Singapore Country Facts
We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.
Global Expansion Made Easy for You
Expanding into Singapore generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.
Having a visa or being a visa-exempt foreigner does not necessarily permit entry into Singapore. All foreigners still need a Visit Pass, given at border control by the Immigration and Checkpoints Authority (ICA). All foreigners also require an SG Arrival Card, which replaces the previous Disembarkation / Embarkation Card. Bradford Jacobs, a Professional Employment Organisation (PEO) and Employer of Record (EOR) with more than 20 years of experience, has specialists regarding recruitment, work permits, visas and other documentation and can have staff in place quickly and cost-effectively.
The different types of Visas and Work Permits for Singapore
People looking for employment require a Work Pass or Work Permit. There are up to eight different types depending on occupation and qualifications but mainly on salary. All working documentation comes under the Ministry of Manpower. Singapore is encouraging foreigners, from CEOs to labourers, to supplement an ageing population, low birth rate and high economic growth; 40% of the population is made up of immigrants. However, understanding the immigration system for work permits or passes needs expert advice on the best route for companies to ‘onboard’ their employees.
Although many countries’ nationals can enter Singapore visa-free for business, tourism, and medical treatment for either 30 or 90 days, all foreigners seeking paid employment require documentation. There are two routes into the employment market for foreigners:
- For professional and well-qualified people
- For general employees with skills needed in the marketplace
First, the foreigner needs a job offer and an employer who can sponsor a Work Pass or a Work Permit (similar to Work Visas in other countries) for employment. Several types are available, with different eligibility, qualifications and salary requirements. There are eight visa types, and the employee should know which is needed before starting employment. They fall into two categories:
- Work Passes are generally for professional, skilled and semi-skilled workers with a minimum qualification requirement, e.g. degree, diploma or technical qualification and a job offer with a minimum salary.
- Work Permits are issued to low and semi-skilled workers where there is no minimum regarding qualifications or salary.
Employment Pass (EP): Issued to professional foreigners at a managerial or executive level. This Pass requires high-end educational or technical qualifications, and more importantly, a high salary should come with the job, i.e. SGD 4,500 (€3,000, US$3,320) per month. However, from September 1 2022, the qualifying salary increases to SGD 5,000 (€3,332, US$3,686). Ministry of Manpower can also issue this ‘pass’ to individuals who have established a company and wish to live in Singapore to run the business. They are issued for one to two years, renewable. No quotas or Foreign Worker Levy are applicable.
EntrePass (Entrepreneur Pass): For individuals wanting to set up a business either backed by private funding (venture capital) or can demonstrate state-of-the-art technologies. Issued for one year, renewable for two. No minimum income, quotas, or Workers Levy apply.
Personalized Employment Pass (PEP): Similar to the EP, but more flexible as employees are not tied to any one employer and have a higher income bracket; however, they cannot perform any entrepreneurial activities, e.g. start a business on this Pass. New employees require a monthly salary of SGD 18,000 (€12,000, US$13,272).
S Pass: For ‘mid-level’ skilled positions such as supervisors, technicians, office or account managers, team leaders, etc. A salary minimum of SGD 2,500 (€1,666, US$1,843) per month is required. However, from September 1 2022, there are increases to SGD 3,000 (€2,000, US$2,212), then again in 2023 and 2025. Quotas and a Foreign Worker Levy apply for each S Pass holder employed. Employers must provide illness and accident insurance up to SGD 15,000 (€10,000, US$11,060).
Training Employment Pass: For individuals receiving practical training and as foreign professionals earn a minimum salary of SGD 3,000 (€2,000, US$2,212) per month.
Work Holiday Passes: Available under the Work and Holiday Visa Programs.
Training Employment Work Permit: For training up to six months for semi-skilled foreign workers.
Work Permits sponsored and supported by employers for Migrant Domestic Workers (MDW) apply in construction, marine, manufacturing and service sectors; for nannies and performing artists. These are subject to a Foreign Worker Levy and quota restrictions.
Note: Employers are responsible for these employees and must provide a security bond and medical and accident insurance. From April 2022, employers must buy a Primary Care Plan for all eligible employees with Work Permits.
General Notes on working passes and permits:
- All nationalities are eligible to apply for employment in Singapore, providing they qualify
- Applicants must be 18 years old, with a National Passport for any visa. In some cases, employees need to be older; however, no older than 50 for most foreign workers apart from Malaysians when the age limit is 58
- All qualifications should be accredited and translated into English, or they may not be accepted.
- Work passes or work permits come under the Ministry of Manpower (MOM), and most foreign workers come under the Employment Act, the Employment of Foreign Manpower Act (EFMA) and the Immigration Act.
- There are stiff penalties for employees working in Singapore without the correct documentation and the approval of the MOM, as are their employers.
- Quotas and Foreign Worker Levy (applied monthly) try to balance and regulate the number of foreign workers, especially in the low-income brackets.
The two main work passes for employers looking for foreign workers are The Employment Pass and the S Pass. The employer (or licensed agent on their behalf) applies to the MOM for the Pass on the employee’s behalf. An In-Principle Approval Letter (IPA) is issued and sent to the employer within four weeks as long as all paperwork has been supplied.
A copy is sent to the employee in the home country who uses this to travel to Singapore. At the border, Immigration and Checkpoints Authority (ICA) issues a one-time visa (Visit Pass) to enter the country to request and collect the Employment Pass or S Pass. This allows employees to live and work in the country as well as exit and enter without visas. However, they require an SG Arrival Card that replaces the previous Disembarkation / Embarkation Card.
How to apply for Visas and Work Permits for Singapore?
Foreigners who want to work and live in Singapore must first have a job offer from an employer who is eligible and can apply for their Work Pass or Work Permit.
For the Employment (EP) and S Pass:
Before Applying:
Employees: As it is the employer (or agent with relevant license) who is responsible for the Work Pass, the employee has to give permission for them to apply on their behalf (e.g. an employment contract/agreement). They need to gather all required documents and ensure they have been translated (if necessary, into English) and legalised by a recognised authority (not a notary).
Employers: Should confirm they are applying for the correct Work Pass. The government provides a Self-Assessment ‘tool’ to help determine whether candidates are eligible to apply for Work Passes. They need to advertise the position for 28 days on MyCareersFuture website before submitting the application. This provides a guideline for considering all candidates as per ‘Fair Employment Practices’.
However, they are exempt if:
- They have less than 10 workers
- Position has a set salary of SGD 20,000 (€13,330, US$14,747) per month
- The position is for no longer than one month
Documents required to apply for Employment Pass (EP) and S Pass by employers:
- A completed application which can be done online through the MyMOMPortal. This takes three to four weeks. If being done in person, at a SingPost office, all documents must be submitted over the counter including downloaded application form
- An application fee of SGD 105 (€70, US$77) must be paid
- Upload passport personal details page
- Recent photo along passport guidelines
- Written confirmation of job details
- Latest company details and profile recorded with the Accounting and Corporate Regulatory Authority (ACRA)
- Details of company business activities or goods produced
- Curriculum Vitae of employee, educational and professional certificates, degree or diplomas and translations – legalized
- Written consent given to employer or agent by employee
- Any recommendations or references from previous employers
- Any other documents requested by the Ministry of Manpower (MOM) on the application form
Upon approval, an In-Principle Approval (IPA) letter is issued and sent to the employer, who sends a copy to the employee. This has to be presented to the airline when leaving home country and when arriving in Singapore along with a valid passport and SG Arrival Card. The Immigration and Checkpoints Authority (ICA) then issues a one-time entry visa (Visit Pass). There may be other requirements on the IPA letter, for instance, a medical check. This can be done before leaving home country or after arriving in Singapore.
The employee has six months to travel to and enter Singapore and request the issuance of the EP Pass or S Pass and Card – online through the MyMOMPortal using the same account the employer used when applying for the Work Pass.
Documents needed for issuing EP and S Pass Card:
- Passport information from main page
- Information regarding the ‘one-time entry visa’ (immigration pass) collected at the ICA on arrival
- Applicant’s Singapore address
- A delivery address to receive the EP Card and a phone number for delivery date
- Names of three legal persons who can sign for the Card
- Fee for issuance SGD 225 (€150, US$166)
Employee should reside at the nominated address until the EP or S Pass is issued. When issued, the employer and employee receive a notification letter allowing the worker to enter and exit Singapore and start working. As part of the process, the ‘notification’ should state whether the employee needs to provide fingerprints and photo (biometrics). The next step involves the employer making an appointment at the Employment Pass Services Center (EPSC) for the employee to be registered, within 14 days from the EP or S Pass being issued and they should take with them to the appointment:
- Letter confirming appointment
- The IPA and notification letters
- Passport with at least six months validity
Four days later the Employment Pass Card or S Pass Card is delivered to the address provided.
Foreign companies can pay their staff working in Singapore, but to hire and pay employees there, they must establish a legal entity. Non-resident companies typically choose to open a limited liability subsidiary, often as a small to medium-sized enterprise, to gain a foothold in the Singapore market. The subsidiary can have 100% foreign ownership but is a separate legal entity from the parent company under Singapore’s Companies Act. Once incorporated, registering employees with the Central Provident Fund (CPF) and the Inland Revenue Authority of Singapore (IRAS) are the first of many steps in employing staff and regulations are strictly applied.
Bradford Jacobs has more than 20 years of experience in the front line of international payroll providers. We ensure our clients comply with every aspect of taxation legislation globally. Our local ‘know-how’ is vital for multinational companies expanding into Singapore’s commercial and financial hub and then further afield into Asia and the Pacific Rim.
Overview of Tax in Singapore
Personal Income Tax (PIT):
The Resident’s income becomes liable at SGD 20,000 (€13,343, US$14,660) at 2% up to SGD 30,000 (€20,000, US$21,990). There are nine different tax bands from 3.5% to 22%, with the top rate attaching to excess income over SGD 320,000 (€213,376, US$234,630). Non-residents’ total income is taxed at a flat rate of 22%, within which employment income is taxed at 15% or at residents’ rates, including allowances, whichever produces the highest tax.
Social Insurance Taxes:
Employers contribute 17% of an employee’s regular monthly wages, with the employee contributing 20%, capped for each at SGD 6,000 (€4,010, US$4,394). Therefore, employers’ maximum contribution is SGD 1,020 (€682, US$747); employees’ maximum contribution is SGD 1,200 (€800, US$880).
Corporate Income Tax (CIT):
The flat rate is 17%. There are partial allowances. The first SGD 10,000 (€6,687, US$7,325) is 75% exempt, and the next SGD 190,000 (€127,064, US$139,333) is 50% exempt. For start-ups (excluding property development and investment holding companies), the first SGD 100,000 (€66,866, US$73,333) is 75% exempt, with the next SGD 100,000 50% exempt.
Withholding Tax (WHT): Income from loans and rentals to non-residents is liable for 15% WHT, with 10% applying to royalties unless tax treaties exist between Singapore and the country involved.
Value Added Tax: The standard rate of 7% applies to the supply of most goods and services in Singapore. The rate is expected to increase to 9% by 2025. Companies must register for GST if turnover exceeds SGD one million (€680,300, US$742,343) in the previous 12 months or if they expect turnover to exceed that level in the current tax year. Zero-rated categories include financial services sale and lease of residential properties.
Personal Income Tax in Singapore
The tax year runs from January 1 until December 31, with returns filed by April 15 of the following year (April 18 if filed electronically). Due taxes are paid within 30 days of the assessment. Spouses can file separate returns, but regulations apply to claiming deductions. Individuals can pay tax in monthly instalments, while employees’ tax is withheld by their employer and remitted to the Inland Revenue Authority of Singapore.
Tax residents live in Singapore or have employment (excluding company directors) for more than 183 days in the 12 months preceding the assessment year. After personal allowances, residents are taxed at progressive rates from 2% to 22%. Residents and non-residents are taxed on income sourced in Singapore.
Resident’s Personal Income Tax (PIT):
From | Not Over | Tax %
SGD 20,000 – SGD 30,000 (EUR 20,016 – USD 21,994): 2%
SGD 30,001 – SGD 40,000 (EUR 26,689 – USD 29,323): 3.5%
SGD 40,001 – SGD 80,000 (EUR 53,400 – USD 58,632): 7%
SGD 80,001 – SGD 120,000 (EUR 80,114 – USD 87,944): 11.5%
SGD 120,001 – SGD 160,000 (EUR 106,812 – USD 117,259): 15%
SGD 160,001 – SGD 200,000 (EUR 133,515 – USD 146,550): 18%
SGD 200,001 – SGD 240,000 (EUR 160,320 – USD 175,860): 19%
SGD 240,001 – SGD 280,000 (EUR 187,040 – USD 205,130): 19.5%
SGD 280,001 – SGD 320,000 (EUR 213,712 – USD 234,445): 20%
SGD 320,001: 22%
Non-Resident’s Personal Income Tax (PIT):
Non-resident’s total income is taxed at a flat rate of 22%. Employment income is taxed at 15% or at residents’ rates, including allowances, whichever produces the highest tax.
Individual Tax Rules in Singapore
- The tax year runs from January 1 to December 31, and returns must be filed by April 15 of the following year or by April 18 if submitted electronically.
- Tax due must be paid within 30 days of the assessment being made, although individuals can apply to pay tax in monthly instalments using the interbank fund transfer system.
- Employees’ income tax is withheld at source and remitted to the IRAS.
- Tax residents are those residing in Singapore or having employment (excluding company directors) for more than 183 days in the year preceding the assessment year.
- Expatriates on the payroll residing in Singapore over three calendar years (not necessarily full calendar years) are tax residents. Also, expats on the payroll residing in Singapore for 183 days spanning two years are considered tax residents, regardless of whether the 183 days is in either or both years.
- Spouses file separate returns, but regulations apply to claiming deductions between them.
Employer’s Social Insurance and Statutory Contributions in Singapore
All employers in Singapore must contribute to the Central Provident Fund on behalf of their employees. Employers contribute the equivalent of 17% of their employees’ monthly payroll, capped at SGD 6,000 (€4,010, US$4,394). Employers’ maximum contribution is, therefore, SGD 1,020 (€682, US$747). The rates also apply to additional remuneration, such as year-end bonuses. Reduced rates (expected to be increased as of 2022) apply to those earning less than SGD 750 (€500, US$548) and over-55s.
However, expanding overseas is a significant step, especially for companies opening a legal entity in their new territory thousands of miles from their home base. If the move fails, companies face the extra expenditure and stress of closing the business, selling property and paying off employees. The sensible alternative is to use a Professional Employment Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Singapore speedily and risk-free. Your company will be up-and-running in days rather than weeks or even months.
How to Set Up a Singaporean Subsidiary?
A subsidiary entity set up in Singapore is a legal requirement for international companies planning to hire staff and run payroll. They typically choose to establish a limited liability company, which can be wholly foreign-owned and operates under the Singapore Companies Act. The Act covers incorporation, shares and shareholder regulations, duties of directors and officers, accounting, audits and other provisions.
General procedures and requirements include:
- Verifying the company name is unique and reserving it with Accounting and Corporate Regulatory Authority (ACRA) via BizFile, then registering a company with ACRA to obtain the Unique Entity Number (UEN) that is used on all official documents.
- Establishing business activities with the Singapore Standard Industrial Classification (SSIC) and obtaining any licenses relevant to business activities.
- Registering with the Inland Revenue Authority of Singapore (IRAS).
- Registering with Singapore Customs if the business involves importing and exporting.
- Registering for Goods and Services Tax (GST), mandatory if taxable revenue exceeds SGD one million (€680,300, US$742,343).
- Lodging details of directors, shareholders and SSIC code for the particular business activities with BizFile.
- Once the application and reservation are approved, registering the business address, share capital and shareholders, directors and company secretary if applicable, company’s constitution and proof of paid fees with BizFile.
- Completing Forms 45 and 45B for each director and company secretary.
- Applying for the Central Provident Fund (CPF) Submission Number (CSN), enabling employers to undertake transactions with the CPF Board.
- Once incorporated, with a minimum share capital of one Singapore dollar or equivalent in another currency, open a business bank account, complying with strict ‘Know Your Customer’ requirements.
Benefits of Setting Up a Singaporean Subsidiary
Specific advantages for a foreign company opening a private limited liability company in Singapore include the entity having a separate legal identity from the parent company. The subsidiary operates under the Singapore Companies Act, and the parent company’s liability is generally limited to its invested share capital. The same applies to its shareholders. The subsidiary is eligible for tax incentive schemes as a local and legal entity.
Through its subsidiary, the parent company has the advantage of maximizing opportunities of expanding further into Asia and the Pacific Rim. And Singapore is the ideal launch pad for such expansion. It is the only Asian nation with a Triple AAA credit rating, a focal point for east and west shipping lanes (with the world’s second-largest port), while 50% of the world’s population is a six-hour flight away.
Other benefits for a subsidiary:
- Easier to obtain potential benefits and incentives and enter into contracts with other Singapore companies
- More impact with clients and suppliers, as subsidiaries imply more permanency than branches
- Employees feel there is more stability and job security than from being with a branch
In the broader commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by Asian and Pacific Rim economies.
However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Singapore by working with Bradford Jacobs. Using a PEO such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our EOR services.
Subsidiary Laws in Singapore
Foreign-owned subsidiaries in Singapore operate under the Companies Act and must incorporate under its laws.
Registration and Documentation:
- Verified unique company name reserved with the Accounting and Corporate Regulatory Authority (ACRA) via BizFile
- Registration with ACRA to obtain a Unique Entity Number (UEN)
- Registering business activities with Singapore Standard Industrial Classification (SSIC) to obtain relevant licenses
- Maintain registers as required by the Companies Act
- Provide Certificate of Incorporation of the parent company, with an extract from Registrar of Companies, with registered address and details of shareholders
Accounts and Taxation:
- Registering with the Inland Revenue Authority of Singapore (IRAS)
- Registering with Singapore Customs if the business involves importing and exporting
- Registering for Goods and Services Tax (GST), mandatory if taxable revenue exceeds SGD one million (€680,300, US$742,343)
- Minimum share capital of the equivalent of one Singapore dollar unless specific business licenses stipulate a high amount
- IRAS considers companies to be tax residents if they are managed in Singapore and its directors make decisions there
- Corporate tax returns (Forms C-S or C) filed by November 30 (paper) or December 15 online
- Supply annual audited accounts to ACRA
Management:
- Lodging details of directors, shareholders and SSIC code for the particular business activities with BizFile
- Completing Forms 45 and 45B for each director and company secretary
- Minimum of one shareholder and a maximum of 50
- Shareholders’ liability is generally restricted to their contribution, although courts can waive their rights.
- Annual general meetings can be held within six months of financial year-end and returns filed within seven months. No legal requirement for board meetings
- Register identities of shareholders and residential addresses of directors
- The subsidiary must appoint at least one Singapore resident as a director, and the company secretary should also be a resident. No nationality requirements for shareholders
Singapore’s economy is the sixth largest among fellow members of the Association of Southeast Asian Nations (ASEAN). Additionally, the World Bank’s absolute ease of doing business report in 2020 placed Singapore second best globally. It is the only Asian nation with a Triple AAA credit rating and is a crossing point for east and west shipping lanes (with the world’s second-largest port), while 50% of the world’s population is within a six-hour flight away. Ultra-clean, ultra-safe and a nation with many tourist attractions, Singapore blends the modern world with heritage, history and culture.
Starting a business in Singapore
All Singapore companies operate under the Companies Act, which covers incorporation and regulations dealing with shares, directors and officers, accounts and other provisions. Quotas apply to the make-up of the workforce, while incoming companies must set up a legal entity if they plan to hire staff and operate their payroll. The most popular choice is to establish a private limited liability company.
The registration procedures include the following:
- Verifying that the company name is unique, reserving it with the Accounting and Corporate Regulatory Authority (ACRA) via BizFile, and obtaining the Unique Entity Number (UEN) to be used on all official documents.
- Registering the business activities with the Singapore Standard Industrial Classification (SSIC) and obtaining any relevant licenses.
- Registering with the Inland Revenue Authority of Singapore (IRAS) and with Singapore Customs if the business involves importing and exporting.
- Registering for Goods and Services Tax (GST) is compulsory if the taxable revenue exceeds SGD one million (€680,300, US$742,343).
- Lodging details of directors, shareholders and SSIC code for the particular business activities with BizFile.
- Once the application and reservation are approved, registering with BizFile the business address, share capital and shareholders, directors and company secretary if applicable, company’s constitution and proof of paid fees.
- Completing Forms 45 and 45B for each director and company secretary.
- Applying for the Central Provident Fund (CPF) Submission Number (CSN), enabling employers to undertake transactions with the CPF Board.
- Once incorporated, opening a business bank account, complying with strict ‘Know Your Customer requirements.
Expanding your business into Singapore
Expanding a business in Singapore, as in any overseas territory can bring challenges. Moving staff worldwide means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Your business plan will have to answer all these questions.
Singapore generally welcomes foreign investment. However, there are quotas on the number of foreign employees allowed to work compared with the number of Singaporeans in the workforce. Employment legislation is a mix of the Employment Act – which does not apply to all workers – as well as guidelines from the Ministry of Manpower and tripartite agreements between employers, trade unions and the government.
Where to locate within the country?
Singapore is a country, an island and a city-state in Southeast Asia, and is only around 275 sq. miles which means it would fit nearly four times into Rhode Island, the smallest state in the United States! So, no trouble getting around, especially with their fast and efficient transportation system, considered one of the best in the world. It is also the second-largest global port and is a hub for east and west shipping traffic. When looking to locate an office in Singapore, distance will not be a factor. In fact, the whole of Singapore is a conducive hub for business. There is a thriving retail industry on the one hand and biomedical research on the other in an R&D hub at One-North. This is where you will find an assortment of growth industries for 2022 such as finance, ICT, the services section and a strong resurgence in manufacturing and trade.
Examples of good office and lifestyle areas to settle in are:
- Marina Bay: it is a highly prosperous area, boasting large commercial and residential centres, business hubs and entertainment complexes in one of the most prestigious locations for business in Singapore, although it does bring with it high costs.
- Tanjong Pagar: once a fishing and agricultural community, it has seen its landscape blossom and develop into a vibrant business and commercial centre with its polished skyscrapers now forming part of the country’s Central Business District – home to many media, consulting, advertising and trading companies. Shipping companies are also attracted to the area as one of the world’s busiest container ports. This area certainly has ‘buzz and colour’ with restaurants and coffee shops galore.
- Orchard: known for its retail, entertainment and for starting a business; it offers lots of choices when it comes to accommodation. It has an excellent infrastructure and glitzy boulevards, malls and hotels; it has the hustle and bustle of a busy business community but also the peace and quiet for downtime with parks, museums and spas.
- Jurong Island: in south Singapore, it houses more than 100 global chemical and petrochemical companies on 12 square miles of reclaimed land and is one of the world’s leading chemical manufacturing sites and intends to stay that way – one step ahead of the game. It is the face of sustainable energy solutions and there are grants available to qualifying small and medium enterprises and start-ups, through the Enterprise Development Grant.
What to look for in your office premises:
- Does it make a good impression and provide a suitable working environment to attract first-class talent?
- What manufacturers and distributors do you need to be close to?
- Are there special economic zones or free-trade areas giving tax benefits or grants?
- Can you benefit from being in a business cluster/hub?
- Workspace, communication and storage facilities – with room for expansion?
Some Singaporean Facts
- Capital – Singapore City.
- Population – Around 5.9 million.
- Regions – Central, North, East, North East and West.
- Official language – Malay, Tamil, English and Mandarin Chinese.
- Economy – 378.6 billion US dollars, 38th globally; US$66,263 per capita, sixth globally.
- Leading sectors by GDP – Manufacturing 21.5%, wholesale trade 16.8%, Finance and insurance 15.7%, Other service industries 10.8%.
- Primary exports include – Electrical machinery and equipment; computers; mineral fuels; optical, technical and medical apparatus; gems and precious metals.
- Leading imports include – Machinery, transport equipment and crude petroleum.
- Main trading partners – China, USA, Malaysia, Indonesia and Japan.
- Government – Unitary parliamentary republic.
- Currency – Singapore Dollar (SGD)
Advantages and Challenges when entering the Singaporean Market
Some advantages of entering the Singaporean market include the following:
- Location: Geographical position in southeastern Asia is ideal for further expansion into Asia and among Pacific Rim nations. Singapore is a meeting point for east and west shipping lanes and has the world’s second-largest port.
- Trade: Mainland China, the US and Malaysia are Singapore’s main trading partners. In 2021, exports to Mainland China exceeded imports. Singapore is the European Union’s 16th largest partner but the second largest among the Association of Southeast Asian Nations (ASEAN) nations. Singapore ranks highly for cross-border trading.
- Taxation: Competitive and comparatively low rate of corporate tax at 17%, with partially lower rates for start-ups and on the first levels of taxable income.
- Business: The World Bank’s final ‘ease of doing business report in 2020 ranked Singapore second globally.
- Infrastructure: Singapore’s roads and expressways have benefitted from substantial investment and connect all corners of the island for people and goods.
Some challenges of entering the Singaporean market include:
- Employment: Reliance on foreign workers to compensate for an ageing workforce.
- Trade: Increased competition from fellow ASEAN members.
- Economy: Rising inflation affects wages and prices.
- Workforce: Some structural unemployment fears as workers from sectors such as services do not have skills for vacancies in other areas.
- Politics: Potentially vulnerable to US-China trade war.
- Red tape: Obtaining construction permits involves 11 procedures requiring permission from at least four official bodies. Registering property is similarly protracted.
Transferring staff from abroad requires compliance with strict and complex quota limits to obtain visas and work permits, a long and hazardous process. Making mistakes risks sanctions, wasting time and money with the likelihood the employee will not be allowed to start work or may even be promptly deported on arrival at the airport. The alternative is to locate and recruit staff within Singapore. This takes a thorough knowledge of the employment market. At Bradford Jacobs, we have the expertise and experience to clear the way for your Global Expansion.
The global reach of our Professional Employment Organisation (PEO) recruitment platforms, combined with the in-country knowledge of our Employer of Record (EOR) specialist teams, guarantees a successful and smooth transition for your employees in your new territory.
The different types of Singaporean Employment Contracts
Employers must give staff who come under the Employment Act a written record of their Key Employment Terms (KETs) within 14 days of starting work. Generally, employers and employees are free to contract their arrangements if they do not contravene minimum benefits and entitlements as spelt out in the Act.
Main contract types include:
Permanent Employment Contracts: These have no end date and are in force until terminated either by the employer or employee. Employees are considered full-time if they work more than 35 hours a week and are entitled to all statutory benefits.
Fixed-term Employment Contracts (known as Term Contracts): These are tied to a specific length of time or project. Fixed-term employees have the same rights as permanent employees if they have worked for at least three months and are also considered full-time if they work at least 35 hours a week. Where an employee serves a succession of fixed-term contracts of at least 14 days each, the Ministry of Manpower encourages employers to consider them permanent if a fixed-term contract is renewed within one month of the previous contract ending.
Probation Periods: These can be included in a contract, although there is no mandatory requirement, and generally last between three and six months.
Collective Bargaining Agreements: A trade union can only negotiate a collective agreement for its members once the employer has recognised it, as set out in the Industrial Relations Act. The agreement must be certified by the Industrial Arbitration Court and is valid for a minimum of two years and a maximum of three.
Singaporean Employment Contracts Requirements
Internationally-minded companies hiring employees in Singapore must operate within a rigid framework of legislation and quotas on the make-up of their workforce. The Employment Act covers most aspects of employment regulations, although this does not cover all employees. The Act’s definition of ‘employees’ does not include executive and managerial staff, domestic staff, seamen and most government employees.
Understanding the differences between EA and non-EA employees is vital during the first stages of hiring, onboarding and drawing up contracts with your new staff. Once Bradford Jacobs’ PEO recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment.
General requirements applying to all contracts include the following:
- Employees covered by the Employment Act (EA) must be given a written record of Key Employment Terms (KETs) as set out in the Employment Regulations – Employment Records, Key Employment Terms and Pay Slips Regulations, 2016.
- KETs should include a description of the role, primary duties and responsibilities; start date; working hours, days, breaks and rest days; salary and payment schedule; vacation allowance; notice periods, termination and severance terms; any probation period.
- KETs should be given to EA employees within 14 days of starting employment.
- If not in the KET, information such as policies on leave and medical benefits can be in the company’s employment handbook or intranet.
- Written contracts are advised but not legally required.
- There are no legal requirements on the language of employment contracts, which are generally in English.
The responsibilities of foreign companies reach further than simply complying with tax, social security and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. In Singapore, contravention of the rules can result in companies being barred from hiring employees who require a Work Pass. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
It is a complex picture. This is where Bradford Jacobs steps in to point you in the right direction, drawing on over 20 years of experience as a Professional Employment Organisation (PEO) and Employer of Record (EOR).
What are the Compensation Laws in Singapore?
Singapore’s Employment Act (EA) covers the obligations of employers and the rights of employees covered by the Act but does not apply to all classes of workers. As of 2022, the Act’s definition of ‘employees’ does not include executive and managerial staff, domestic staff, seamen and most government employees.
Additionally, the Ministry of Manpower issues ‘guidelines’ that employers are expected to follow at the risk of fines and sanctions for infringement. Penalties can include losing the right to obtain Work Passes to employ non-Singaporeans. Apart from the guidelines issued by the MOM, tripartite agreements have a significant role in employment relations in Singapore and operate between employers, trade unions and the government.
Legislation relating to employee benefits in Singapore includes:
- The Employment Act
- Employment Regulations – Employment Records, Key Employment Terms, and Pay Slips Regulations
- Tripartite Alliance on Fair and Progressive Employment Practices (TAFEP)
- Personal Data Protection Act
- Retirement and Re-employment Act
- Workplace Safety and Health Act
- Protection from Harassment Act
- Industrial Relations Act
- Trade Unions Act
- Trade Disputes Act
In Singapore, employers need to be up to speed with responsibilities to their staff over benefits, compensation and minimum requirements. Do not risk paying penalties or facing sanctions for ignoring these responsibilities, as companies can lose the right to hire staff.
The Employment Act largely governs minimum standards compensation entitlements, covering maternity and paternity leave, sick leave, termination, severance, overtime, paid vacations, notice periods and probation. The benefits listed apply to employees covered by the Employment Act (EA).
- Maternity, Paternity, Parental Leave: EA mothers receive 16 weeks if their child is a Singapore citizen (12 weeks in other cases). The employer pays the total salary for the first eight weeks, reclaimable from the government. The government pays for the second eight weeks under the Government-Paid Maternity Leave scheme for first and second children. The government pays for the entire term to capped limits for third and subsequent children. Fathers have two weeks of paternity leave in the 12 months after the birth with benefits capped at SGD 2,500 (€1,700, US$1,855) for each working week under the Government-Paid Paternity Leave program. The Shared Parental Leave (SPL) scheme allows fathers to share up to four weeks of the mother’s 16 weeks’ leave in one block or non-continuously. The benefit is capped at SGD 2,500 (€1,700, US$1,855) for each working week.
- Sick Leave: Employees covered by the EA are entitled to 14 days outpatient leave and 60 days hospitalization leave if they have worked for the employer for at least three months and have their incapacity certified by a registered medical practitioner
- Minimum Wages: The Ministry of Manpower (MOM) does not impose mandatory national minimums. However, Singapore applies Progressive Wage Models (PWMs) in sectors such as cleaning and security, with plans to extend the scheme by 2023 to other workers.
- Probation Periods: No mandatory regulations apply to probation or trial periods, which are generally between three and six months
- Working Hours and Breaks: EA employees should not work more than eight hours daily or 44 weekly, or more than six hours without a break. Employees opting out cannot work more than 12 hours daily (with specified exceptions) or exceed 72 hours of overtime over four weeks. Shift workers can give written agreement to work more than six consecutive hours without a break, more than eight a day and more than 44 in a week.
- Overtime: Extra working hours over the provisions of the Employment Act are overtime and should be paid at a minimum of 1.5 times the regular hourly working wage
- Notice Periods: EA employees and employers must give the same notice period as detailed in their contract. Otherwise, the required notice terms for EA employees range from one day for those employed less than 26 weeks to four weeks for those with more than five years of seniority.
- Termination / Severance /Redundancies: EA employees with two years of service are entitled to severance pay. The Ministry of Manpower (MOM) expects employers to offer severance ranging from a lump sum to two weeks or one month’s salary for each year of service. With redundancies (known as ‘retrenchments’), the MOM expects reorganization to leave a strong representation of Singaporean workers and companies employing ten or more must notify the MOM of their plans. Employers must also inform the Commissioner of Labor.
- Paid Vacations: Employment Act employees receive seven days of paid annual leave for the first 12 months of continuous service. An extra day is added for each subsequent 12-month employment with the same employer for up to 14 days. Employees who have worked more than three months but less than 12 receive leave pro rata.
Guarantees and Restrictions on Employee Benefits in Singapore
Guaranteed mandatory benefits, entitlements and compensation in Singapore are covered by the Employment Act (EA) for most of the nationwide workforce. However, the EA does not apply to all workers under the Act’s definition of ‘employees’. For example, the EA does not include executive and managerial staff, domestic staff, seamen and most government employees.
Guaranteed Benefits:
Maternity / Paternity Leave: Mothers whose child will be a Singapore citizen receive 16 weeks, with their full salary paid by the employer for the first eight weeks, which is reclaimed from the government and by the Government-Paid Maternity Leave (GPML) scheme for the remaining weeks. Fathers have two weeks of paternity leave in the 12 months after the birth, with benefits capped at SGD 2,500 (€1,700, US$1,855) for each working week. This applies to first and second children, with the GPML paying all 16 weeks for subsequent children.
Sick Leave: Employees are entitled to 14 days of outpatient leave and 60 days of hospitalization leave if they have worked for the employer for at least three months.
Paid Vacations: Employment Act employees receive seven days of paid annual leave for the first 12 months of continuous service. An extra day is added for each subsequent 12-month service with the same employer for up to 14 days.
Restrictions:
Maternity Benefit: Mothers must be covered by the Employment Act, their child must be a Singapore citizen, have worked for the employer for at least three months before the birth date and give at least one week’s notice before starting leave.
Sickness Benefit: Claimants must be covered by the Employment Act and have worked for their employer for at least three months. They must notify the employer within 48 hours and have been certified unfit for work by a registered medical practitioner.
Social Security in Singapore
The Central Provident Fund is the central pillar of Singapore’s comprehensive social insurance framework, serving healthcare, housing and retirement needs. Employer and employee contributions fund the mandatory system into the MediSave element of the scheme.
Employers contribute 17% of an employee’s regular monthly wage from its payroll, with the employee contributing 20%, capped for each at SGD 6,000 (€4,010, US$4,394). Employers’ maximum contribution is, therefore, SGD 1,020 (€682, US$747); employees’ maximum contribution is SGD 1,200 (€800, US$880).
In addition to MediSave, Singapore’s universal health system is based on MediShield Life – mandatory for citizens and permanent residents to cover large hospital and outpatient bills, and MediFund – a government ‘safety net’ in addition to provisions of MediSave.
Our global experience is vital for taking the smartest recruitment route into Singapore. Bradford Jacobs’ benchmark platforms as a Professional Employment Organisation (PEO) have a worldwide reach and include a total understanding of the complexities of Singapore’s economy and employment market, where quotas create a hazardous backdrop for the unwary.
Recruiting in Singapore
Singapore has become one of the prime targets for international investment. However, it is essential for foreign companies taking their first steps into Singapore’s economy to have a clear plan when it comes to recruitment. The southeastern Asian city-state of Singapore is an increasingly attractive target for incoming countries establishing their presence in this world-class economic and commercial centre.
There are complications affecting businesses and incoming job seekers. The Ministry of Manpower limits the number of Work permits and S Pass-holders a company can have on their books. This can affect the initial recruitment and the ability to maintain the legally-required balance when the staff of different categories leave or join.
Employers must pay the Foreign Worker Levy (FWL) on all employees who come under these classifications. S Pass holders cannot exceed 10% of the total workforce in the services sector and 18% in the industries of construction, manufacturing and shipyards.
Recruitment is the first stage of making your company operational and competitive in Singapore. But these restrictions complicate moving staff into the country – in addition to the complexities of obtaining work permits and visas. To avoid these issues, knowing where to locate the finest talent in Singapore is vital to be the perfect fit for your company’s expansion plans.
Employees’ Legal Checks in Singapore
Employees checks in Singapore must comply with the Personal Data Protection Act (PDPA), and potential employees should give their permission and be advised why their data is being collected and how it will be used. The PDPA does not apply where information is publicly available. Employers should ask if the candidate holds a National Registration Identification Card (NRIC) to identify whether they need a Work Pass. Employers must comply with advertising requirements under the Fair Consideration Framework (FCF).
Criminal Record Checks: Permissible when relevant to the role.
Medical History or Examinations: Employers may ask for medical history and require medical tests.
Educational Qualifications and References: Employers are allowed to ask for evidence.
Required: Immigration compliance to determine whether the applicant needs a Work Pass.
Basic Facts when Recruiting in Singapore
The rights of employees and the obligations of employers in Singapore are primarily governed by the Employment Act (EA). However, this does not apply to all classes of workers. The Act’s definition of ‘employees’ does not include executive and managerial staff, domestic staff, seamen and most government employees. Where the Act does apply to employees, it details the following:
- All employers must provide written key employment terms (KETs) to EA employees who will be working for 14 days or more.
- The KETs should include Full names and addresses of both parties; job title, role, and start date; duration of fixed term contract; working hours, days, breaks and rest days; salary, allowances, any benefits; leave arrangements; termination and severance terms; probation and notice periods.
- KETs should be given to EA employees within 14 days of starting employment
- If not in the KET, information such as policies on leave and medical benefits
- Written contracts are advised but not legally required
- Part-time EA employees (working fewer than 35 hours a week) should also have KETs, particularly specifying their hourly pay rates
- Employers failing to comply with KETs may lose their right to apply for future Work Passes for employees
- Records of all EA employees must be kept up to date by employers
After hiring and onboarding, employers must be aware of other considerations. Minimum standards include sick leave, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.
Employers’ responsibilities include:
- Applying for the Central Provident Fund (CPF) Submission Number (CSN) and registering employees with the CPF to make social insurance contributions
- Applying for individual CSNs as necessary according to the donations being made to the CPF on behalf of employees
- Registering employees with the Inland Revenue Authority of Singapore (IRAS) by preparing forms IR8A, Appendix 8A, Appendix 8B and IR8S
- Filing individual income tax (paper form) by April 15 of the year following the tax year or by April 18 electronically.
- Applying for UEN and CSN together where necessary via the Accounting and Corporate Regulatory Authority (ACRA) via the BizFile+Portal
The city-state of Singapore is in the front rank of international commerce and finance, with transport systems and an infrastructure that display the best in 21st-century innovation. And yet, Singapore also reflects the traditional cultures and heritage of an Asian nation. It is a multi-cultural and multi-ethnic society. Ethnic Chinese, at around 75%, Malays and Indians comprise over 98% of the population, creating a business and work culture that still displays in many areas the values of respect for age, status and hierarchy.
A raft of attractions tempts foreign companies to expand into Singapore. Although Singapore’s nominal Gross Domestic Product (GDP) in 2021 ranked only 38th in the world at 378.6 billion US dollars, the population is among the world’s richest, with a per capita GDP of US$66,263 ranked sixth globally. This is one of the highest among Pacific Rim nations. Singapore is sixth among the economies of fellow members of the Association of Southeast Asian Nations (ASEAN). It is the only Asian nation with a Triple AAA credit rating, a hub for east and west shipping lanes (with the world’s second-largest port), while 50% of the world’s population is within a six-hour flight away.
The Basics of the Singaporean Work Culture
Here are a few tips on taking the best steps and clearing those cultural barriers in Singapore. The country has some unique etiquette nuances that could catch out western employees.
Language: Chinese, Malay and Tamil are the official languages, while English is the working language in commerce and business.
Punctuality: Being on time shows respect for your opposite numbers and the budding relationship.
Business Attitudes: Remain in tune with the status hierarchy on the other team and show thoughtful consideration for the views expressed.
Negotiations: These reflect the highly-competitive marketplace, with an often rigid attitude towards costings and deadlines. Think long-term rather than a quick result, leaving room for a tiny element of compromise and hiding frustrations.
Greetings: Be sure to shake hands first with the team’s most senior member. Leave plenty of ‘personal space between yourself and Malay or Indian females.
Business Cards: Exchange these as part of the greeting and introduction phase; offer with both hands and show interest in the information displayed. Perfectly acceptable to have them written only in English.
Dress Code: Lightweight suits for both men and women are a sensible way of coping with the year-round tropical climate in what is very much a ‘business city’. Short-sleeved shirts with a tie are also acceptable.
Gift Giving: A regular part of Asian business etiquette, although if possible, check beforehand if a small offering is acceptable.
Out of Hours: Sharing lunch and dinner with new colleagues of the opposite team is an integral part of building the relationship. Remember … if the meal is with Malay or Indian associates, alcohol will not be served.
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