Employment Law

Singapore Employment Contract Types

In Singapore, employers are advised to prepare a strong written contract that clearly sets out the relevant terms of employment. This should include the job description, the employee's responsibilities, and the compensation and benefits that come with the position.

Regarding offer letters and employment contracts, both types of documents should always list the compensation amount in Singapore Dollars (SGD). Remoly can assist you in drafting employment contracts through our Singapore registered employer and PEO or your own local entity.

Fixed Term

Indefinite

Singapore Working Hours

Under Singapore law, working hours must not exceed 44 hours per week. For employees who work five days a week or less, working hours should not exceed nine hours per day. For employees who work more than five days a week, working hours should not exceed eight hours per day.

Employees in Singapore may be entitled to overtime pay at 1.5 times their hourly wage. This will depend on whether the employee is classified as a "worker" or a "non-worker". Furthermore, this only applies if the employee's salary is below the applicable cap.

Income Tax and Social Contributions

In Singapore, the Provident Fund (Central Provident Fund) is the main welfare or social security fee stipulated by the state. While this amount may vary, it is recommended that employers budget for 17% of an employee's salary on top of existing wages. This amount is the cost of benefits contributed by the employer to the Provident Fund. There are no employee, employer or payroll tax payments required every month in Singapore. Personal taxes must be filed by March 30 of each year and report the employee's income for the previous calendar year. Remoly will file your employees' personal income taxes by March 30 of each year. In practice, the IRAS (authority) tax assessment will be completed in approximately 1-2 months. Once the assessment is completed, individuals are required to pay the tax due in full (no later than May in most cases). Therefore, no taxes are withheld or deducted each month. Employees are still responsible for filing employee taxes.

Health Insurance

In Singapore, standard insurance is provided through the national system ( Medishield Life ). Employers may choose to provide supplemental coverage to their employees. This would be classified as a supplementary benefit.

Holiday Policy

Take a Vacation

Singapore generally gives employees 14 days of annual leave. For senior managers, this may add three to four weeks. In Singapore, the legal minimum number of working days is seven days, plus one day for each subsequent year of service – until eight years of service. After an employee has been with the organization for eight years, the statutory minimum holiday period remains 14 days per year.

Sick Leave

In Singapore, employees are generally entitled to sick leave if they have worked for an organization for more than three months. Additionally, employees must notify their employer within 48 hours of a planned absence. All sick leave must be certified by the organization's physician, an organization-approved physician or a government physician.

The length of paid sick leave depends on the number of years the employee has been with the employer.

Between 3 and 6 months, employees are entitled to sick leave on a pro-rata basis, from 5 to 11 outpatient sick leave days to 15 to 45 inpatient sick leave days.

For employees employed for more than six months, they are eligible for 14 days of outpatient non-hospitalization leave. In addition, these employees are entitled to 60 days of hospital leave, including 14 days of outpatient leave.

Maternity and Paternity Leave in Singapore

Female employees who are Singapore citizens and have been with their employer for more than three months are generally entitled to 16 weeks of paid maternity leave. To be eligible for maternity leave, the child must also be a Singapore citizen.

For a female employee's first two pregnancies, the employer must pay for the first eight weeks of maternity leave. The Singapore government will pay for the remaining eight weeks. In Singapore, the government pays all maternity leave costs for additional pregnancies.

Employees who are not Singapore citizens are generally entitled to 12 weeks of paid maternity leave, unless their employment contract provides otherwise. Employees who have been employed for less than three months are not entitled to paid maternity leave.

Female employees can share up to four weeks of maternity leave with their husbands - provided they are legally married and the husband is the father of the child.

In Singapore, fathers are generally entitled to two weeks of government-funded paid maternity leave. To be eligible for paternity leave, the father must be currently or previously married to the child's mother at the time of conception and birth. The father must also be a Singapore citizen and have been working continuously for more than three months before the child is born. Paternity leave in Singapore is capped at S$2,500 per week.

Singapore Job Bonus

Similar to China and Hong Kong, Singapore often offers employees a 13th-month bonus (or annual bonus). For sales employees, commissions may replace this form of bonus. In times of strong economic growth in Singapore, year-end bonuses could be equivalent to two to three months' annual salary.

Termination and Severance

In Singapore, a probationary employment contract usually specifies a period of three to six months. During this period, the notice period is usually shorter, although this is not a statutory requirement. One month's notice of termination is usually the agreed period from both the employee and the employer. However, this is not a set rule for all work arrangements. Where no notice period is specified in the employment contract, the standard notice period shall apply. For employees who have been employed for less than 26 weeks, the notice period is 1 day. This increases to one week if the period of employment is between 26 weeks and two years, and two weeks if the period of employment is between two and five years. For employment periods exceeding five years, four weeks' notice is required from either party. For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Singapore PEOs and Employers of Record can reduce risks for foreign companies and provide guidance along the way.

Social Costs

The Central Provident Fund (CPF) is perhaps the most important function of the country's social security system. The Provident Fund provides a social security savings plan for employees and manages other types of benefits such as health care and pensions. Similar to U.S. retirement plans, both employers and employees contribute into this Social Security fund. Contributions are allocated to one of three accounts: Ordinary Account This account can be used to buy a house, invest, pay for education, and pay provident fund insurance. Special Accounts Special accounts are targeted at employees approaching retirement. It covers retirement-related products and services. MediSave Account This account can be used to pay for any approved medical expenses, including hospitalization, doctor's visits and medical insurance. The maximum provident fund contribution rate is 17% for employers and 20% for employees under 55 years of age. From age 55, the required contribution rates begin to decrease - from age 65, the employer contributes 7.5% and the employee contributes 5%. Please note that foreign employees with an Employment Pass or Work Permit in Singapore are not required to pay CPF.

Under immigration laws, foreign workers must hold the necessary visas and work permits in Singapore. As part of our services, Remoly can sponsor your employees to obtain the required licenses. The most common work permit is the Employment Pass, which is available to qualified foreign workers earning at least S$3,300 per month.

Salary and Benefits

Singapore Compensation Act

In Singapore, there is no universally set minimum wage. This means that employers have discretion when determining the appropriate salary for their employees. Two exceptions to the minimum wage apply to industries: cleaners and security guards. While there is no uniform minimum wage, international businesses operating in Singapore need to be aware of the "Local Qualifying Salary" or "LQS". We explain it as follows:

In Singapore, companies can only hire foreign workers and also hire a certain number of local workers. The exact ratio of foreign workers to local workers depends on the industry. For example, in the construction industry, 87.5% of workers can be foreign employees, meaning a company can hire seven licensed workers for every local worker. To ensure that businesses do not pay local workers a nominal fee, starting September 1, 2022, companies will be required to pay local workers at least US$1,400 per month. This amount is the local qualifying wage. When it comes to employment contracts, best practice is for the employer to draft a clearly worded written contract. All references to wages should be expressed in Singapore Dollars (SGD). Although annual bonuses are not mandatory in Singapore, many employees do receive some form of bonus.

In fact, during strong economic times in Singapore, year-end bonuses could be as much as three months' salary. The Employment Act in Singapore mentions recommended compensation for overtime pay to employees. For any worker earning more than S$2,000 a month - like many managers and senior executives - overtime compensation must be specified in the employment contract. For workers earning less than S$2,000 a month, overtime pay should be 1.5 times the hourly wage. Although annual bonuses are not mandatory in Singapore, many employees do receive some form of bonus. In fact, during strong economic times in Singapore, year-end bonuses could be as much as three months' salary. The Employment Act in Singapore mentions recommended compensation for overtime pay to employees. For any worker earning more than S$2,000 a month - like many managers and senior executives - overtime compensation must be specified in the employment contract. For workers earning less than S$2,000 a month, overtime pay should be 1.5 times the hourly wage. Although annual bonuses are not mandatory in Singapore, many employees do receive some form of bonus. In fact, during strong economic times in Singapore, year-end bonuses could be as much as three months' salary. The Employment Act in Singapore mentions recommended compensation for overtime pay to employees. For any worker earning more than S$2,000 a month - like many managers and senior executives - overtime compensation must be specified in the employment contract. For workers earning less than S$2,000 a month, overtime pay should be 1.5 times the hourly wage. The Employment Act in Singapore mentions recommended compensation for overtime pay to employees. For any worker earning more than S$2,000 a month - like many managers and senior executives - overtime compensation must be specified in the employment contract. For workers earning less than S$2,000 a month, overtime pay should be 1.5 times the hourly wage. The Employment Act in Singapore mentions recommended compensation for overtime pay to employees. For any worker earning more than S$2,000 a month - like many managers and senior executives - overtime compensation must be specified in the employment contract. For workers earning less than S$2,000 a month, overtime pay should be 1.5 times the hourly wage.

Singapore’s Welfare is Guaranteed

In terms of benefits management in Singapore, employers need to understand which benefits are mandatory under the law and which benefits are provided by the employer as a supplement.

All employees in Singapore receive basic health insurance through the national system. However, employers have the discretion to provide additional health benefits. In Singapore, it is common for employers to provide supplementary health and life insurance to their employees. Another option many employers take is to offer a small stipend that can be used to supplement coverage.  

Any additional benefits, such as additional sick leave, maternity or vacation leave, or housing allowances, should be taken into account when drafting employee contracts.

Singapore Welfare Management

Employers can choose to manage their employees' benefits themselves or outsource their benefits administration to a Singapore PEO. But please note:

• If choosing to self-administer benefits, the employer must seek out additional coverage options for the employee. In addition, they need to comply with Singapore employment laws and regulations.
• Our Singapore PEO and employer of record can manage your payroll and benefits administration in Singapore. When you work with Remoly, our in-country experts will ensure that the entire business complies with Singapore employment laws and regulations.

Legal Framework for Employee Benefits in Singapore

In Singapore, the Employees' Compensation Act requires employees to be paid at least once a month and within seven days of the end of that period. If employees work overtime, overtime wages must be paid within 14 days after the wage period. Singapore employment laws cover all basic labor rights, including maximum working hours and overtime, sick leave, annual leave, paid public holidays and paid maternity leave. Before hiring Singaporean employees, employers must understand their obligations under the Singapore Employment Act. Often, international businesses benefit from local employment partners to ensure compliance with employment laws. With Remoly's Singapore PEO solutions, you can be confident that all local employer obligations, including benefits and social contributions, are fully complied with.