The Top Legal Considerations For Employers In Singapore

​As a global business nucleus, Singapore’s free-market economy owes its success to its open and corruption-free business environment. And not only this but well-framed monetary & fiscal policies and a transparent legal framework also synergise to make it highly developed. With the ease of company formation & suitable geographical location, Singapore becomes an ideal spot for establishing businesses.

But, per contra, businesses encounter several legal compliance issues. This fact makes it pertinent for employers to understand employment and labour laws & regulations.

The guide provides some of the key aspects of employment law in Singapore as well as explains the top legal considerations for employers across the region.

ALSO READ: 2023 Southeast Asia Market Insights & Salary Trends Report

The Employment Act

The Employment Act is the primary legislation that governs employer-employee relations in Singapore. It sets out minimum legal considerations for employers that employers need to address while hiring workers covered by the law.

The Employment Act of Singapore (Chapter 91) (“EA”) is the primary statute regulating the employment relationship. This provides for the basic terms and conditions at work for employees (both locals and foreign) covered by the EA. The act also protects part-time employees. Employers must comply with their obligations and provide no less favourable terms than those mentioned in EA. For instance, an employment contract clause will be considered null and void if it is less favourable to the employee than specified by the EA.

Do you know? The 2022 Edition of The Global Talent Competitiveness Index* by Insead, Human Capital Leadership Institute, and Portulans Institute has listed Singapore as the second-most talent-competitive country in the world. The report measures how countries and cities grow, attract and retain talent against the background of many changes that could deeply affect the global talent scene.

What are the key Employment Law Provisions?

For those covered under the Employment Act, their employers are required to abide by the following considerations of the Act as listed below.

#1. Employment Contract and KETs

An employment contract or contract of service defines the employer-employee relationship, including the terms and conditions of employment. The contract must include key employment terms (KETs) and essential clauses, such as hours of work and job scope.

KET generally includes:

• Full name of employer and employee

• Job title, main duties, and responsibilities

• Start date and duration of employment

• Working time and day

• Salary, allowances, and deductions

• Employee benefits

• Probation and notice period

Refer to the following template for in-depth understanding of KETs.​

#2. Age

The legal age to work in Singapore is 17 years. Even so, an employer can employ young children aged 13 to 16 years but take note of restrictions on the type of work that children and young persons may perform. However, there are some legal compliance issues in employing them in certain types of work. In other words, there are certain restrictions on what kind of job children and young persons can perform. The retirement age is 62 years. However, only Singapore citizens and permanent residents are eligible for re-employment after age 62.​

#3. Minimum wage 

There is no set minimum wage for employees, and salaries are decided according to mutual consent between the employer and the employee. Salary must be paid:

• Within 7 days after the end of the salary period

• For overtime work, within 14 days after the end of the salary period

All employers must also issue itemised pay slips to employees covered by the Employment Act.​

#4. Hours of work

The daily working time must not exceed 9 hours per day or 44 hours a week in case of a 5-day work week. However, if employees work more than five days a week, their working time may be up to 8 hours a day or 44 hours a week.  Under circumstances where employees work more than specified hours, the employer must pay 1.5 times the basic pay.

Break times are not included in the calculation of the hours of work.​

#5. Annual leaves

An employee is entitled to annual leave if he has worked with the same employer for at least three months. Following is the scheme laid out by the law for annual leave.

• Employees in the first year of employment are entitled to 7 annual leaves.

• Employees in the second year of employment are entitled to 8 annual leaves.

• Employees in the third year of employment are entitled to 9 annual leaves

• Employees in the fourth year of employment are entitled to 10 annual leaves.

• Employees in the fifth year of employment are entitled to 11 annual leaves.

• Employees in the sixth year of employment are entitled to 12 annual leaves.

• Employees in the seventh year of employment are entitled to 13 annual leaves.

• Employees in the eighth year of employment or who have served more than eight years are entitled to 14 annual leaves.

#6. Sick Leaves 

An employee who has worked for at least three months is entitled to paid outpatient sick leave and hospitalisation leave. The Employment Act requires employee to inform your employer within 48 hours. The employer may ask for a certificate from a medical practitioner registered under the Medical Registration Act or Dental Registration Act.

Between 3 and 6 months of service, your entitlement is pro-rated as follows:

Number of months of service completed	Paid outpatient sick leave (days)	Paid hospitalisation leave (days)
3	5	15
4	8	30
5	11	45
6 and thereafter	14	60

​

#7. Public Holidays

As per the Employment Act, every employee has the right to 11 paid gazetted public holidays annually. The employer should pay an extra day’s salary or offer an off on a different day if they wish the employee to work on a public holiday.

In accordance with the Employment Act, if a public holiday falls on a non-working day, you are entitled to another day off or one extra day’s salary in lieu of the public holiday at the gross rate of pay.​

#8. Termination

Both the employer and employee can terminate the contract of employment in Singapore.  This can happen if the:

• employer resigns,

• contract duration expires or

• employer dismisses the employee

In case of dismissal or resignation, either the employer or employee must give advance notice in writing. Both parties must follow the terms and conditions for termination as stated in the contract of service.

Here are the basic EA requirements for a termination:

• Employees must give your employer advance notice in writing. Employees can also use their annual leave to offset the notice period.

• If an employee decide to terminate without notice, employee will have to pay compensation in lieu of notice.

• If termination is due to misconduct, the employer must hold an inquiry before taking any disciplinary action.

• If an employee believes that he or she has been wrongfully dismissed, they can file a wrongful dismissal claim at Tripartite Alliance for Dispute Management (TADM).

Summing Up

Employment laws aimed to protect workers from mistreatment by employers. Over time, the role of the regulations has expanded. Simply put, they also ensure flexibility for organisations throughout the journey and employment activities.

We hope to have brought you the aspects that will assist you in running your venture while complying with the laws. However challenging, employers must keep abreast of legal compliance issues and the legislative environment. The only way to protect your organisation’s commercial interests is by complying with legal obligations under employment law.

How can we help with your plans in Singapore?

These are just a few of the provisions to be aware of Employment Act in Singapore. Make sure you research the laws in your area to be sure that you are following all applicable regulations.

If you have any questions about how to proceed, contact us for advice and best practices for hiring your next employee. We are here to take the stress out of growing your business. Get in touch with us today to learn more about our staffing solutions or get assistance with work pass applications when hiring foreign talent.

FAQs

1. How can employers ensure compliance with legal considerations?

As a business grows, the relevant laws and regulations become complex. Moreover, they govern the employer-employee relationship. Therefore, businesses must take some measures to comply with legal considerations, which are mentioned as follows:

• Familiarising themselves with state and federal labor laws to prevent violation of employees’ rights.

• Conducting the recruitment process lawfully.

• Verifying the employment status of all the potential candidates.

• Training managers on how to handle situations involving harassment and discrimination.

2. What are some standard legal compliance issues that employers face?

The most common legal compliance issues that employers face are:

• Workplace harassment

• Diversity and inclusion

• State and local laws

• Recruiting

• Workforce planning and technology

• Data security

• Employee leave policies

• Employee wellness

• Employee benefits