Guide to Hiring Employees in Singapore

Business-Office-Space-Operations

Guide To The Hiring Process For Singapore Businesses

Hiring your first employee is an important milestone in the life of any company. It’s a process that requires serious and deep thought and some careful decision making, especially as the hiring process involves both employer and applicant complying with certain legal protocols. Most employees will have a clear idea of the rights and protection afforded to them by the Singapore Employment Act and other relevant pieces of legislation, making it important for employers to understand the do’s and don’ts involved in hiring a new employee.

Before you even post a job ad, it’s important that you have answers to the following questions:

  • What are the relevant labour laws in this situation and what binding effect do they impose on me and/or my employees?
  • Is there a maximum number of foreign employees that my business can employ at any one time? Are there any formalities attached to hiring foreign or local employees?
  • Is there a formal distinction to be made during hiring between part time, full time and contract staff?
  • What is the real cost of hiring an employee? Are there any levies, provident fund contributions or other additional costs attached?
  • In the absence of a statutory requirement or limit imposed by the Employment Act, are there common practices in Singapore that I should be aware of?
  • Are there any recruitment guidelines or rules that I should be aware of?

This guide has been written to demystify the aforementioned points, helping you to understand key pieces of labour legislation, as well as providing hiring guidelines for foreign and local employees and information on common Singaporean recruitment practices. This guide is intended for use by newly established companies in Singapore looking to hire their first staff-members. Please note that this guide is not intended to replace professional advice and is provided as general information only. Please speak to Ottavia for personalised, professional assistance with the hiring process.

Overview of the Employment Act

The Singapore Employment Act is a key piece of labour legislation outlining the basic terms and conditions of employment for workers in Singapore.

What is the Employment Act?

All employers will be required to issue itemised pay slips and key employment terms (KETs) to employees covered under the Employment Acy from 1 April 2016.

 

Requirements

  • Itemised pay slips
  • Key employment terms (KETs)
  • Keeping employment records

 

There is a new framework to treat less severe breaches of the Employment Act from 1 April 2016.

 

The breaches include:

  • Failure to issue itemised pay slips.
  • Issuing inaccurate or incomplete pay slips.
  • Issuing inaccurate or incomplete KETs.
  • Failure to issue KETs in writing.
  • Failure to maintain detailed employment records.
  • Provision of inaccurate information to the Commissioner for Labour or inspecting officers without the intent to defraud and mislead.

 

To whom does the Employment Act apply?

All employees of Singapore-based companies are covered by the Employment Act, with a few exceptions:

  • Domestic workers
  • Seamen
  • The majority of the government staff
  • People in executive or managerial positions, defined as a position where an individual has influence or direct authority over the hiring, termination, promotion, transfer or reward or discipline of other employees in the company, or as a position whose main duties involve the running of and management of the business. This category also extends to certain professionals (defined as individuals in possession of a tertiary education as well as some specialised skills or knowledge) who carry out the same or similar responsibilities as executives or managers, such as accountants, lawyers, dentists and doctors.

The act separates all eligible employees into two categories:

  • Employees earning a salary less than SGD 2,000 per month, and
  • Employees earning a salary exceeding SGD 2,000 per month

Employees earning a salary less than SGD 2,000 are afforded additional protections under Part IV of the Employment Act. These specifically refer to “Rest Day, Hours of Work and Overtime, Public Holidays, Annual Leave, Sick Leave, Retrenchment Benefits, Retirement Benefits, Annual Wage Supplement and other variable payment”.

Key features of the Employment Act

FeaturesManagers / Executives positionsEmployees earning > 2,000/monthEmployees earning < 2,000/month
Max. Hours of Work per WeekAs per contract

Common practice: 40-50 hours

As per contract

Common practice: 40-50 hours

44 hours
Max. Days of Work per WeekAs per contract

Common practice: 5 days

As per contract

Common practice: 5 days

6 days
OvertimeAs per contract

Common practice: Not applicable

As per contractMaximum 72 hours per month

Paid at 1.5 times of the basic hourly rate

Central Provident Fund Contribution for Singapore Citizens and PRsRequiredRequiredRequired
Annual BonusAs per contract

Common practice: equivalent to 1-4 months of salary

As per contract

Common practice: equivalent to 1-4 months of salary

As per contract
Paid Annual LeaveAs per contract

Common practice: 15 days

As per contract

Common practice: 15 days

1st year – 7 days

2nd year – 8 days

3rd year – 9 days

(annual increase up to a max. 14 days)

Paid Sick LeaveAs per contract

Common practice: 14 days per annum

As per contract

Common practice: 14 days per annum

Outpatient: 5-14 days (depending upon the period of employment served)

Hospitalisation: 15-60 days (depending upon the period of employment served)

Paid Maternity Leave (if eligible)16 weeks

First 8 weeks employer payable for first 2 confinements

16 weeks

First 8 weeks employer payable for first 2 confinements

16 weeks

First 8 weeks employer payable for first 2 confinements

Paid Annual Childcare Leave (until child turns 7 years old) (if eligible)6 days

First 3 days employer payable

6 days

First 3 days employer payable

6 days

First 3 days employer payable

Unpaid Infantcare Leave (until infant turns 2 years old) (if eligible)6 days6 days6 days
Paid Public Holidays11 days11 days11 days
Probation PeriodAs per contract

Common practice: 6 months

As per contract

Common practice: 6 months

As per contract

Common practice: 3-6 months

Termination Notice PeriodAs per contract

Common practice: 1-3 months

As per contract

Common practice: 1-3 months

As per contract

Common practice: 1 month

RetrenchmentAs per contractAs per contractEligible to:

– receive salary on last working day

– receive retrenchments benefits

– serve notice period

Medical InsuranceAs per contractAs per contractAs per contract

 

For more information on the Employment Act, please refer to our introductory guide to the Employment Act and Employee Benefits.

Singaporean employers’ duties and obligations

 

Key Employment Terms (KET) – Formalising the employment contract

All employers must issue key employment terms (KETs) in writing to employees covered to all employees under the Employment Act from 1 April 2016. Employees need to be employed for 14 days or more. This refers to the length of contract, not the number of days of work.

The following needs to be included for those entering into a contract of service on or after 1 April 2016, unless it is not applicable.

 

1 Full name of employer

2 Full name of employee

3 Job title, main duties and responsibilities

4 Start date of employment

5 Duration of employment (if employee is on fixed-term contract).

6 Working arrangements, such as:

  • Number of working days per week (e.g. six).
  • Daily working hours (e.g. 8.30am – 6pm).
  • Rest day (e.g. Saturday).

7 Salary period

8  Basic salary

  • For hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay (e.g. $X per hour, day or piece).

9 Fixed allowances

10 Fixed deductions

11 Overtime payment period (if different from item 7 salary period)

12 Overtime rate of pay

13 Other salary-related components, such as:

  • Bonuses
  • Incentives

14 Type of leave, such as:

  • Annual leave
  • Outpatient sick leave
  • Hospitalisation leave
  • Maternity leave
  • Childcare leave

 

15 Other medical benefits, such as:

  • Insurance
  • Medical benefits
  • Dental benefits

 

16 Probation period

17 Notice period

 

Itemised payslips

From 1 April 2016, employers must issue itemised pay slips to all employees covered by the Employment Act.

 

This must be given together with payment to employee. In the case when the company is unable to give this together, the pay slips need t be given within 3 workings days of payment.  In the case of termination or dismissal, pay slip must be given together with outstanding salary.Soft copy or hard copy, including handwritten, is applicable.

 

The following items need to be included in the pay slips below. For example, if overtime pay does not apply, your pay slip need not include No. 9 to 11 below.

 

1 Full name of employer

2 Full name of employee

3 Date of payment (or dates, if the pay slips consolidates multiple payments)

4 Basic salary

For hourly, daily or piece-rated workers, indicate all of the following:

  • Basic rate of pay, e.g. $X per hour.
  • Total number of hours or days worked or pieces produced.

5 Start and end date of salary period

6 Allowances paid for salary period, such as:

  • All fixed allowances, e.g. transport.
  • All ad-hoc allowances, e.g. one-off uniform allowance.

7 Any other additional payment for each salary period, such as:

  • Bonuses
  • Rest day pay
  • Public holiday pay

8 Deductions made for each salary period, such as:

  • All fixed deductions (e.g. employee’s CPF contribution).
  • All ad-hoc deductions (e.g. deductions for no-pay leave, absence from work).

9 Overtime hours worked

10 Overtime pay

11 Start and end date of overtime payment period (if different from item 5 start and end date of salary period).

12 Net salary paid in total.

Maintaining detailed employment records of employees

Employers must maintain records for all employees covered by the EA (Employment Act). Record should be kept latest for two years and for ex-employees, records should be kept for last 2 years, one year after the employee leaves employment.

 

Two types of records should be kept.

  • Employee records
  • Salary records

 

Employee records include:

1 Address

2 NRIC number

For non-citizens, work pass number and expiry date.

3 Date of birth

4 Gender

5 Date of starting employment

6 Date of leaving employment

7 Working hours, including duration of meals and tea breaks

8 Dates and other details of public holidays and leave taken

 

Salary records include:

1 Full name of employer

2 Full name of employee

3 Date of payment (or dates, if the pay slips consolidates multiple payments)

4 Basic salary

For hourly, daily or piece-rated workers, indicate all of the following:

  • Basic rate of pay, e.g. $X per hour.
  • Total number of hours or days worked or pieces produced.

5 Start and end date of salary period.

6 Allowances paid for salary period, such as:

  • All fixed allowances, e.g. transport.
  • All ad-hoc allowances, e.g. one-off uniform allowance.

7 Any other additional payment for each salary period, such as:

  • Bonuses
  • Rest day pay
  • Public holiday pay

8 Deductions made for each salary period, such as:

  • All fixed deductions, e.g. employee’s CPF contribution.
  • All ad-hoc deductions, e.g. deductions for no-pay leave, absence from work.

9 Overtime hours worked.

10 Overtime pay.

11 Start and end date of overtime payment period (if different from item 5 start and end date of salary period).

12 Net salary paid in total.

 

 

 

 

 

 

Reporting employee earnings

  • For all employees: Under the Income Tax Act, employees are required to report their remuneration each year. Employers are required to prepare tax forms for all employees employed in Singapore to report their remuneration.

Tax issues relating to foreign employees

  • For foreign employees leaving Singapore for any period in excess of three months, ceasing employment with you or leaving on an overseas posting: Employers are required to notify the Inland Revenue Authority of Singapore (IRAS) and withhold all payment due to the foreign employee counting from the day you decide to post their employment overseas or the employee decide to cease their employment. Tax clearance is required for all aforementioned employees by IRAS to ensure that the employee has paid all taxes they owe. Once an assessment has been completed by IRAS, a certificate of tax clearance will be issued as written confirmation that all taxes have been paid. After this, you may release any payments due to your employee.

Contributing to the employee’s Central Provident Fund (CPF) account

  • For local employees: Employers must make CPF contributions for all employees holding either citizenship or permanent residency on a salary exceeding SGD 50 a month. CPF contribution rates vary depending on the age of the employee, their permanent residency status and other factors, but contribution rates are capped for employer and employee is 16% and 20% respectively.
  • For foreign employees: CPF contributions for foreign employees are not required. Foreign employees do not access the CPF.

Paying levies

  • The government collects a Foreign Worker Levy (FWL) for low- and unskilled foreign employees. The FWL is a pricing control mechanism that contributes to the regulation of foreign workers in Singapore. Please refer to the Manpower section below for further information.

Hiring students

  • For students who are Singapore citizens or permanent residents: Students with permanent residency or citizenship can be hired without restriction on either a full or part time basis. They are entitled to contributions to their CPF account, unless otherwise exempted. Students undertaking an internship at your business as training as part of their curriculum are exempt from CPF contributions. Common practice is to pay interns a monthly allowance.
  • For foreign students: Work Pass exemptions must be granted under the Employment of Foreign Manpower (Work Pass Exemptions) Notification in order for foreign students to work in Singapore during vacation time or term time. Employers wishing to take on foreign students either as interns or as part of an industrial attachment programme are required to apply for a Training Work Permit or Training Employment Pass for the student. Foreign worker levy payments do not need to be made, as the student is only working at your organisation as part of the training for their curriculum. Interns are – by common practice – only paid a monthly allowance.

Hiring contractual and part time staff

  • All employers working less than 35 hours per week are defined as part-time employees
  • Contract workers are defined as those employees on casual or on-call employment employed on an ad hoc basis and call upon as and when the company requires their services, as well as those on fixed-term employment contracts. The contract lasts only for a specific time frame and expires upon the completion of the specified job or task.
  • Part-time and contract workers benefit from largely the same workplace rights and employment protection as full-time employees under Singapore’s employment laws, unlike many other countries. This system also offers both employee and employer a certain amount of flexibility in the provision of rest days, annual leave encashment and employment benefits pro-rating. Do note that bonuses, medical insurance and other perks enjoyed by full-time employees are by common practice not provided to contract and part-time employees.

Age restrictions

Employers may hire and employ people between the ages of 13 and 16 under certain circumstances. Prior to 13, children are not permitted to work in any setting. On their 13th birthday, children are permitted to work in non-industrial settings performing light duties such as cleaning up or serving drinks, and unless they work with a family member cannot work in an industrial setting prior to their 15th birthday. Between the ages of 15 and 16, children can perform any duties in a non-industrial setting and can work in an industrial setting, permitted that the employer notifies the Ministry of Manpower and submits a medical report. The retirement age in Singapore is 62 years old.

Hiring foreign employees

The majority of companies in Singapore rely on foreign talent to supplement and support the existing local workforce. A declining birth rate combined with an ageing population combined with explosive economic growth has led to the demand for talent across the economy – but specifically in certain sectors such as IT, finance, business and research and development – simply outstripping local supply, leading to companies to resort to relying on foreign manpower. Similarly, there is not a huge amount of local demand for jobs in construction or domestic help, leading to employers in these industries to hire foreign workers. The Singapore government has made provisions and passed several measures to liberalise the immigration policy to support local business’ hiring foreign professionals.

The Employment Act requires that any foreigner wishing to work in Singapore hold a valid work visa. Employers wishing to hire foreign workers are required to apply for the relevant work permit or pass on the behalf of the foreign worker prior to their commencing employment. Depending on the work pass sought, the number of foreign employees that your organisation can hire may be capped.

The foreign work force is categorised into three main groups:

  1. Skilled professionals (such as research & development specialists, software engineers and doctors). Issued an Employment Pass.
  2. Semi-skilled professionals (such as administrative professionals, technicians and chefs). Issued an S Pass.
  3. Unskilled professionals (such as domestic help or construction workers). Issued a work permit known as an R Pass.

See below for a broad overview of the various work passes required for specific types of foreign talent.

Pass TypeEmployment Pass S Pass R Pass (Work Permit)
Suitable ForSkilled employees with tertiary level education and relevant work experience

Earn a monthly salary greater than $3,000

Mid-skilled employees with diploma level education and relevant work experience

Earn a monthly salary greater than $2,000

Unskilled workers with relevant work experience

Earn a monthly salary less than $2,000

Validity Issued for 1-2 years initially

Renewable

Issued for 1-2 years initially

Renewable

Issued for 1-2 years initially

Renewable

Quota System NoYes

20% of the company’s total workforce

Yes

Variable across industries

Eligibility for Dependants PassYesYesNo
Restrictions on NationalityNoNoYes
LeviesNoForeign Worker LevyForeign Worker Levy

Please refer to Ottavia’s guide on Singapore’s Work Permit Schemes for further information on the various types of work passes provided by the government.

General guidelines for recruitment

The diversity of the Singapore workforce with regards to gender, ethnicity and age means that employers are strongly recommended to adopt fair and progressive human resources practices, specifically with reference to the hiring process. To ensure that all employers are operating with fair employment practices, the Ministry of Manpower has issued a number of guidelines. A summary follows:

  • The selection and recruitment of candidates for employment is to follow a meritocratic system.
  • The candidate’s ability to perform the job as advertised, as well as their skills and experience are to take precedence over age, race, religion, disability status, family status or gender.
  • Selection criteria must be made known to all job applicants and relate to the requirements of the job. Selection criteria must be reviewed regularly to ensure relevancy to the job requirements.
  • Unless it is duly justifiable for the position being advertised, job advertisements are to avoid listing personal attributes such as language, age, gender, race, religion or marital status.
  • Where job application forms request personal information, it is to be stated clearly that it is for administrative purposes only. Job application forms are only to ask for information that is relevant to the employer for the purposes of assessing the applicant’s suitability for the job.
  • Only questions that are relevant to the job requirements are to be asked during job interviews and applicant tests.

Employers rely on a number of recruitment channels for sourcing talent in Singapore. Some of the more popular ones are as follows:

  • Recruitment firms & employment agencies: The majority of medium to large organisations and corporations in Singapore prefer to use head-hunters and recruiters to find the right candidate. As it takes less time and effort, this is considered to be the most convenient approach for organisations that can afford it. The rates of most agencies are usually equivalent to the candidate’s salary. Singapore is home to both a number of local recruitment organisations as well as offices of major international agencies including Hudson, Hays, Robert Walters and others who cater to a large base of multinational corporations.
  • Newspaper advertisements: Both job seekers and recruiters frequently utilise the classified section in The Straits Times – the local publication with the highest circulation – to find work or applicants. Think carefully about your target audience and the advertising rates before placing an ad.
  • Internet recruitment websites: There are around four to five job websites popular with both recruiters and job seekers where recruiters can post ads for a fee. These are most commonly used for reginal positions and primarily cater to the local market.
  • Job & careers fairs: With nearly half a million job seekers attending every year, job fairs are an increasingly popular way to attract candidates. It allows employers the opportunity to conduct on the spot interviews with multiple candidates and is most suitable for skills-based jobs.
  • Campus recruitment: The majority of the city’s polytechnics and universities permit on-campus recruiting through interviews and recruitment talks.