How to Hire Employees in Singapore – Complete Guide
As a business owner in Singapore, you may want to hire people to help you with day-to-day operations or to help you reach your business expansion goals. When recruiting talent, you should carefully familiarize yourself with the intricacies of recruitment, including legal requirements – such as those regulated by the Singapore Employment Act. Understanding the Singapore Employment Act is essential to ensuring compliance with labor laws and entering into legal employment contracts.
Here’s a complete step-by-step guide that will provide you with an overview of rules and practices to follow when hiring employees for your business in Singapore.
Employment Act
Understand Local vs. Foreign Hiring
- Hiring Locals
- CPF Contributions and Responsibilities
- Hiring Foreigners
- Work Passes and Permits (For Foreign Hiring)
- For professionals and executives
- For skilled and semi-skilled workers
- Family Members
- Foreign Worker Levy (FWL)
- Skills Development Levy (SDL)
- Work Passes and Permits (For Foreign Hiring)
Decide on What Basis You Want to Hire an Employee
- Full-time
- Part-time
- Term Contract
Employment Act – Obligations for Employers
- Leave Entitlements
- Minimum Annual Leave
- Sick Leave
- Public Holiday Pay
The Hiring Process
- Decide Whom You Want to Hire
- Craft Effective Job Postings
- Shortlisting and Interviewing
- Additional Considerations: Hiring Remote Workers in Singapore
Onboarding and Post-Hiring
- Employment Contract
- Key Employment Terms (KETs)
- Work Injury Compensation Insurance
- Ongoing Employer Obligations
- Monthly Obligations
- Yearly Obligations
Conclusion
Employment Act
To conduct business in Singapore, a business owner should familiarize themselves with the Employment Act (EA), which serves as the cornerstone of the legal framework governing employer-employee relations. The law was passed in 1968 and is the main labor law in the country, setting minimum standards for working conditions applicable to most workers, except for certain categories. The Act does not apply to specific categories such as domestic workers, seafarers and certain statutory board employees or civil servants.
It extends its coverage to encompass both local and foreign employees, irrespective of their employment status—whether full-time, part-time, temporary or contractual. For employees falling under the purview of the Employment Act, their employment contracts must uphold terms no less favorable than those stipulated within the Act. For employees not covered by the Act, negotiations regarding the terms of employment may take place between both parties. Once mutually agreed upon, these terms should be clearly stated in the employment contract, establishing binding obligations for both employer and employee.
Part IV of the Employment Act, which sets minimum work conditions and leave entitlements, doesn’t apply to all managers and executives. Exempt categories include those with decision-making authority on staffing matters and business strategy, as well as professionals with advanced degrees whose employment terms are similar to managers (lawyers, accountants, doctors).
Understand Local vs. Foreign Hiring
Depending on whether you hire local or foreign workers, you have to be aware of certain specific rules for each category and plan a hiring process accordingly.
Hiring locals
All employers in Singapore need to register with the Central Provident Fund (CPF) Board to make contributions for their employees. This registration process involves obtaining a CPF Submission Number (CSN). Apart from obtaining a CSN, no additional work authorization applications are required.
CPF Contributions and Responsibilities
The CPF is a mandatory savings and social security initiative in Singapore set up by the government. It functions as a financial safety net for Singaporeans and Permanent Residents (PR) by requiring both employers and employees to contribute a portion of the employee’s salary to the CPF account.
The registration includes steps that depend on whether your company has a Unique Entity Number (UEN). If you do, you’ll need to set up a specific e-service in the Corppass portal before applying for a CSN online. If you don’t have a UEN but are a registered business, you have to apply for UEN and CSN together via ACRA BizFile+ Portal. Finally, if you’re hiring employees in your personal capacity and do not require a UEN, you can apply for a CSN directly on the CPF website.
Employers in Singapore are required to contribute to the CPF, with a typical arrangement of 20% deducted from the employee’s salary and an additional 17% contributed by the employer. They are due on the final day of the calendar month. These funds are held in individual CPF accounts until retirement or for specific purposes like housing or medical expenses.
All employers and employees in Singapore are subject to CPF contributions. These include Singapore citizens and Singapore permanent residents working in Singapore under a contract of service; and/or employed under a permanent, part-time or casual basis. However, foreign workers are not mandated to contribute to the CPF. Instead, they may voluntarily choose to contribute to their CPF accounts.
For more information, please see our complete guide on making CPF contributions and all the relative contribution rates of employers and employees.
Hiring foreigners
Any foreign national who plans to work in Singapore requires a work pass. However, there are exceptions. For example, those company directors who do not reside in Singapore usually do not need work visas. Similarly, remote workers from overseas, depending on the specific arrangement and their residency regulations, may not require a Singapore work visa.
Work Passes and Permits (For Foreign Hiring)
For foreign workers coming to Singapore to work directly, there are different types of visas depending on their salary and position. Employers need to create a Work Pass account for further online registration and declaring their business activities.
Under the Employment Act in Singapore, foreign citizens must have a valid work visa to legally work in the country. The foreign workforce can be broadly divided into three main categories:
- Skilled professionals, such as software engineers or doctors, who are usually issued an Employment Pass (EP);
- Semi-skilled workers, including technical specialists or administrative specialists, are eligible to receive an S Pass;
- Unskilled professionals, such as construction workers or domestic helpers, usually receive a work permit.
Here are the details of various work passes:
For professionals and executives:
Employment Pass (EP): The most common work pass for foreign professionals, managers and executives. It requires a minimum salary of $5,000 per month. Note that it will be raised to $5,600 from Jan 1, 2025. The application process is handled through the Employment Pass eService system and requires qualifications and a confirmed job offer. If you submit your application online, you can expect it to be processed or receive an update within 10 business days. However, for overseas companies without a Singapore-registered entity, the processing time is typically within 8 weeks for most cases.
Keep in mind that if you want to hire foreigners with an Employment Pass, you must first promote the job on MyCareersFuture for at least 28 days.
EntrePass: This pass is designed for foreign entrepreneurs who want to set up and run their own businesses in Singapore. There is no minimum salary requirement, but applicants need to present a viable business plan with strong growth potential. The application takes around 8 weeks to process.
Personalised Employment Pass (PEP): This is a unique pass for high-earning foreign professionals or existing EP holders. It offers greater flexibility but has stricter eligibility requirements and is only issued once for a maximum of three years. It requires a fixed monthly salary of at least $22,500 and takes around 8 weeks to process.
The application process is the same for all three passes. To begin the process, you need to apply for an EP, EntrePass or PEP online. If approved, you will receive an in-principle approval letter for the candidate. Once the employee arrives in the country, you will need to obtain their pass and possibly register their fingerprints and photograph. Card delivery usually takes 5 business days.
For skilled and semi-skilled workers:
S Pass: This pass is suitable for skilled foreign workers with qualifications and experience relevant to the job who may not meet the EP criteria. The minimum salary requirement is at least $3,150 per month. It can be issued for up to 2 years. If you submit your application online, you can expect it to be processed or receive an update within 10 business days. However, for overseas companies without a Singapore-registered entity, the processing time is typically within 8 weeks for most cases.
To begin the application process, employers first need to advertise the position on MyCareersFuture. First-time employers need to declare their business activity. Once prepared, gather the necessary documents and submit the S Pass application online. Upon arrival, purchase medical insurance for the employee, submit those details online and then proceed with pass issuance. Depending on the notification letter, fingerprint and photo registration might be required. Card delivery usually takes 5 business days.
*For upcoming S Pass changes, refer to the MOM website.
Work Permit: This pass allows foreign workers from approved source countries/regions to work in certain sectors. There is no minimum salary requirement and it can be issued for up to 2 years depending on the validity of the passport, security bond and employment period. Employers applying for Work Permits need to comply with quotas set by the MOM and pay a monthly levy for each worker.
Before starting an application process, new employers must declare their business activity. Construction, process or marine shipyard companies hiring from specific regions might need additional approvals. Once approved, the worker receives an In-Principle Approval (IPA). Upon arrival, procedures include booking Onboard Centre slots (for CMP sectors), purchasing security bonds and medical insurance, registering for the Settling-in Programme (manufacturing and female CMP workers) and attending medical examinations. Permit delivery usually takes 5 business days.
Family members:
The good news is, Singapore offers several visa options that allow EP, S Pass and EntrePass holders to have their families join them in the country.
Dependent’s Pass (DP): This pass allows spouses and children under 21 years of EP or S Pass holders to live in Singapore. However, obtaining permission to work in Singapore with a DP typically requires a separate Letter of Consent from the MOM. It is issued for up to 2 years and is tied to the validity of the main work pass.
Long-Term Visit Pass (LTVP): This pass is suitable for common-law spouses, stepchildren or handicapped children of eligible EP or S Pass holders. Those earning over $12,000 can also bring in their parents. It is issued for up to 2 years and is tied to the validity of the main work pass.
Visit the MOM website to learn more about the work passes.
Foreign Worker Levy (FWL)
The Foreign Worker Levy (FWL) acts as a pricing tool to regulate the presence of foreign workers. Employers must pay a monthly levy for each Work Permit holder, with the amount determined by the worker’s qualifications and the company’s sector-based quota for foreign labor.
Skills Development Levy (SDL)
The Skills Development Levy (SDL) is a compulsory payment made by employers to support workforce development programs, such as training grants and skill enhancement courses. It applies to all employers in Singapore, covering both local and foreign workers, including part-time or temporary employees, typically paid alongside monthly CPF contributions.
Decide on What Basis You Want to Hire an Employee
Full-time
A full-time employee is often in charge of various company’s day-to-day operations and key functions. They are recruited under a service contract which can be for a specific period (e.g. number of years) or without an expiration date – it will end when either the company or the employee terminates it. The specific conditions for termination can be outlined in the contract itself.
Part-time
Unlike full-time employees, part-time workers typically work fewer than 35 hours per week. However, these employees are still entitled to certain protections under the EA, specifically through the Employment of Part-Time Employees Regulations. These regulations ensure that part-time workers receive fair treatment and are provided with essential details in their contracts of service. Part-time employees are covered by the Employment Act (except for those who are domestic workers or seamen).
The following provisions must be included in the part-time employment contract:
- Hourly basic rate of pay;
- Hourly gross rate of pay (the hourly basic rate plus allowances);
- Number of working hours per day or per week;
- Number of working days per week or per month.
Term contract
Term contract employees are engaged on fixed-term employment contracts when the job is only accessible on a temporary or project basis or when there is a headcount constraint (i.e., the number of people the company can employ is restricted). Unless renewed, these fixed-term contracts will expire at the end of a certain period or at a specific date.
Employers are advised to follow the Tripartite Standard on the Employment of Term Contract Employees. It sets out best practices for the employment of fixed-term workers, including provisions for continuing employment benefits.
Employment Act - Obligations for Employers
Leave Entitlements
In most cases, the minimum leave entitlements in Singapore apply to both local employees and foreign workers with valid work passes.
Minimum Annual Leave:
- Employees with at least 3 months of service: Entitled to at least 7 days of annual leave per year.
- Employees with at least 1 year of service: Entitled to at least 14 days of annual leave per year.
- Additional Leave (Optional): Employers can offer more than the minimum annual leave as part of their employee benefits package.
Sick Leave:
- Employees with at least 3 months of service: Entitled to 5 days of paid outpatient sick leave per year. They are also entitled to 15 days of paid hospitalization leave per year in case of illness requiring hospitalization.
- Employees with at least 6 months of service: Entitled to 8 days of paid outpatient sick leave per year. This increases to 30 days of paid hospitalization leave per year.
- Employees with at least 1 year of service: Entitled to 14 days of paid outpatient sick leave per year. The hospitalization leave entitlement remains at 60 days per year (inclusive of the outpatient sick leave entitlement).
Public Holiday Pay:
- Full-time employees who are not working on a public holiday are entitled to be paid their usual daily wages.
- Part-time employees who are not working on a public holiday are entitled to be paid pro-rated based on the number of hours they typically work on a normal working day.
The Hiring Process
Decide Whom You Want to Hire
Depending on the nature of the job, required qualifications and the company’s financial capabilities, it will be important to decide whether you would want to hire a local or a foreign employee. This decision will impact the hiring process, the salary level and the length of the hiring process.
Analyze the job requirements. If a niche skill-set is needed and unavailable locally, consider a foreign hire. Local candidates might have lower salary expectations, but the hiring process can be faster. Foreign talent can bring valuable expertise and regional or language skills, but the process takes longer due to work visa applications.
To match the challenging business landscape and the country’s reputation as a global business center, companies need professionals who can thrive in a variety of environments. Your workforce will likely be a mix of nationalities, and effective communication and cultural sensitivity will be required to foster collaboration. The competitive nature of Singapore’s business climate requires professionals who can adapt to changing market dynamics and work under pressure.
Craft Effective Job Postings
To increase your chances of attracting qualified job candidates, an important step is to create compelling job postings. Use eye-catching titles with keywords and avoid generic terms. The description can be brief but compelling as long as you describe the role correctly and clearly define the responsibilities, skills and qualifications required. Remember that you should post adverts that do not discriminate against applicants based on age, gender, color, religion, marital status, family responsibilities or handicap.
Here’s a breakdown of some popular job posting platforms in Singapore catering to both local and foreign demographics:
Local hiring:
| MyCareersFuture | Aims to provide Singapore Citizens and PRs with a fast and smart job search service to match them with relevant jobs, based on their skills and competencies. |
|---|---|
| Indeed | Platform specifically catering to Singaporean job seekers and employers, offering a vast pool of local talent. |
| JobsDB | A search engine for jobs throughout Singapore that allows its users to search through thousands of career opportunities, all sourced from many job sites from around Singapore. |
| Recruit.net | Allows job seekers to instantly search millions of jobs from thousands of websites as well as to post jobs in Singapore and in the 15+ countries. |
| STJobs | Offers a good mix of positions across various industries and paid options based on the number of jobs you want to post. |
Foreign hiring:
| A professional networking platform widely used by international talent. Powerful search filters allow targeting specific job titles, skills and locations worldwide. | |
|---|---|
| Glassdoor | Connects companies worldwide with potential hires by offering job postings, employee reviews and salary insights. |
| Monster Jobs | It allows employers to connect with a diverse pool of job seekers from various industries and locations. |
| The Muse | A career platform with a focus on career development and company culture. It can be a good fit for attracting foreign talent looking for a positive work environment. |
| Indeed Global | Acts as a massive job search engine, aggregating job postings from a multitude of sources to reach a vast international audience of potential candidates. |
You can also use the SkillsFuture Framework to categorize jobs into relevant sectors and identify the skills and competencies needed.
Shortlisting and Interviewing
As an employer, you should carefully review resumes and applications to ensure they match the job description based on the essential skills and qualifications of employees.
When analyzing resumes or job application forms, only consider information that is directly connected to the position’s qualifications, abilities, knowledge and experience. It is best to give greater consideration to those candidates who best meet these criteria and demonstrate great potential for the position.
Finally, schedule interviews with job seekers to ensure that you are hiring the best individual for your company. Interview questions and/or assessments should be merit-based and non-discriminatory.
ADDITIONAL CONSIDERATIONS:
Hiring Remote Workers
Consider whether your company is capable of implementing Flexible Work Arrangements such as remote working.
Remote work is particularly beneficial for knowledge workers (software developers, data analysts), customer service representatives and creative professionals (designers, writers). These roles rely heavily on skills and expertise, making location less critical.
Beyond cost savings on office space, hiring remote workers offers significant advantages:
- Global Talent Acquisition: Attract top talent regardless of location, including those with niche skills scarce in Singapore.
- Improved Employee Satisfaction: Remote work fosters work-life balance and flexibility, boosting morale and productivity.
- Diversity of Thought: A remote workforce brings together individuals from various backgrounds, leading to more creative solutions.
Onboarding and Post-Hiring
Employment Contract
The foundation of a strong employer-employee relationship is a clear and well-defined Employment Contract. This contract outlines the terms and conditions of employment, including job duties, compensation, benefits, working hours, leave entitlements, termination clauses and more.
Crafting the contract begins with ensuring compliance with Singapore’s EA and relevant regulations. It should also reflect your company’s specific policies and best practices, catering to your unique needs and expectations for the role. Remember, while the initial draft is offered by the employer, employees have the right to request modifications.
Key Employment Terms (KETs)
Employers in Singapore are required by law to provide Key Employment Terms (KETs) to most employees. This serves as a concise document outlining the essential details of the employment relationship, ensuring clarity and transparency for both employer and employee.
KETs must include the following items unless it does not apply to the employee:
- Full name of employer and employee;
- Employee’s job title, responsibilities and primary duties;
- Duration of employment (if employee is on fixed-term contract);
- Working conditions (working hours, working days and rest days);
- Salary, salary period and other salary-related components;
- Different types of leave and medical benefits are available;
- There is a probation period and a notice period.
The MOM website has a sample KETs form. You can also utilize MOM’s KETs verification tool to see if your work arrangements, remuneration and other components comply with the EA.
Once the job candidate has accepted your offer, you will be required to sign an employment agreement, also known as a contract of service, which outlines the parameters controlling the relationship between an employer and an employee. The KETs must be included in the employment agreement. Your employee must also sign and return the employment contract to you.
Work Injury Compensation Insurance
You must also obtain work injury compensation insurance for all employees performing physical labor (regardless of income level) and employees earning less than $2,600 per month. This obligation applies to both domestic and international personnel.
You have the option to acquire insurance for other employees (those who do not perform manual labor and/or earn less than $2,600 per month).
Ongoing Employer Obligations
Monthly obligations
Employees covered by the EA must get itemized payslips from all employers. The pay slip should encompass essential details such as the employer’s and employee’s full names, the start and end dates of the salary period, the payment date, mode of payment, basic salary, total allowances with a breakdown, additional payments like bonuses and holiday pay, fixed and ad-hoc deductions (e.g., CPF contributions and deductions for no-pay leave), overtime hours worked and corresponding pay, the start and end dates of the overtime payment period, net total salary paid and employer’s CPF contributions.
Pay slips must be issued in conjunction with the employee’s salary. If you are unable to give both at the same time, you must provide the payslip within three working days of receiving the salary.
Furthermore, you are required to take from your employees’ salaries their donations to self-help groups (SHG). The SHGs were established to help Singapore’s less privileged, low-income households.
SHG monies are made payable to various organizations according to the employee’s ethnicity or religion, and the CPF Board also collects them. Therefore, SDL and SHG money can be paid in conjunction with your employee’s CPF payments.
Yearly obligations
Employers must also submit their employees’ compensation to the Inland Revenue Authority of Singapore (IRAS) by 1 March each year for tax purposes depending on their income source and residency status.
Individuals:
If you are a resident taxpayer in Singapore and your income exceeds certain thresholds, you are required to file an Income Tax Return with IRAS. This includes income from employment, rental properties, investments and other sources.
Non-residents who derived income from Singapore in the preceding year might also need to file an Income Tax Return, regardless of the amount earned.
Conclusion
Navigating the hiring landscape in Singapore requires a nuanced understanding of local and foreign talent acquisition. While local hires offer faster onboarding and potentially lower salary expectations, foreign talent can bring valuable expertise and diverse perspectives.
To build a successful team that thrives in this dynamic business environment, consider not only the origin of your employees but also the type of employment arrangement that best suits your needs. Full-time employees form the backbone of your operations, while part-time workers offer flexibility for specific tasks or fluctuating workloads. Term contracts can be ideal for temporary projects or headcount limitations.
Although there appears to be a lot to accomplish when hiring people, the process may be gratifying in the end because your new employees can help to take over various business operations, grow your revenue and expand the firm further.
Get in touch with us for company registration in Singapore.
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