Recruitment of a Singaporean Resident
In this article, we cover the key points to note when hiring a Singapore Citizen or Permanent Resident.
Singapore Employment Act
The Employment Act is Singapore's main labour law, and all employers must comply with it. It sets out the basic terms and working conditions for employees, and it covers all employees under a contract of service, including managers and executives. Some parts of the Act, such as the rules on working hours and overtime, apply only to employees below certain salary levels.
The following employees are not covered by the Act:
- Seafarers
- Domestic workers
- Statutory board employees and civil servants
Employment Contract
The employment contract sets out the relationship between the employer and employee, including the terms and conditions of employment.
For employees covered by the Employment Act who are employed for 14 days or more, employers must give Key Employment Terms (KETs) in writing within 14 days from the start of employment. KETs include job title and duties, working hours, salary, allowances, leave, probation and notice period. They can be given in hard or soft copy, either in the contract itself or in a separate document. We recommend putting the full employment contract in writing to minimise disputes over the agreed terms.
Central Provident Fund (CPF)
The Central Provident Fund (CPF) is a mandatory social security savings scheme funded by contributions from both employers and employees. It is a key pillar of Singapore's social security system and helps Singaporeans meet their retirement, housing and healthcare needs.
CPF contributions are payable for Singapore Citizens (SCs) and Singapore Permanent Residents (SPRs) who:
- Work in Singapore under a contract of service, whether permanent, part-time, temporary or casual, and
- Earn total wages of more than $50 a month.
Employers pay both the employer's and the employee's share of CPF contributions each month:
- Contribution rates. For employees aged 55 and below, the employer contributes 17% and the employee 20% of monthly wages, up to the Ordinary Wage ceiling of $8,000 a month. Rates are lower for older employees.
- Lower-wage employees. For employees earning between $50 and $500 a month, only the employer's share is payable. The employee's share is phased in for wages between $500 and $750.
- New PRs. SPRs pay graduated (lower) rates in their first two years of PR status, unless the employer and employee jointly apply to pay full rates.
Employers can recover the employee's share by deducting it from the employee's wages, but only for the month the wages are paid. If the deduction is missed, the employer cannot recover it later and must bear the cost.
CPF contributions are due by the last day of each month and must be paid by the 14th of the following month. Late payments attract interest of 1.5% a month.
Skill Development Levy (SDL)
Employers must pay the Skills Development Levy (SDL) for all employees working in Singapore, including foreign employees. The money goes to the Skills Development Fund.
SDL is 0.25% of each employee's total monthly wages, on the first $4,500. The minimum is $2 for employees earning less than $800 a month, and the maximum is $11.25 for employees earning more than $4,500. SDL is paid together with the monthly CPF contributions.
