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Employer of record in Singapore

Expanding your business into Singapore can be an exciting venture. However, navigating the complexities of employment regulations and workforce management can be a daunting task. This is where working with an Employer of Record (EoR) in Singapore comes into play. An EoR is a third-party organisationo that legally employs workers on behalf of another company. EoR takes care of employment responsibilities such as payroll and taxes, benefits, and compliance, enabling companies to focus on their core operations while ensuring compliance with local laws.

Let’s explore the key factors to consider when choosing an EoR and why partnering with CXC, a trusted EoR provider, can simplify your expansion journey.

Compliance with local regulations

An EoR must adhere to the stringent legal and regulatory framework in Singapore. While there may not be a specific “EoR license,” companies offering employer of record services in Singapore are required to comply with several key areas:

  • Company registration: Businesses must be registered with the Accounting and Corporate Regulatory Authority (ACRA). This ensures the company operates legally within Singapore.
  • Labour laws compliance: Employment in Singapore is governed by the Employment Act and the Central Provident Fund Act. These laws regulate working hours, wages, benefits, and termination procedures.
  • Social security contributions: Employers must contribute to the Central Provident Fund (CPF), a mandatory savings scheme for Singaporean and permanent resident employees.
  • Tax compliance: Employers are responsible for withholding and remitting employee income taxes to the Inland Revenue Authority of Singapore (IRAS).
  • Work permits: If hiring foreign workers, obtaining the necessary work permits is a must, as per Singapore’s immigration policies.
  • Data protection compliance: Organisations must comply with the Personal Data Protection Act (PDPA) when handling employee information.
  • Employment agency license: If the EoR also provides recruitment or placement services, an Employment Agency License from the Ministry of Manpower (MOM) may be required.

Choosing an EoR with a proven track record in regulatory compliance ensures that your business remains protected from legal and financial risks.

Expertise in workforce management

A reliable EoR vendor in Singapore should have extensive experience managing payroll, benefits administration, and employment contracts. This expertise ensures smooth operations and minimises administrative burdens for your team.

Scalability and flexibility

As your business grows, your EoR should be able to accommodate your changing workforce needs. Look for an EoR agency in Singapore that offers scalable solutions, whether you need to onboard one employee or manage a larger team.

Local market knowledge

Understanding Singapore’s cultural and economic landscape is crucial for effective workforce management. An EoR with local insights can help you navigate challenges and maximise opportunities in the Singaporean market.

Hiring in Singapore

Navigating the hiring process in Singapore involves understanding employment laws, crafting compliant contracts, and implementing effective workforce strategies. Whether you’re working directly or through an employer of record in Singapore, prioritising employee well-being and cultural inclusivity will set your business up for success.

Employment laws in Singapore

Singapore’s employment regulations are primarily governed by the Employment Act (EA). This statute defines the rights and obligations of employers and employees, ensuring fairness in the workplace. Key highlights include:

  • Coverage: The EA applies to most employees in Singapore, excluding seafarers, domestic workers, and certain government employees. It provides additional protections for "Part IV EA Employees," including limits on working hours and overtime pay.
  • Labour relations: Employers must adhere to prescribed terms and conditions in the EA, which protect employees from unfair treatment.
  • Hiring foreign workers: For companies hiring foreign workers in Singapore, compliance with work pass regulations is mandatory. Employers need to secure the appropriate work passes through the Ministry of Manpower (MOM) and meet the advertising requirements for certain roles.

Hiring practices in Singapore

In terms of employment contracts, all employers in Singapore must provide written employment contracts outlining the terms of engagement. Here’s what you need to know:

  • Key employment terms (KETs): Employers must issue KETs to employees hired for 14 days or more. These should be provided within 14 days from the start of employment and can be delivered in hard or soft copy.
  • Probation periods: Although the EA does not specify probationary periods, they are a common practice. Typically, probation lasts between 3 to 6 months, allowing employers to evaluate performance before confirming permanent roles.
  • Customary terms: Employment contracts must meet at least the minimum standards set by the EA. Additionally, certain terms may be implied by law or workplace customs.
  • Independent contractors: While businesses can engage independent contractors, the MOM evaluates the actual working relationship to prevent misclassification. Simply labelling a worker as a contractor is insufficient.
  • Agency workers: These individuals are often hired through employment agencies. Agency workers must be Singapore citizens or permanent residents, and their contractual terms should comply with the Employment Act.

Employment benefits in Singapore

Providing competitive employment benefits is essential to attract and retain top talent. Key benefits include:

  • Central Provident Fund (CPF): Employers must contribute to CPF accounts for Singaporean and permanent resident employees. These contributions support retirement, healthcare, and housing needs.
  • Leave entitlements: Employees are entitled to paid annual leave, sick leave, and parental leave as per statutory requirements.
  • Medical coverage: Offering comprehensive health benefits, including insurance and wellness programs, is a widespread practice.
  • Bonuses: Performance-based bonuses and annual payouts are often used to reward and motivate employees.

Cultural considerations in Singapore

Singapore’s multicultural environment requires employers to be mindful of cultural nuances:

  • Diversity: The workforce comprises individuals from various ethnic and religious backgrounds.Respect for different customs and practices is essential.
  • Communication: While English is the primary business language, being sensitive to cultural differences in communication styles can improve workplace harmony.
  • Work-life balance: Singaporeans value work-life balance, and companies offering flexible arrangements are often viewed favourably.

Employee background checks in Singapore

Conducting background checks in Singapore is an essential step in making informed hiring decisions. From verifying immigration status to performing criminal background checks, employers must ensure that their processes comply with the Singapore background check laws and PDPA requirements.

Whether you’re performing an employment background check in Singapore or navigating complex regulations, understanding your obligations as an employer is key to a smooth and compliant hiring process.

Singapore’s background check law

Employers are allowed to conduct background checks on job candidates, but these checks must comply with the Singapore Personal Data Protection Act 2012 (PDPA). Under the PDPA, employers must inform candidates about the collection, use, and disclosure of their personal data and obtain their consent.

Key points under the PDPA:

  • Notification and consent: Employers must notify applicants of the purpose of collecting their personal data and obtain their consent.
  • Exceptions: Employers may bypass consent if the information is publicly available or collected for evaluative purposes, such as determining an applicant’s suitability for a role.
  • NRIC collection: While there is no requirement to request National Registration Identity Card (NRIC) details during job applications, employers may need this information later to determine work pass requirements.

Pre-employment checks that involve sensitive personal data must be handled carefully to ensure compliance with the PDPA. Failing to comply could result in penalties and reputational damage for employers.

Right to work in Singapore

Employers must verify a candidate’s right to work in Singapore, particularly when hiring foreign nationals. This involves conducting immigration checks and ensuring the appropriate work pass is obtained. Employers must comply with the Ministry of Manpower (MOM) guidelines when hiring foreign workers. Failing to validate an applicant’s immigration status can lead to significant legal consequences.

Singapore’s criminal background checks

Criminal background checks are permissible in Singapore but must be conducted appropriately and within legal boundaries. Employers can request such checks as part of their pre-employment background checks, particularly for roles requiring high levels of trust and security.

Considerations for criminal checks:

  • Employers may ask candidates to declare any prior criminal convictions during the hiring process.
  • There is no centralised public database for criminal records in Singapore. Employers typically rely on self-disclosures, reference checks, or third-party screening providers.

Criminal background checks are particularly relevant for positions involving financial transactions, data access, or vulnerable populations.

Failed employee background check in Singapore

Employers must ensure they handle any disclosed information fairly and without discrimination. For example, a failed background check should not automatically disqualify a candidate without assessing the relevance of the conviction to the role.

Minor inconsistencies may be overlooked or clarified, while serious concerns, such as falsified qualifications or a criminal record, can lead to more significant consequences. One possible outcome is the revocation of the job offer. If the individual has already started employment on a conditional basis, the employer may terminate the contract upon discovering the discrepancies. In some cases, employers may conduct further investigations or request clarification and additional documentation from the candidate to address the issues found during the background check.

For foreign workers, discrepancies in work pass applications, such as falsified educational credentials, may result in rejection by the Ministry of Manpower (MOM). Additionally, providing false information can lead to legal consequences, including fines, imprisonment, or even a permanent ban from working in Singapore, particularly if fraudulent documents are involved.

Other types of pre-employment background checks in Singapore

Aside from criminal and immigration checks, employers may consider other types of background checks to ensure a candidate’s suitability for a role. These include:

  • Employment verification: Employers often conduct checks to verify a candidate’s employment history, such as previous roles, job titles, and tenure. This is particularly useful when validating qualifications or experience for senior-level positions.
  • Education verification: Confirming academic qualifications is common in pre-employment background checks. Employers may request copies of degrees, certificates, or transcripts to ensure accuracy.
  • Reference checks: Obtaining professional references from former employers provides insights into the candidate’s work ethic, performance, and suitability for the role.
  • Medical checks: Employers may require medical examinations for roles with specific health requirements. However, these checks must be relevant to the job and comply with PDPA guidelines.

Hiring employees and other types of workers in Singapore

When it comes to hiring employees in Singapore, employers have various options to meet their organisational needs. From full-time employees to freelancers and independent contractors, understanding the different types of workers, along with relevant regulations, is essential for a smooth hiring process.

Full-time, part-time, and fixed-term employees in Singapore

In Singapore, employees can be hired on a full-time, part-time, or fixed-term basis. The Employment Act (EA) governs the relationship between employers and employees and sets out the rights and protections of workers.

Under the EA, an “employee” is defined as anyone under a contract of service with an employer, except for seafarers, domestic workers, and government employees. Specific protections apply to Part IV EA employees, including workmen earning up to SGD 4,500 monthly and non-workmen earning up to SGD 2,600 monthly. These protections include rest days, overtime pay, and limits on working hours.

Independent contractors in Singapore

Engaging independent contractors in Singapore is another hiring option for businesses looking for specialised services without entering into an employment relationship. However, simply labelling someone as an independent contractor does not determine their status. The Ministry of Manpower (MOM) and courts will assess the actual substance of the working arrangement.

Employers should consider the distinction between independent contractors and employees carefully to avoid disputes or non-compliance issues.

Agency workers in Singapore

Employers may also hire agency workers, who are often Singapore citizens or permanent residents. These workers are usually placed by employment agencies and can provide flexibility for short-term staffing needs.

Hiring freelancers in Singapore

Hiring freelancers in Singapore is becoming increasingly popular, particularly for creative, technical, and project-based work. Freelancers operate as self-employed individuals and are not protected under the Employment Act. Employers engaging freelancers must ensure clear contract terms to outline deliverables, payment, and other obligations.

Hiring retirees in Singapore

Hiring retirees in Singapore is another viable option for employers seeking experienced talent. With an ageing workforce, businesses can leverage the skills and expertise of older workers through flexible or part-time arrangements.

Foreign interns in Singapore

Employers can also consider hiring foreign interns in Singapore. Foreign nationals seeking internships require a valid Training Work Permit or Training Employment Pass, depending on their qualifications and the internship’s nature.

Hiring foreign workers in Singapore

When hiring foreign employees in Singapore, employers must comply with strict regulations, particularly regarding work passes and immigration requirements. The type of work pass required depends on the foreign worker’s qualifications, skill level, and salary.

Common work passes include:

  1. Employment Pass (EP): For highly skilled professionals, managers, and executives earning at least 5,000 SGD monthly in sectors like financial services. From 1 September 2023, EP applicants must also pass the Complementarity Assessment Framework (COMPASS), which evaluates individuals and companies based on various criteria.
  2. S Pass: For mid-skilled workers earning a minimum of 2,500 SGD monthly. Employers must pay a monthly levy and adhere to quotas for hiring S Pass holders.
  3. Work permits: For semi-skilled workers in sectors such as construction, manufacturing, and services. Employers must meet sector-specific quotas and pay levies for Work Permit holders.

Language used in Singapore

Understanding the language used in Singapore and its cultural nuances allows employers to build strong, inclusive teams. While English remains the primary working language, being mindful of the linguistic diversity and the cultural significance of other languages like Mandarin and Malay can enhance workplace communication.

What language is spoken in Singapore?

Singapore is a multicultural society with four official languages: English, Malay, Mandarin Chinese, and Tamil. However, English is the most used language in Singapore in both business and daily communication.

  1. English language in Singapore: English serves as the main working language and is the medium for education, business, and government operations. Most employment contracts, corporate communications, and legal documents are written in English. Employers are encouraged to use clear and precise English in their workplace documentation to ensure compliance and understanding. While there is no national language requirement for Singapore, English proficiency is typically expected of employees, especially in professional and customer-facing roles.
  2. Chinese language in Singapore: Mandarin Chinese is widely spoken among the Chinese-majority population. It is often used in informal settings or among Chinese-speaking employees. Employers hiring workers who interact with Mandarin-speaking clients or teams may find it beneficial to ensure their employees have Mandarin proficiency.
  3. Other languages: Malay, as the national language, holds cultural significance and is used in ceremonial settings. Tamil is spoken within the Indian community. While these languages may not dominate the workplace, businesses serving specific cultural groups may benefit from employees proficient in these languages.

Cultural diversity in Singapore

The cultural diversity in Singapore plays a significant role in shaping communication styles and workplace practices. Employers should be mindful of the following:

  1. Multicultural workforce: Singapore’s workforce comprises individuals from various ethnic backgrounds, including Chinese, Malay, Indian, and expatriate communities. Promoting inclusivity and sensitivity to cultural differences fosters a harmonious work environment.
  2. Language and business etiquette: While English is the most used language in Singapore, understanding other languages or dialects can help bridge cultural gaps, particularly in relationship-driven industries like sales or hospitality. Directness in communication is valued, but politeness and respect are equally important. Using appropriate language and tone ensures professional and effective communication.
  3. Hiring considerations: Employers do not need to adhere to any national language requirement for Singapore when drafting contracts or setting job criteria. However, roles involving customer interaction or global communication may specify proficiency in English or additional languages like Mandarin. There are also no specific legal requirements for the language used in employment contracts, though they are generally written in English for clarity and compliance.

Payroll processing in Singapore

Setting up payroll processing in Singapore requires careful planning and compliance with employment laws, CPF contributions, and tax obligations. Employers can simplify the process by adopting a reliable payroll system in Singapore that automates calculations and ensures accuracy. From CPF contributions to income tax withholdings, a well-organised payroll process is essential for businesses to thrive in Singapore’s competitive employment landscape.

Payroll system in Singapore

The Employment Act (EA) is the cornerstone of labour laws in Singapore. It governs matters related to salary payments, working hours, and employment conditions. Under the EA:

  • Employers must provide itemised payslips for all employees covered under the Act.
  • Payslips must include details like basic salary, allowances, deductions, overtime, and net pay.
  • Employers are also required to maintain salary records in alignment with the payslip requirements.

On the other hand, Central Provident Fund (CPF) contributions, mandated under the CPF Act, is a social security savings plan for Singaporean citizens and Permanent Residents (PRs) earning more than 50 SGD monthly. Employers are responsible for making monthly CPF contributions based on the employee’s wages, their age and income level.

Moreover, employers in Singapore must comply with tax withholding requirements for employees, particularly for foreign workers. This includes the Income Tax Clearance (Form IR21), which requires employers to withhold tax on foreign employees’ salaries upon their termination or departure from Singapore.

How to set up payroll in Singapore

1. Register your business entity

Before initiating payroll, foreign companies must register a subsidiary, branch, or representative office to carry on business in Singapore. Under the Companies Act 1967, “carrying on business” includes activities like managing property or employing staff. However, certain activities, such as holding director meetings or using independent contractors, do not require registration.

2. Select a payroll system

Employers should implement an efficient payroll system in Singapore to automate salary calculations, tax deductions, and CPF contributions. Payroll software solutions should streamline company’s payroll process from monthly salary payments, statutory contributions, and tax filings and compliance.

3. Ensure statutory compliance

To meet payroll compliance requirements, employers must:

  • Calculate salaries in accordance with employment contracts and EA regulations.
  • Deduct statutory contributions, such as CPF, SDL, and Foreign Worker Levy (FWL).
  • Prepare itemised payslips with accurate salary components for employees.
  • Submit tax returns and income declarations to the Inland Revenue Authority of Singapore (IRAS).

4. Payroll management for foreign workers

When processing payroll for foreign employees, employers must verify valid work passes, set account for levies and quotas applicable to S Pass and Work Permit holders. They should also withhold taxes for foreign employees upon termination to comply with tax clearance requirements.

Step 5: Maintain records

Employers must retain payroll records, including payslips and salary details, for at least two years. These records must align with EA and tax requirements to facilitate audits and compliance reviews.

Step 6: Monitor ongoing compliance

Singapore’s payroll regulations are updated periodically. Employers should stay informed about changes to CPF rates, tax policies, and work pass regulations to ensure ongoing compliance.

Setting up payroll in Singapore and ensuring compliance with local regulations can be a complex and time-consuming process, especially for businesses unfamiliar with the country’s labour laws. From calculating statutory contributions like CPF to adhering to strict tax requirements, even small mistakes can lead to penalties or legal issues.

To simplify this process, many companies choose to partner with an Employer of Record (EOR). This allows businesses to focus on managing their talent and growing their operations without getting bogged down by administrative or legal challenges.

Easily hire employees in Singapore and beyond with CXC

Hiring employees in Singapore usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.

Through our EoR solution, you can confidently hire employees in Singapore, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.

Compliantly hire workers anywhere with CXC

With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.

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