Key Takeaways:
- Singapore’s employment laws aren’t just one set of rules. They’re a mix of the Employment Act, CPF Act, and Ministry of Manpower guidelines, which can be tricky to navigate without local expertise.
- There’s no official minimum wage in Singapore, but some industries are governed by the Progressive Wage Model, which mandates pay minimums.
- Employers aren’t required to withhold income tax but they must report salaries and manage required contributions, such as CPF.
Longstanding political stability and a highly educated workforce.
A business-friendly tax environment and a well-won position atop the Global Talent Competitiveness Index.
It’s easy to see why Singapore consistently ranks among the world’s top destinations for international hiring.
Still, hiring in Singapore isn’t without its challenges. Employers must comply with detailed labor laws and regulations covering contracts, wages, leave entitlements, and termination procedures.
Non-compliance can lead to penalties and back payments, and it can also hurt your reputation with prospective talent. That’s why it’s important to have a solid understanding of Singapore’s employment laws, how they’re enforced, and the penalties you could face if you make a mistake.
Understanding Singapore’s Labor Law Framework
Singapore’s employment system is governed by several key laws, each addressing different aspects of the employment relationship, from contracts and working hours to benefits and contributions.
The Employment Act
The Employment Act is Singapore’s primary labor law. It establishes the baseline rules that apply to the majority of employees in Singapore, covering aspects such as:
- Working hours and overtime
- Salary payment timelines
- Leave entitlements
- Protection against improper dismissal
The Act generally applies to employees earning within certain salary thresholds, but often serves as a reference point for general employment practices.
Ministry of Manpower Guidelines
The Ministry of Manpower (MOM) offers general guidance on fair employment practices beyond the Employment Act. It outlines legislation governing:
- Work passes
- Employment practices
- Workplace safety
- Employment of international talent
- Employment agencies
- Housing for international workers
If you’re not aligned with MOM guidelines, it can raise red flags with regulators and reflect poorly on your company.
The Central Provident Fund Act
The Central Provident Fund (CPF) Act outlines Singapore’s mandatory social security system. It requires both employers and employees to make regular contributions toward retirement savings, healthcare, and housing.
Because CPF contributions apply to both Singapore citizens and permanent residents, they’re a central part of compliance when hiring in Singapore.
Who Is Covered by Singapore’s Labor Laws?
Employees
The Employment Act applies to most employees in Singapore who are employed under a contract.
In general, someone is considered an employee when the employer controls when, where, and how the work is performed. Employees are paid a regular salary and are entitled to statutory protections, including leave, notice periods, and other benefits.
Employees who work fewer than 35 hours per week are considered part-time, but still covered under the Employment Act, with entitlements adjusted accordingly.
Contractors
Independent contractors are not covered by the Employment Act. They control when and where they work, manage their own taxes, and are not entitled to employment benefits.
Classification depends on the actual nature of the work, not the title alone. Contractors functioning like employees may be reclassified under Singapore law.
To avoid misclassification, companies should understand how authorities define employees vs. contractors. If there’s any gray area, it’s best to get local legal guidance before proceeding.
Misclassifying an employee as a contractor can expose a company to penalties, back payments of CPF contributions, and potential legal claims.
Employment Contracts in Singapore
Written employment contracts are key to staying compliant with Singapore’s Employment Act and related regulations. At a minimum, they should clearly outline the core terms of the role, but in practice, most contracts go further.
That usually includes details such as:
- Job title and responsibilities
- Salary and payment schedule
- Working hours
- Leave entitlements
- Notice periods
- Probation terms
A well-drafted contract makes expectations clear from the start and helps avoid confusion down the line.
The Ministry of Manpower offers a Key Employment Terms verification tool to help employers ensure employment terms are compliant and accurately calculate pay.
Working Hours, Overtime, and Salary Rules
Standard working hours are capped at 44 per week. Any additional hours are treated as overtime and must be paid at a minimum of 1.5 times the employee’s hourly rate, with a maximum of 12 working hours in a single day.
Minimum Wage in Singapore
Singapore does not have a universal minimum wage. Instead, the government uses a Progressive Wage Model (PWM) that mandates minimum pay floors for specific industries, including food service and retail.
Employee Leave Entitlements
Singapore law requires employers to provide statutory leave benefits to all eligible employees.
Annual leave
Annual leave starts at 7 days per year and increases by 1 day per year of employment, up to a maximum of 14 days.
Sick leave
Employees in Singapore are entitled to up to 14 days of paid outpatient sick leave and 60 days of paid hospitalization leave per year.
Maternity Leave
Singaporean citizens are eligible for 16 weeks of paid maternity leave. The rate of pay depends on the duration of the leave and the number of children the mother has.
Public Holidays
Employees are entitled to paid leave on each of Singapore’s specifically designated public holidays. If an employee is required to work on a public holiday, they are entitled to additional pay or a day off as compensation.
Workplace Health and Safety
Employers in Singapore are required to comply with the Workplace Safety and Health Act (WSHA), which means they’re responsible for ensuring safe working conditions. This includes identifying and managing risks, maintaining proper registration, reporting accidents to MOM, making sure employees are trained, and providing compensation if injuries occur.
If these requirements aren’t met, it can lead to fines, prosecution, or restrictions on business operations.
Payroll Taxes and Employer Contributions
Central Provident Fund Contributions (CPF)
CPF contributions are the primary payroll obligation for employers in Singapore and must be submitted monthly.
They apply to both full-time and part-time employees who are Singapore citizens or permanent residents. Contribution rates vary based on factors including the employee’s age, residency status, and monthly wage level.
Income Tax Withholding
Employers do not generally withhold income tax in Singapore. Still, employees' salaries must be reported to the Inland Revenue Authority of Singapore (IRAS).
Rates vary depending on the number of days the employee works and whether the employer is based in Singapore or internationally.
Data Protection and Employee Privacy
Employee data is subject to Singapore’s Personal Data Protection Act (PDPA). Compliance with PDPA requires employers to follow an eleven-step checklist that covers measures such as:
- Taking public accountability for data security
- Notifying individuals of disclosed personal data
- Limits on how data may be collected and used
Independent Contractors in Singapore
Engaging independent contractors is common in Singapore, but the relationship must genuinely reflect their status as independent contractors.
Authorities may assess the level of control the company exercises over the worker’s day-to-day activities, whether the contractor serves multiple clients, and who supplies the tools and equipment used.
If a contractor is reclassified as an employee following an audit, the company may be required to pay back CPF contributions, statutory benefits, and any other entitlements the worker should have received.
When in doubt, it’s less risky to treat the relationship as employment.
Termination and Notice Periods
Singapore law requires that any termination, whether instigated by either the employer or the employee, be documented in writing.
Notice periods are usually set in the employment contract. If they’re not, the Employment Act defaults apply:
- Less than 26 weeks: 1 day
- 26 weeks to less than 2 years: 1 week
- 2 to less than 5 years: 2 weeks
- 5 years or more: 4 weeks
These apply even during probation unless the contract states otherwise.
Either party can also choose to pay salary in lieu of notice, effectively ending employment immediately.
A waiver of notice is allowable if both the employer and employee consent.
Final Pay and Severance
There’s no statutory requirement for severance pay in Singapore.
That said, many employers offer retrenchment benefits under company policy or contract terms, typically 2 to 12 weeks of salary per year of service. Employees with less than 2 years of service are typically not eligible..
Any unused annual leave must be paid out in the employee’s final salary.
Challenges for Global Companies Hiring in Singapore
Even in a business-friendly environment, compliance can be complex for companies unfamiliar with Singapore’s employment landscape.
Common pain points include:
- Understanding local salary thresholds and their implications for statutory coverage
- Managing CPF contribution calculations
- Drafting contracts that meet KETs requirements
- Navigating the nuances of termination
For international employers, the learning curve can be steep, particularly if you’re managing employees across multiple borders simultaneously.
Hiring in Singapore Without Opening a Local Entity
There are two primary approaches a foreign business can take when hiring in Singapore. Establishing a legal entity makes sense for companies planning long-term expansion or building a large local team.
On the other hand, for those looking to hire one or two employees, test the market, or scale quickly without administrative overhead, the time and cost of entity formation often isn’t justified.
In those cases, many companies prefer to work with an Employer of Record (EOR). The EOR legally employs workers on the company’s behalf, handling HR and compliance, while the hiring company retains control over the employee’s day-to-day responsibilities.
How RemoFirst Helps You Hire in Singapore
RemoFirst enables companies to hire, pay, and manage employees in Singapore without setting up a local entity.
As the legal Employer on Record, RemoFirst handles compliance, payroll, and HR administration while you manage your team’s work directly.
With RemoFirst, you can:
- Hire compliantly in 185+ countries
- Run payroll in line with local requirements
- Offer benefits including private health insurance through RemoHealth
- Receive support for visas and work permit applications
- Manage contractors and employees in one platform
Pricing starts at $199 per employee per month.
Ready to hire in Singapore? Schedule a demo today!
