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Hiring in Singapore? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Singapore.
Employment Norms in Singapore
Introduction: Singapore is known for its strong economy and diverse workforce, making it a popular destination for job seekers and businesses. However, before entering the job market, it's important to understand the employment norms in Singapore. From labor laws to work culture, this article provides insights into what you need to know about employment in Singapore.
General Information:
- The Singapore currency is the Singapore dollar (SGD).
- Singapore is a city-state with no official capital. However, the city of Singapore is considered the de facto capital.
- English, Malay, Mandarin, and Tamil are the official languages of Singapore. Legal documents can be drafted in English to be considered legally valid.
- As of 2021, the GDP of Singapore was reported to be USD 396.99 billion.
Singapore's labor laws ensure fair employment practices, minimum wage standards, and protection for workers against discrimination and exploitation.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements
In Singapore, agreements are a vital part of employment, and they can be either in writing or oral.
- The language used in employment agreements is typically English.
- The terms and conditions of the agreement must adhere to the employment laws and regulations of Singapore.
- Employment agreements usually cover basic information such as job responsibilities, compensation, benefits, and duration of employment.
- Some agreements may also include non-compete clauses, confidentiality agreements, and intellectual property agreements.
- Both parties should sign the agreement to indicate that they understand and agree to the terms and conditions mentioned.
- If there are any changes to the agreement, they should be made in writing and agreed upon by both parties.
Onboarding Process
While there are no specific laws governing the onboarding process in Singapore, the following best practices are generally recommended:
- Orientation to the company's culture, values, and policies
- Introduction to colleagues and supervisors
- Training on the job responsibilities and expectations
- Completion of the necessary paperwork, including:
- Employment contract
- Personal particulars form
- Bank account details
- Tax forms
- Immigration documents for foreign employees
Visa
Singapore has various types of work visas available for foreign nationals, depending on their qualifications and job requirements. Some of the most common work permits/visas include:
- Employment Pass (EP): For foreign professionals, managers, and executives who earn at least SGD 4,500 per month and meet other eligibility requirements.
- S Pass: For mid-level skilled workers who earn at least SGD 2,500 per month and meet other eligibility requirements.
- Work Permit: For semi-skilled foreign workers in specific industries such as construction, manufacturing, and domestic services.
- Training Employment Pass (TEP): For foreign trainees undergoing practical training in Singapore.
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Minimum Wage
Singapore has no minimum wage laws or regulations. There is an exception for two professions, the minimum wage of a cleaner should be SGD 1200 per month, whereas a security guard should get SGD 11100 per month as a minimum wage.
Payroll Cycle
In Singapore, the standard payroll cycle is monthly.
Annual Bonus
In Singapore, it is customary practice to offer a 13th month's salary or a bonus by the end of every year.
Health Benefits
In Singapore, employers are not legally required to provide health benefits to their employees, but many companies offer them as part of their employee benefits package. Some common health benefits that employers may offer include:
- Medical insurance coverage for hospitalization and outpatient treatment
- Dental coverage
- Vision care coverage
- Annual health screenings or check-ups
- Wellness programs or gym memberships
Employers may also contribute to the Central Provident Fund (CPF) account of their employees, which can be used to pay for healthcare expenses, among other things. While there is no specific legislation governing health benefits, employers are encouraged to provide competitive and comprehensive benefits to attract and retain top talent.
Working Hours and Overtime
- Work hours: The standard workweek is of 44 hours, with a maximum of 8 hours of work per day.
- Break: Employees are entitled to at least 1 rest day per week and 1 hour of rest for every 8 hours of work. Lunch breaks of at least 30 minutes are also mandatory.
- Overtime: For overtime work, employees must be compensated at a rate of at least 15% of their basic hourly rate. An employee can overtime 12 hours in one day and 72 hours in a month.
Leaves
Sick Leave
- After 6 months of employment, the employee gets 14 days of paid sick leaves per annum. 60 days if hospitalization is required.
- Before 6 months, the allotment is
- 0-3 months: 5 days per year. 15 days if hospitalized.
- 4 months: 8 days per year. 45 days if hospitalized.
- 5 months: 11 days per year. 45 days if hospitalized.
- Employers should be informed about the sick leave within 48 hours.
Parental leaves
- Working mothers in Singapore are entitled to 16 weeks of paid maternity leave. Pay for the first 8 weeks is done by the employer and the remaining by the government in case of the birth of a first or second child. During the birth of the third child, all 16 weeks' salary is paid by the government.
- Working fathers are entitled to 2 weeks of paid paternity leave. Government-Paid Paternity Leave (GPPL) pays for these leaves.
- Adoptive fathers, if meets the eligibility criteria, can avail the paternity leave, funded by Government-Paid Paternity Leave (GPPL).
Annual leaves
- In Singapore, employees are entitled to at least 7 days of paid annual leave for the first year of employment, which increases progressively to a maximum of 14 days after 8 years of continuous service with the same employer.
Other leaves
- Bereavement leave of 2-3 days is offered to employees who have recently suffered a loss of a close relative.
- Marriage leave of up to 5 days is allowed for all employees.
- Voting day is considered a public holiday.
- If an employee receives official notification of a national service call by the government, they are entitled to paid reservist leave annually.
Public Holidays (for the Calendar year 2023)
- New Year's Day: 2 January
- Chinese New Year: 23-24 January
- Good Friday: 7 April
- Hari Raya Puasa: 22 April
- Labour Day: 1 May
- Vesak Day: 3 June
- Hari Raya Haji: 29 June
- National Day: 9 August
- Deepavali: 18 November
- Christmas Day: 25 December
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Taxes for Employers
Employers in Singapore are required to pay several taxes, including:
- Central Provident Fund (CPF) contributions: The contribution of employers towards CPF is as follows:
- 17% contribution for the employees who are 55 years old and above.
- 13% contribution for the employees whose age is between 55 to 60 years.
- 9% contribution towards the employee whose age is between 60 to 65 years.
- Skills Development Levy (SDL): Employers contribute up to 0.25% to SDL.
- Employers also pay the worker's injury fund, the amount of which depends upon the insurance plan.
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Taxes for Employees
Employees in Singapore are required to pay several taxes, including:
- Central Provident Fund (CPF) contributions: CPF funds the social security programs such as family protection, healthcare home ownership, retirement etc. Both employees and employers contribute towards the CPF:
- An employee of age 55 and below contributes 20%
- Employee between the age of 55 to 60 contributes 13%
- Those employees who are between the age of 60 to 65 contributes 7.5%
- Personal Income Tax: Employees are subject to personal income tax on their employment income, which is calculated based on a progressive tax rate structure. The current tax rates range from 0% to 22%, depending on the employee's income level.
- 0 - 20000: No tax
- 2.0%: 20000-30000
- 3.5%: 30000-40000
- 7%: 40000-80000
- 11.5%: 80000-120000
- 15.0%: 120000-160000
- 18%: 160000-200000
- 19%: 200000-240000
- 19.5%: 240000-280000
- 20%: 280000-320000
- 22%: 320000 and above
Probation
Probation periods in Singapore range between 3-6 months.
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Termination
Employers in Singapore may terminate an employee's contract for various reasons, including:
- Poor performance or misconduct
- Redundancy or retrenchment
- Medical reasons
- Mutual agreement
Severance Pay
There is a retrenchment benefit in Singapore where payments are made upon termination after an employee has worked for two years. Payment is typically 2-4 weeks' pay for each year of employment.
Employees or Contractors
Employers who misclassify employees as contractors may be subject to penalties and fines, as well as be required to pay back wages, benefits, and taxes owed to the employee. Similarly, employers who misclassify contractors as employees may be required to provide the contractor with employment benefits, as well as pay back wages, taxes, and penalties.
Final Words
Singapore has a highly regulated employment landscape with a strong focus on ensuring the protection and well-being of employees. Despite the highly regulated environment, Singapore also offers numerous opportunities for businesses and individuals to thrive, thanks to its stable economy, strategic location, and highly skilled workforce.
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