scheme known as the Central Provident Fund scheme for certain employees.
• Under the CPF scheme both employers and employees are required to make monthly contributions to the Central Provident Fund within 14 days after the end of the month.
• CPF contributions are mandatory if an employee earns more than S$50 a month.
• CPF contributions are required for employees who are Singapore citizens or Singapore Permanent Residents, irrespective of whether they are full-time employees or part-time, contractual staff.
• CPF contributions are not required for foreign professional staff who are holding a valid work pass.
• CPF contributions are not mandatory for Singapore citizens or Singapore Permanent Residents who work overseas. If you wish to continue making CPF contributions for your existing employees who are posted overseas, these are deemed as voluntary contributions.
• CPF contributions are computed based on the employee’s total wages for a calendar month including overtime pay, allowances, cash awards, commissions and bonuses.
• The rate of CPF contribution varies depending upon three factors:
  • Whether the employee is a Singapore Citizen or Singapore Permanent Resident;
  • The age group of the employee; and
  • Wage band that is applicable to th employee.
• The maximum rate of contributions for employees is 20%, while for employers it is 14.5%. The Government has recently increased the employer's CPF contribution rate by 1%. The first 0.5% increase will be implemented on 1 September 2010. The remaining 0.5% increase will be effected 6 months later on 1 March 2011.
• Employers usually pay both their contribution and the employee's contribution and later deduct the employee's share from his/her monthly salary.

Singapore's labor laws are generally more favorable to the employee. Here are some examples:

• The Employment Act stipulates certain terms and conditions of employment for employees earning <S$2,000 a month.
• Although the legal retirement age in Singapore is 62 years, the labor laws do not prescribe compulsory retirement. Should an employee wish to continue working beyond the age of 62 years (s)he is free to do so.
• An employer cannot dismiss an employee who is on maternity leave. Should such a situation arise, the employer is liable to compensate the employee with maternity benefits.
• Female employees, subject to certain criteria, are entitled to 16 weeks of maternity leave. Out of the 16 weeks, 8 weeks are employer payable.
• Childcare leave and infant care is also available for employees who satisfy certain criteria.

• The Singapore Employment Act lays down certain guidelines on the termination of an employment contract for employees earning a monthly salary of <S$2,000.
• For all other employees, the termination guidelines will be specified in the employment contract depending upon what was mutually agreed upon by the employer and employee at the time of signing the contract.
• Most companies in Singapore adhere to the Employment Act stipulations even if their employees are not covered by the Employment Act.

Here is a brief outline of the employment termination guidelines in Singapore:

• Employers can initiate a termination of the employee's contract under the following circumstances:
  • The employee does not perform well during the probationary period,
  • The employee has breached the employment contract,
  • The employee is liable for misconduct,
  • The employee is transferred to another company (whether it is an associated company or otherwise),
  • The employee has attained retirement age, or
  • The employee is retrenched.
• Employment can be terminated by providing notice period or in some cases, by paying salary-in-lieu of notice. If the employee is being dismissed on the grounds of misconduct or breach of contract, the employer need not give notice or salary-in-lieu of notice.
• If an employee is being retrenched, adequate notice period (as per the contractual terms) must be provided. An employee who has worked for more than 3 years in the Singapore corporation is entitled to retrenchment benefits, as per what is mentioned in the contract.

Some of the common recruitment channels for hiring employees in Singapore include:

• Recruitment firms: There are several recruitment firms that offer staffing solutions to Singapore corporations. Some of these firms specialize in certain sectors, while most of them cover almost all industries. Apart from local employment agencies, several international head hunters are also based in Singapore. Each of the firm's charge a varying fee depending upon their market share.
• Classified advertisements: A popular recruitment channel in Singapore is newspaper advertisements in the 'The Straits Times', one of the widely circulated and popular English language newspaper's in Singapore. The Saturday edition of 'The Straits Times' carries a separate supplement  called 'Recruit' and is highly popular with employers and job-seekers alike. Be sure to check their advertisement tariff before deciding to place an ad.
• Online job portals: There are numerous easy-to-use  job portals where you can place your job postings to reach a large number of job-seekers. Internet job websites are highly popular for junior level positions, freelance jobs, and temporary placements. The job portals have an extensive affiliate network and most of them allow you to register for free. Of course there are premium paid packages depending on the extent of your requirements.
• Job fairs: Job fairs have gained popularity in recent times and are an effective way to conduct on-the-spot interviews with several candidates. The fairs are held at regular intervals and are usually a 2-4 day affair. You can set up stalls at the venue for an approximate fee of S$6,000-S$7,000. The fair is popular for junior level positions and skill based jobs for the services sector. Most of the fairs attract over 300,000 visitors.
• Campus placements: An effective way to reach out to the cream of University graduates is to make use of on-campus and off-campus recruitment services in Singapore's Universities and polytechnics be it industry talks, organizing campus job fairs, advertising positions on campus job portals, etc.

Some of the Top Universities in Singapore include the following:

• National University of Singapore (NUS).
• Nanyang Technological University (NTU).
• Singapore Management University (SMU).
• Singapore Institute of Management (SIM).
• INSEAD (Asia Campus).
• University of Chicago Graduate School of Business (Asia Campus).

The popular polytechnics in Singapore include:

• Singapore Polytechnic.
• Ngee Ann Polytechnic.
• Republic Polytechnic.
• Nanyang Polytechnic.
• Temasek Polytechnic.