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Employment contracts in Singapore

Understanding employment contracts is crucial for employers in Singapore to establish clear, compliant, and productive work relationships. This guide explores the key aspects of employment contracts, including commission-based contracts and dual employment contracts. It also highlights the potential consequences of breaching an employment contract and provides best practices for handling contract extensions, working hours, and termination clauses.

Is an employment contract mandatory in Singapore?

Yes, an employment contract is mandatory in the country. The law requires employers to provide a written agreement to protect both parties and clearly define their rights and obligations. Whether drafting a standard employment contract, a part-time contract, or one for foreign workers, employers must follow the correct legal framework to avoid legal repercussions and ensure compliance with the Employment Act and other relevant regulations.

What are the employment contract laws in Singapore?

Employment contract laws in Singapore are governed primarily by the Employment Act, which outlines the minimum terms and conditions for employees, such as salary, working hours, overtime, and leave entitlements. These laws ensure fairness and protect both employers and employees from potential disputes. Below are key contract types and their specific considerations:

  • Standard employment contract in Singapore: Covers full-time employees with detailed terms on salary, job scope, working hours, and benefits.
  • Part-time employment contract in Singapore: Must specify the agreed number of working hours per week, typically fewer than 35 hours, along with pro-rated benefits such as annual leave and CPF contributions.
  • Employment contract for foreign workers in Singapore: Requires adherence to additional regulations, including work pass requirements and terms outlined by the Ministry of Manpower (MOM).
  • Commission-based employment contract in Singapore: Specifies how commissions are calculated and paid, alongside basic salary terms, if applicable, ensuring clarity on performance-based earnings.
  • Dual employment contract in Singapore: Applies when an employee holds two roles within the same or different companies, requiring clear separation of job scopes and responsibilities to avoid legal or tax complications.

What happens when there is a breach of employment contract in Singapore?

A breach of an employment contract occurs when either party fails to fulfill their obligations as outlined in the agreement. For instance, an employer may breach the contract by failing to pay agreed-upon wages, while an employee might breach it by resigning without providing the required notice. The consequences of a breach can include legal action, where the non-breaching party may seek remedies such as compensation for damages or specific performance. Employment claims may also be lodged with the Tripartite Alliance for Dispute Management (TADM) or escalated to the Employment Claims Tribunals (ECT) for resolution. In severe cases, the contract may be terminated, and the breaching party could face penalties or damages.

Employment contracts policies for employees in Singapore

In Singapore, employment contracts form the backbone of employer-employee relationships. Employers are required to issue Key Employment Terms (KETs) in writing to employees covered under the Employment Act (EA) who are employed for at least 14 consecutive days. This requirement has been in effect since April 1, 2016, and applies to both full-time and part-time employees.

KETs must include essential details such as:

  • Salary and payment frequency.
  • Leave entitlements.
  • Medical benefits.
  • Working hours.

Employers can provide these terms via soft or hard copy, and common KETs (e.g., leave policy or medical benefits) can be shared through an HR policy employee handbook in Singapore or the company intranet. Importantly, if all KETs are covered in the written employment contract, separate documentation is not necessary.

Failure to issue KETs can result in administrative penalties, including potential limitations on applying for work passes. Employers should also maintain comprehensive employee records in compliance with the Employment (Employment Records, Key Employment Terms, and Pay Slips) Regulations 2016.

Probationary periods in Singapore

The Employment Act does not dictate probationary period durations, leaving it to employer discretion. Typically, a probationary period ranges from three to six months. This time allows both parties to assess the individual’s suitability for the role.

While crafting company policy for employees, employers should outline clear expectations during probation, such as performance metrics and evaluation timelines.

Employment policies in Singapore

Singaporean employers must ensure that policies adhere to EA requirements, ensuring no terms are less favourable than those prescribed by law. Core policies include:

  1. Privacy policy for employees in Singapore: This safeguards employee data and aligns with Singapore’s Personal Data Protection Act (PDPA).
  2. HR policy employee handbook in Singapore: This handbook centralises essential policies like leave entitlements, workplace behaviour, and grievance mechanisms.
  3. Employee referral program policy in Singapore: Incentivising staff referrals can enhance recruitment efforts and strengthen team cohesion.
  4. Employee welfare policy in Singapore: Addressing benefits like medical insurance, mental health support, and recreational initiatives helps maintain morale.

Ensure these policies are easily accessible and updated regularly to reflect legal and organisational changes.

Third-party approval in Singapore

Employers generally do not need approval from third parties for employment contracts or policies to be valid. Exceptions include specific work pass advertising requirements and approvals, which may apply when hiring foreign employees.

Terms of contract in Singapore

Understanding contract terms and conditions is important for employers to ensure compliance and foster clear communication with employees. A well-crafted contract of service not only defines the employer-employee relationship but also helps avoid or resolve misunderstandings and disputes.

Typical contract terms in Singapore

A contract of service outlines the mutually agreed terms and conditions of employment between employers and employees. Contracts can be written or verbal, but having a written contract is recommended for clarity. Employers are required to provide employees with a copy of the written contract if one exists.

The terms under the contract must meet the minimum standards set by the Employment Act. Employers must also obtain employee consent before making changes to the contract terms.

Implied term contracts in Singapore

In addition to explicit clauses, contracts often contain implied term in Singapore, which are terms not expressly stated but understood to exist. These may include:

  • Duty of fidelity: Employees must act in good faith and prioritise the employer’s interests.
  • Safe working environment: Employers must ensure workplace safety.
  • Reasonable care and skill: Employees are expected to perform their duties competently.

Implied terms can arise from custom, practice, or legal requirements and play a critical role in shaping the employer-employee relationship.

Unfair Contract Terms Act in Singapore

Singapore’s Unfair Contract Terms Act (UCTA) protects parties from unreasonable or oppressive contractual terms. It primarily applies to exclusion clauses — terms that limit liability for breaches or negligence.

For employment contracts, UCTA ensures that:

  • Employers cannot unreasonably exclude liability for statutory duties, such as providing a safe workplace.
  • Employees are safeguarded from overly restrictive clauses that limit their rights unfairly.

Employers should regularly review contracts to ensure compliance with UCTA and other applicable regulations.

Contract extensions in Singapore

Whether it is renewing a fixed-term contract, extending a probationary period, or engaging independent contractors, understanding the rules and best practices ensures compliance and fairness.

Extending probationary periods in Singapore

Extending probationary periods is allowed in Singapore, provided it aligns with the terms of the employment contract and is handled fairly. Employers should clearly communicate the reasons for the extension, such as the need for more time to assess the employee’s performance, and ideally obtain the employee’s agreement in writing.

While there are no specific legal limits on the extension duration, it should be reasonable and not arbitrary. Employees on probation are still entitled to statutory benefits like paid leave and CPF contributions, ensuring fair treatment during the extended period.

Steps for extending a probation period may include:

  1. Performance review: Conduct a thorough assessment to identify specific areas for improvement.
  2. Clear communication: Notify the employee about the extension, providing constructive feedback and support plans.
  3. Formal documentation: Issue an extension of probation period letter, detailing the reasons for the extension, the new probation period, and expectations moving forward.

Typical probation extensions range from one to three months, depending on the role and performance gaps. Employers should be consistent in applying probation extension policies to avoid perceptions of bias.

Fixed-term contracts in Singapore

A fixed-term employment contract in Singapore is an agreement between an employer and an employee for a specified duration or until the completion of a particular project. Unlike permanent contracts, it clearly outlines the start and end dates of employment. Fixed-term contracts are commonly used for temporary roles, seasonal work, or project-based assignments.

Employees under such contracts are generally entitled to the same statutory benefits as permanent employees under the Employment Act, such as paid leave, CPF contributions, and overtime pay (if applicable). When the contract ends, the employer is not required to provide notice of termination unless otherwise stated in the agreement.

Extending a fixed-term contract in Singapore

There are no statutory limitations on the duration or renewal of fixed-term employment contracts. Employers can structure these contracts for short-term needs, such as three to six months, or for longer durations, like one to two years, depending on the role.

The flexibility to renew these contracts allows employers to adjust employment arrangements based on business demands as well. However, frequent renewals of short-term contracts may raise questions about whether the arrangement effectively constitutes permanent employment. Clear communication and proper documentation help avoid potential disputes.

Rights for workers with fixed-term contract jobs in Singapore

Individuals with fixed-term contract jobs in Singapore are entitled to the same statutory protections as their permanent counterparts under the Employment Act. These rights include:

  • Minimum wage requirements (if applicable).
  • Leave entitlements, including annual, medical, and maternity leave.
  • Protection against wrongful dismissal.

Employers should ensure that fixed-term employees are treated equitably and informed about their rights. Any additional benefits provided should be explicitly stated in the contract to prevent misunderstandings and disputes down the road.

Notice periods for fixed-term contracts in Singapore

Notice periods for fixed-term contracts are typically agreed upon by both parties at the outset and documented in the employment agreement. If no notice period is specified, the notice period defaults to the terms set by the Employment Act, which are determined by the length of employment.

For short-term contracts, notice periods may be shorter than those for permanent roles but should be reasonable and clearly communicated.

Employers and employees must honour the agreed-upon notice period when terminating the contract early. This ensures a smooth transition and reduces legal risks.

Getting out of a fixed-term contracts in Singapore

Ending a fixed-term contract prematurely, whether by the employer or employee, should follow the terms outlined in the contract. For employers considering terminating a contract, valid reasons may include redundancy, performance issues, or mutual agreement.

When terminating a fixed-term contract, employers should:

  • Provide written notice in accordance with the agreed-upon notice period.
  • Offer compensation if the termination is not due to employee misconduct or poor performance.
  • Ensure compliance with the Employment Act to avoid claims of unfair dismissal.

In cases where the contract reaches its natural end without renewal, no additional notice is typically required, as the expiry date serves as the termination point.

Singapore’s working hours

Employers in Singapore must carefully manage employee schedules to comply with the Ministry of Manpower’s working hours regulations while considering industry-specific demands and workforce flexibility. Adhering to legal requirements ensures fair treatment of employees and avoids potential disputes.

Legal working hours in Singapore

The legal working hours in Singapore are outlined under Part IV of the Employment Act. For employees covered by this section, the maximum standard working hours are 44 hours per week.

The standard workweek typically runs from Monday to Friday, though some businesses may include Saturday as a half-day. Employees cannot work more than eight hours a day or six days a week without overtime compensation. Employers offering flexible working hours, such as half-day arrangements, should still ensure that total weekly hours do not exceed the legal maximum.

Overtime regulations in Singapore

For eligible employees, overtime work must be compensated at a rate of at least 150% of the basic hourly wage. The regulations also set clear limits:

  • Daily maximum: Employees cannot work more than 12 hours in a single day, including overtime.
  • Monthly maximum: Overtime is capped at 72 hours per month.
  • Overtime pay caps: Employers must pay overtime within 14 days of the salary period. The cap for overtime pay is SGD 4,500 for white-collar workers and SGD 2,600 for blue-collar workers.

Flexible working hours in Singapore

The average working hours in Singapore vary by industry, but 44 hours per week remains the benchmark for full-time roles. However, as workplaces evolve, there is a growing demand for more flexibly scheduled jobs in the country.

Flexible arrangements may include:

  • Adjusted start and end times to accommodate employee needs.
  • Compressed workweeks.
  • Remote working opportunities.

Offering flexibility can enhance employee satisfaction and improve work-life balance. Employers should ensure that even with flexibility, the total weekly hours comply with the Employment Act.

Students working hours in Singapore

For employees, Singapore’s maximum working hours regulations serve to protect health and safety.

Employers hiring international students on a student visa must also adhere to specific limits:

  • Students on a student visa in Singapore have work-hour restrictions that are typically up to 16 hours per week during school terms.
  • During school holidays, students may work full-time without restrictions. Employers must verify a student’s eligibility to work and ensure compliance with the visa regulations to avoid penalties.

Remote work in Singapore

Working remotely in Singapore is allowed and has become increasingly common, especially after the COVID-19 pandemic. While there is no specific law governing remote work, it is generally permitted as long as employers and employees comply with the Employment Act and other relevant labour regulations.

Employers are encouraged to adopt flexible work arrangements (FWAs), including remote work, under the recent Tripartite Guidelines on Flexible Work Arrangement Requests. Under the guidelines, employees can formally request remote work as part of flexible work arrangements, fostering better work-life balance and reducing commuting stress.

Employers are required to have a structured process to assess these requests fairly and respond within two months, providing clear reasons if a request is denied. While employers are not obligated to approve all requests, they are encouraged to explore alternatives, such as hybrid work models, to meet both employee and business needs.

Moreover, employers can implement remote work arrangements in Singapore through:

  • Individual agreements with employees tailored to their roles and responsibilities.
  • Clear company policies that outline expectations, remote work eligibility, and operational procedures.

Under specific circumstances, such as public health measures or operational requirements, employers may require employees to work remotely.

While there are no specific laws mandating reimbursement for remote work expenses, providing financial support demonstrates fairness and enhances employee satisfaction. Common reimbursable expenses include:

  • Internet and utility bills.
  • Office furniture or ergonomic equipment.
  • Software subscriptions or technical tools.

Clear guidelines in your company’s remote work policy can ensure consistency and transparency in handling expense claims.

Singapore’s remote work visa

The country does not currently offer a dedicated remote work visa. However, certain immigration pathways support remote work arrangements:

  • Dependent Pass holders: Spouses of Employment Pass holders can work remotely for a Singapore-based company with a valid Letter of Consent.
  • International workers: Employees working remotely for Singapore-owned companies from overseas must ensure compliance with local tax and employment laws in their country of residence.

Employers hiring remote international employees should consult the Ministry of Manpower or legal advisors to ensure compliance with immigration and tax obligations.

Tailored employment contracts in 100+ countries

Like all countries, Singapore has its own rules and regulations when it comes to employment contracts — and non-compliance could land your company in hot water.

Thankfully, our team is experienced in drawing up tailored, compliant contracts in Singapore (and more than 100 countries worldwide). That means that, when you work with us, you won’t need to waste time worrying about whether you’ve got it right. Instead, you can focus on what matters: growing your business.

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