Hiring Employees in Singapore
What are the applicable laws to my employee?
Two forms of legislation come into play when you hire an employee: the Employment Act and the Employment of Foreign Manpower Act (EFMA), for those who hold a pass such as an EP, PEP, and EntrePass etc.
Employment Agreements in Singapore
Sometimes called an offer letter, terms of engagement, appointment letter or employment contract, the employment agreement determines the terms between Singapore employers and employees.
Payslips and other key employment terms
According to the Employment Act, on top of an existing employment agreement employers need to do the following:
- Issue Key Employment Terms (KET) that explicitly state leave, benefits, etc
- Keep employment records which consist of employee records and salary records
These new requirements aim to help employees better understand how their salary is calculated and also to help employers minimize misunderstandings and disputes in the workplace.
Additional requirements for foreign employees
Should you choose to decide to hire foreigners, you will need to apply work passes for your employee with the Ministry of Manpower (MOM). These include:
- S Pass (mid-level skilled workers who make at least $2,200 per month and fulfill assessment criteria set by MOM)
- Work permit (semi-skilled workers in the construction, manufacturing, marine, process or services sector)
There are stiff penalties for foreigners who work without the relevant work passes, so make sure that the MOM approves them before they start working in Singapore.
Central Provident Fund (CPF) contributions and additional levies
As an employer, you need to contribute to your employee’s Central Provident Fund (CPF) if he is a Singapore citizen or permanent resident (PR). Please make these payments within 2 weeks after the last day of the month.
The Singapore Government collects a Foreign Worker Levy for all low-skilled and unskilled foreign employees a Foreign Worker Levy (FWL). This is to regulate the demand for foreign workers in Singapore.
There are several options when it comes to bringing students into your company.
There are no restrictions to hiring students who are Singapore citizens or PRs on a full-time and part-time basis. If you place students in an internship, you are exempt from paying their CPF – instead, you can choose to pay a monthly allowance as per standard practice.
If you wish to give an internship to a foreigner, you will need to apply for a Training Employment Pass, Training Work Permit, Work Holiday Pass or Work or Holiday Visa Programme for them.
If your candidate is not suitable for the above visas, you may still hire your intern if they have a Student Pass.
Tax clearance for foreign employees
It is your responsibility as an employer to make sure that a non-Singapore citizen employee pays all outstanding taxes before they leave Singapore for more than 3 months. Additionally, you should file an IR21 form with the IRAS (Inland Revenue Authority of Singapore).
Separately, please also ensure that their work pass is cancelled and the physical pass returned to the MOM.