An Employer of Record (EOR) in Singapore is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.
Discover the key considerations and essential details you should be aware of before opting for an Employer of Record (EOR) in Singapore.
On this page: Employment Contracts | Employment Laws | Social Security | Personal Income Tax | Employee Benefits
Singapore Overview
| Overview | |
| Continent | Asia |
| Country | Singapore |
| Capital | Singapore |
| Time zone | UTC+08:00 (SST) |
| Total Time zones | 1 |
| Working hours per week | 44 |
| Working week | Monday–Friday |
| Typical hours worked | 9 |
| Personal Tax filing deadline | 15 April (18 April if filed electronically) |
| Financial Year | 1 April – 31 March |
| Date format | dd/mm/yyyy |
| Currency | Singapore Dollar (SGD) (S$) |
| VAT | the standard rate is 7% |
Employment Contracts in Singapore
In Singapore, employment contracts are termed "contracts of service" by the Ministry of Manpower. These contracts define the relationship between employers and employees, encompassing crucial terms and conditions of employment. The agreement can take various forms, including written, verbal, expressed, or implied, with a preference for written documentation to minimize disputes.
A contract of service signifies an agreement where one party agrees to employ another as an employee, and the other agrees to serve as an employee. Employers are obligated to provide Key Employment Terms (KETs) in writing to employees meeting specific criteria, such as entering into a contract of service on or after April 1, 2016, being covered by the Employment Act, and being employed for 14 days or more (referring to the contract duration, not the number of workdays).
Employers must issue KETs within 14 days after the commencement of employment. For instance, if an employee starts work on January 1, the KETs should be issued by January 15. KETs can be provided in a soft or hard copy, including handwritten formats. Certain common KETs, like leave policies and medical benefits, can be outlined in an employee handbook or on a company intranet.
KETs should cover essential aspects, including work arrangements and salary. Employers can use the KETs verification tool to ensure all necessary sections are included. Understanding and adhering to these guidelines ensure transparency and a clear understanding of employment terms for both employers and employees in Singapore. Compliance with these regulations helps maintain positive employer-employee relationships and minimizes the risk of disputes.
Employment Laws in Singapore
Singapore's dynamic economy thrives on a well-regulated and balanced employment landscape. The Employment Act serves as the cornerstone, ensuring fair treatment and minimum standards for all employees, except for specific excluded groups like managerial staff earning exceeding specific salary thresholds. This framework safeguards fundamental rights like minimum wage, working hours, leave entitlements, and termination procedures, fostering a stable and secure work environment for both employers and employees.
Minimum Wages
Singapore does not have a mandated minimum wage. Instead, wages are determined by market forces of supply and demand.
Payroll Cycle
As per the regulations outlined in the Employment Act, salaries must be disbursed at least once a month, settling within 7 days following the conclusion of the salary period.
Probation Period and Notice Period
In Singapore, the probation period typically ranges from 3 to 6 months, but the specific duration is determined by the employer and explicitly stated in the employment contract. It's important to note that having a probation period is at the discretion of the employer and is not mandatory.
The notice period, which is the duration between an employee's resignation and their final day of work, varies based on the length of the employee's service:
- Less than 26 weeks: 1 day
- 26 weeks to less than 2 years: 1 week
- 2 years to less than 5 years: 2 weeks
- 5 years or more: 4 weeks
Should an employee wish to leave before the notice period concludes, they have the option to do so by compensating with the payment of their salary in lieu of notice.
Working Hours
The regular working hours are from 9 am to 6 pm, Monday through Friday, with a 1-hour lunch break, totaling 40 hours per week. Contractual working hours refer to the mutually agreed-upon hours between you and your employer as specified in the contract of service.
- Depending on your typical work arrangement:
- If you work 5 days or fewer each week, your contractual hours can extend up to 9 hours per day or 44 hours weekly.
- If you work more than 5 days a week, your contractual hours are up to 8 hours a day or 44 hours weekly.
Overtime Pay
Overtime pay is applicable to all work conducted beyond the standard hours, excluding breaks.
- Employees eligible for overtime claims include:
- Non-workmen earning a monthly basic salary of $2,600 or less.
- Workmen with a monthly basic salary of $4,500 or less, typically engaged in manual labor.
The overtime rate for non-workmen is capped at $2,600 per month or an hourly rate of $13.60.
To ensure timely and accurate payment, it's crucial to receive your correct overtime pay for work performed beyond the contractual hours. Employers are obligated to pay at least 1.5 times the hourly basic rate for overtime work, and this payment should be settled within 14 days after the end of the salary period.
For instance, if a non-workman earns $2,600 monthly and works 2 hours of overtime, the overtime pay would be calculated as follows:
$13.60 × 1.5 × 2 hours = $40.80.
The calculation of overtime pay involves multiplying the hourly basic rate by 1.5 and the number of hours worked overtime.
The hourly basic rate is determined based on the employee category:
- For monthly-rated employees: (12 x Monthly basic rate of pay) / (52 x 44)
- For daily-rated employees: Daily pay at the basic rate / Working hours per day
- For piece-rated employees: Total weekly pay at the basic rate of pay / Total number of hours worked in the week
Understanding how overtime pay is calculated is essential to prevent disputes or claims related to overtime pay.
13th Month Salary
The Annual Wage Supplement (AWS), commonly known as the "13th month payment," is a once-a-year payment in addition to an employee's total annual wage.
The provision of AWS is not mandatory, and its payment is contingent on the terms outlined in your employment contract or collective agreement. Employers are encouraged to grant AWS as a means of acknowledging their employees' contributions to the company's overall performance.
In cases where business results for the year are exceptionally poor, employers have the flexibility to negotiate a reduced amount for AWS.
There is a limit on the AWS amount that an employer can pay. If no AWS was provided before 26 August 1988, the employer cannot exceed a payment equivalent to 1 month's salary.
Termination and Severance Pay
Notice for termination, whether initiated by the employer or the employee, is a written obligation that must be fulfilled. The duration of the notice period is determined by the terms agreed upon in the employment contract.
The day on which the notice is officially given is considered part of the notice period. In cases where no specific notice period was agreed upon initially, the following standards apply based on the length of employment:
- Employment less than 2 weeks: 1 day notice period
- Employment period of 26 weeks – 2 years: 1 week notice period
- Employment period of 2 – 5 years: 2 weeks notice period
- Employment period of 5 years and above: 4 weeks notice period
Mutual agreement between the parties involved can lead to the waiver of the notice period. Employees who successfully complete the stipulated notice period are entitled to Central Provident Fund (CPF) contributions for the corresponding salary during the notice period.
Severance Pay
The calculation of termination or severance pay considers multiple factors, such as your years of service and salary. Generally, this payout spans from one to three months' salary for every year of service.
Personal Income Tax in Singapore
Income tax rates are contingent on an individual's tax residency status in Singapore. For a particular Year of Assessment (YA), individuals qualify as tax residents if they are Singapore Citizens or Singapore Permanent Residents residing in Singapore, excluding temporary absences. Foreigners become tax residents if they have stayed or worked in Singapore for at least 183 days in the previous calendar year, continuously for three consecutive years (even with less than 183 days in the first and/or third year), or worked in Singapore for a continuous period spanning two calendar years with a total stay of at least 183 days. Singapore's progressive personal income tax rates for resident taxpayers, effective from YA 2024 onwards, mean higher income earners face higher proportions of tax. The highest personal income tax rate stands at 22%, with various tax brackets and corresponding rates based on chargeable income.
Resident Tax Rates (From YA 2024 onwards)
| Chargeable Income | Income Tax Rate (%) | Gross Tax Payable ($) |
|---|---|---|
| First $20,000 Next $10,000 |
0 2 |
0 200 |
| First $30,000 Next $10,000 |
- 3.50 |
200 350 |
| First $40,000 Next $40,000 |
- 7 |
550 2,800 |
| First $80,000 Next $40,000 |
- 11.5 |
3,350 4,600 |
| First $120,000 Next $40,000 |
- 15 |
7,950 6,000 |
| First $160,000 Next $40,000 |
- 18 |
13,950 7,200 |
| First $200,000 Next $40,000 |
- 19 |
21,150 7,600 |
| First $240,000 Next $40,000 |
- 19.5 |
28,750 7,800 |
| First $280,000 Next $40,000 |
- 20 |
36,550 8,000 |
| First $320,000 Next $180,000 |
- 22 |
44,550 39,600 |
| First $500,000 Next $500,000 |
- 23 |
84,150 115,000 |
| First $1,000,000 In excess of $1,000,000 |
- 24 |
199,150 - |
Employee Benefits in Singapore
The Singapore Employment Act stipulates specific benefits that employers must offer to their employees. Here are some compulsory employee benefits in Singapore:
- Annual Leave: Employers must grant a minimum of seven days of annual leave to employees who have completed at least three months of service. Additional leave is provided based on the duration of employment, as outlined in the employment contract.
- Sick Leave: The Employment Act mandates paid sick leave for employees. The entitlement varies, with a maximum of 14 days per year for those employed for more than six months.
- Hospitalization Leave: Employees hospitalized are entitled to paid hospitalization leave. The duration depends on the hospital stay and the employee's length of service.
- Maternity Leave: Female employees receive paid maternity leave, with the duration determined by their length of service and the number of children. Additional benefits include childcare leave and extended maternity leave.
- Paternity Leave: Male employees are entitled to paid paternity leave, the duration of which depends on their length of service and the number of children.
- Singapore Central Provident Fund (CPF): CPF is a mandatory social security savings plan requiring both employers and employees to contribute to retirement, healthcare, and home ownership.
- Injury Compensation Insurance: Mandatory for employees engaged in manual work, this insurance provides compensation for work-related injuries or illnesses.
- Health Insurance: While Singaporean Citizens and permanent residents can utilize MediSave, only Work Permit and S Pass holders are entitled to healthcare or medical insurance benefits from employers. Health insurance is not compulsory for Employment Pass holders.
Embracing an Employer of Record (EOR) solution in Singapore is a strategic imperative for companies aiming at global expansion. By offloading critical tasks such as compliance with local employment laws, navigating complex payroll intricacies, and ensuring statutory adherence to the EOR, businesses can seamlessly establish their presence in Singapore without the hassles tied to setting up a legal entity. This collaborative partnership empowers companies to concentrate on their core objectives and growth strategies, assuring that their workforce in Singapore operates in full compliance with local regulations. The EOR simplifies international employment processes, offering invaluable guidance in navigating the multifaceted landscape of Singaporean employment regulations.
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Social Security in Singapore
Social Insurance in Singapore revolves around the Central Provident Fund (CPF), a mandatory social security savings program sustained by contributions from both employers and employees. This vital component of Singapore's social security system addresses the retirement, housing, and healthcare needs of its populace.
The CPF consists of three distinct savings accounts:-
Ordinary Account: Usable for various purposes, such as home purchases, investments, and education.
- Special Account: Restricted until retirement, unless funds are allocated for retirement-related financial products. Functions as income during retirement.
- Medisave Account: Dedicated to covering medical expenses, hospitalization costs, and approved medical insurance.
Employer contributions are mandatory, ranging from 7.5 percent to 17 percent, contingent on the employee's age and income. Simultaneously, employee contributions range from 5 percent to 20 percent. CPF savings earn risk-free interest, with rates varying across accounts and age groups, regularly updated on the CPF government website.
CPF Contribution Rates for 2023
CPF Contribution Rates from January 1, 2024, Onwards
For Singapore Permanent Residents (SPRs), CPF contribution rates vary based on the SPR status year, applying the mentioned rates from the third year onwards. Additionally, contribution rates may adjust according to monthly salary, with the specified rates applicable to individuals earning more than $750 per month.