Singapore Hiring Insights: All The Thing for Successful Recruitment

Navigating the intricacies of employment and recruitment in Singapore is a fundamental undertaking for businesses seeking to establish an international presence. The Employment Act, a pivotal legislative framework, governs employment relationships, setting forth essential regulations. Discerning whether your employee is protected by the Act is the initial step towards ensuring compliance with its stipulations. In this guide, we delve into the critical aspects of recruitment, shedding light on the formalization of employment contracts, employee earnings reporting, tax implications for foreign employees, and contributions to the Central Provident Fund (CPF).

What Constitutes the Employment Act?

• The Employment Act in Singapore stands as the comprehensive legislative framework governing labor and employment matters. It provides detailed guidelines concerning fundamental employment terms, and delineates the rights, duties, and obligations of both employers and employees.
• Your primary step involves assessing if your employee falls under the protection of the Employment Act.
• Should your employee be encompassed by the Employment Act, it’s crucial to note that the terms outlined in the employment agreement must not be less favorable than those stipulated by the Employment Act.
• In cases where your employee isn’t covered by the Act, the terms and conditions of employment can be mutually negotiated and once finalized, clearly articulated in the employment contract, thereby legally binding both parties.

Essential Employers’ Responsibilities and Commitments

Establishing the Employment Agreement

In the case of all staff members, the employment agreement stands as a pivotal document, delineating the terms and conditions governing the relationship between you and your employee. While it’s possible to create this agreement independently, it is highly recommended to seek guidance from a legal professional or an HR consultant well-versed in such formalities. It’s crucial to note that if your employee falls under the jurisdiction of the Employment Act, the contractual terms must align with the Act’s minimum stipulations. Some critical aspects to incorporate into the agreement are:

• Designation or position
• Duration of the employment contract, if relevant
• Commencement date of employment
• Compensation package
• Working hours
• Employee perks and benefits
• Probationary clauses, if applicable
• Code of ethics
• Termination clauses

Employee Earnings Documentation

All employers must adhere to Singaporean tax laws, as stipulated by Section 68(2) of the Income Tax Act. By March 1st each year, employers in Singapore are required to complete and submit the appropriate forms, including Form IR8A and Appendices 8A, 8B, or Form IR8S (where applicable) for their employees. Companies with over five employees are obligated to electronically submit employment income information through the Auto Inclusion Scheme. Notably, unlike some other jurisdictions such as Europe or China, it’s important to highlight that the employer’s duty does not encompass withholding the employee’s tax. Instead, each employee is responsible for filing their personal income tax by mid-April annually.

Taxation Concerns for Foreign Employees

In cases where foreign employees conclude their employment, embark on an overseas posting, or leave Singapore for a period exceeding three months, tax clearance is essential. This process guarantees that all taxes owed by the employee have been duly paid. As an employer, you must promptly notify the tax authority (IRAS) and withhold any due payments for the respective foreign employee at least a month before their employment termination or relocation to an overseas assignment. Once the IRAS completes an assessment and issues a tax clearance certificate confirming the clearance of all taxes, you can release the employee’s outstanding payments.

Contributions to the Central Provident Fund (CPF)

For local employees in Singapore, it is mandatory for employers to make CPF contributions, especially for citizens and Permanent Residents (PRs) earning above SGD 50 monthly. The CPF contribution rates for both employers and employees stand at a maximum of 17% and 20%, respectively, though these rates may vary based on factors such as the employee’s age and permanent resident status. The combined contribution is capped at 102,000 SGD per year, with an ordinary wage ceiling set at 6,000 SGD monthly (equivalent to 72,000 SGD annually).

To illustrate, if an employee’s ordinary wage for a calendar month amounts to $6,500, only $6,000 will attract CPF contributions, leaving the remaining $500 exempt from CPF contributions. Similarly, the Additional Wages (AW) ceiling is calculated as $102,000 minus the Total OW subject to CPF for the year.

Fulfilling financial obligations

In the case of employing low-skilled and unskilled foreign workers, the government imposes a levy known as the Foreign Worker Levy (FWL). This levy acts as a pricing control measure, strategically managing the demand for foreign labor in Singapore.

Singapore’s Stance on Minimum Wage

The Ministry of Manpower in Singapore does not specify a minimum wage for all workers within the nation.

Hours of work

In Singapore, employees adhere to mutually agreed contractual working hours. Typical work arrangements in Singapore encompass:

• A maximum of 9 hours daily or 44 hours weekly for a workweek lasting five days or less.
• A maximum of 8 hours daily or 40 hours weekly for a workweek exceeding five days.

Overtime

Legally, employees are restricted from working beyond 12 hours a day. However, under specific circumstances, employers can extend these hours. This extension is permissible:

• In the event of an accident or imminent threat.
• For work crucial to the community’s vitality, national defense, or security.
• Urgent tasks related to machinery or plant maintenance.
• Unforeseen interruptions in work.

An employee’s overtime is capped at 72 hours per month. Any hours beyond this limit necessitate the employer to seek an exemption. For overtime labor, the employer must compensate eligible employees at a rate of at least 1.5 times the basic hourly wage, with payment issued within 14 days of the salary period’s conclusion.

Employee Benefits in Singapore

Employee Perks and Advantages in Singapore

Companies operating in Singapore must adhere to the stipulations of the Employment Act by furnishing their workforce with essential benefits such as social security, leave allowances, as well as termination and severance compensation.

In the contemporary and fiercely competitive job market, businesses aiming to allure, engage, and retain talent must extend beyond the fundamental benefits. Here is a compilation of supplementary offerings that can enrich your benefits portfolio, enhancing your ability to attract discerning employees:

• Wellness initiatives available on-site
• Allocated mental health days
• Educational assistance and support
• Employee aid programs
• Flexibility in spending allowances
• Dedicated volunteering days
• Provision for remote work opportunities

Types of Available Leaves in Singapore

Annual leave

Employees who have been with their employer for a minimum of three months are entitled to paid annual leave. The allocation of annual leave in Singapore is contingent on an employee’s tenure with a company. Typically, businesses offer their employees 14 to 20 days of annual leave during their initial year of service.

Sick Leave Policy

In Singapore, employees are granted 14 days of paid sick leave within a year after completing six months of service. Should hospitalization be required, employees are entitled to 60 days of sick leave per year, inclusive of 14 days for outpatient care. The allocation of paid sick leave is determined by the length of employment as follows:

• Up to three months – five days per year, 15 days if hospitalization is necessary
• Four months – eight days per year, 45 days in the event of hospitalization
• Five months – 11 days per year, 45 days in the event of hospitalization
• Six months and beyond – 14 days per year, 60 days in the event of hospitalization

Adoption Leave and Childcare Leave

Qualified adoptive mothers are granted a 12-week paid adoption leave to care for their adopted infants based on specific conditions:

• The adopted child is under 12 months old at the formal adoption intent.
• One adoptive parent must be a Singapore citizen.
• The child must attain Singapore citizenship within 6 months of adoption.
• The employee must have a continuous work or self-employment period of at least 3 months immediately before the formal adoption intent.
• The adoption order must be confirmed within 1 year from the formal adoption intent.

As for childcare leave, under the Employment Act, parents with Singapore citizen children are granted six days of paid childcare leave per year. Non-citizen parents are entitled to two days of childcare leave. Eligibility criteria for Government-Paid Childcare Leave (GPCL) include:

• The child is below 7 years old.
• The child holds Singapore citizenship.
• The employee has maintained three months of continuous service with their employer.
• For self-employed individuals, a minimum of three consecutive months of work is required, with a documented loss of income during the childcare leave period.

Maternity, Paternity, Shared Parental, and Unpaid Infant Care Leave

Pregnant employees with over three months of tenure before childbirth are eligible for 16 weeks of maternity leave, reduced to 12 weeks if the child is not a Singapore citizen. During this period, companies are not allowed to terminate the employment contract.

The first eight weeks’ compensation for the first two children is covered by the employee, with subsequent weeks reimbursed by the government. However, from the third child, all 16 weeks of maternity leave is reimbursed by the government.

Working fathers are granted two weeks of Government-Paid Paternity Leave (GPPL) provided:

• The child holds Singapore citizenship.
• The employee has a lawful marriage to the child’s mother between conception and birth.
• The employee has served their company continuously for at least three months before the child’s birth.
• For self-employed individuals, a continuous engagement in work for at least three months before the child’s birth, with a loss of income during the paternity leave period.

Additionally, working fathers have the option to share up to four weeks of their spouse’s 16 weeks of Government-Paid Maternity Leave, subject to the spouse’s agreement.

All working parents in Singapore are entitled to six days of unpaid infant care leave annually under these conditions:

• The child holds Singapore citizenship.
• The child is less than two years old.
• The employee has maintained three months of continuous service with their current employer.

For Vietnamese and global investors aspiring to establish their business footprint in Singapore, Iris International serves as the trusted partner for seamless market entry. Our specialized services encompass not only company setup and registration but extend to a spectrum of critical needs. From efficient Employment Outsourcing (EOR) solutions for seamless human resource management to meticulous accounting, bookkeeping, and payroll services, we cater to your diverse business requirements. Moreover, our flexible office rental options and tailored services further enhance your operational efficiency. Choose Iris International to unlock your business potential in Singapore, and let us pave the way for your success in this vibrant business hub. Contact us today to embark on a prosperous business journey.