Are you considering Singapore as a destination to start your business? If so, it is important for you to find out more about Singapore's Employment Act.
Additionally, understanding the Employment Act will allow you to craft effective and attractive compensation and employee benefits to attract and retain talents in your company.
Who is Covered Under the Employment Act?
In Singapore, their employment contract covers and governs the relationship between employers and employees.
Both parties are free to negotiate and mutually agree on the terms, all while ensuring compliance with the Employment Act.
However, do note that the Employment Act does not extend to cover all types of employees. It only applies to "employees" specifically identified under the Act. The following groups of employees are not covered under the Employment Act:
- Managerial & Executive Positions: Employees who are considered Managerial and Executive are defined as someone with direct influence and authority over hiring, firing, promotions, transfers, disciplinary actions, and rewards of other employees. It also includes professionals with tertiary education with specialized skills, such as lawyers, doctors, and accountants.
- Domestic Workers: Employees engaged in domestic roles, such as household helpers or maids, are not subject to the Employment Act's provisions.
- Seamen: Employees working in seafaring roles are also exempted from the Employment Act's regulations.
- Most Employees Working in the Government: The Employment Act does not cover many government employees as separate regulations govern them.
Additionally, employees earning below SGD $2,600 per month will receive additional protection under Part IV of the Employment Act.
This protection covers regulated rest days, working hours, overtime, public holidays, retirement benefits, annual wage supplements, and other variable payments.
Employment Contract
An employment contract is important as it includes several clauses. An employment contract might also be an employment agreement, appointment, or offer letter.
It is an agreement in writing between an employer and employee that specifies the terms and conditions of employment. It is advisable to have a written employment contract in Singapore.
Typically, senior management employees may have the opportunity to negotiate their contracts.
Any violation of the contract's terms by either party is considered a breach of contract. Important clauses found in most employment contracts include:
- Appointment position
- Duration of the employment contract (if applicable)
- Date of employment commencement
- Remuneration package
- Working hours
- Employee benefits
- Probation duration (if applicable)
- Code of conduct
- Termination terms
In order to make it attractive to potential employees, it is essential to ensure that the terms and conditions in the employment contract are not less favorable than what is underlined in the Employment Act.
Salary, Bonuses, and Benefits
Different companies will offer different sets of remuneration packages. There are various types of compensation provided to employees in addition to their normal salaries.
Employee benefits in Singapore include leaves (sick leave, annual leave, maternity and paternity leave, hospitality leave, and child care leave), incentives, and bonuses.
Other benefits might include relocation assistance, healthcare benefits, housing allowances, travel allowances, and transportation reimbursements.
Below is a table underlining the statutory requirement versus the standard practice in Singapore:
| Type of Practice | Statutory Practice | Common Practice |
| Remuneration Package (Salary and Bonus) |
∙ No minimum salary requirements. ∙ Salary must be paid once a month, within 7 days after the end of the salary period. ∙ Overtime pay must be paid within 14 days of the stipulated salary period. ∙ There is no requirement for bonus payment. |
∙ Salary is based on the position and skills required. ∙ Annual bonus equivalent to at least 1 month’s salary (13th-month bonus). ∙Variable bonus that is tied to the employee’s performance as well as the performance of the company. |
| Hours of Work and Overtime | ∙ Only applicable to employees earning less than SGD2,600 per month. ∙ Work no more than 44 hours per week. ∙ Cannot work for more than 6 hours without a break. ∙ 1 rest day per week. |
∙ Not applicable based on the Employment Act if earning more than SGD2,600 per month. ∙ Agreement is free to be determined by agreement between employer and employee. ∙ The common practice is to work from Monday through Friday from 9 a.m. to 6 p.m. ∙It is not uncommon to work 9 to 10 hours during the weekdays and half a day during Saturdays. |
| Public Holidays | ∙ For employees earning less than SGD2,600 per month, they are mandated under the Employment Act. Employees are entitled to a paid holiday on public holidays. ∙ If the public holiday falls on a rest day or Sunday, the following Monday shall be considered the paid holiday. ∙ If the public holiday falls on a day when the employee is not contractually required to work, the employee shall be compensated with an off-in-lieu or an extra day’s pay. |
∙ For employees earning more than SGD2,600, although not protected under the Employment Act, it is common practice to practice the same. |
| Annual Leave | ∙ To qualify, the employee must earn less than SGD2,600 per month and work for at least 3 months. ∙ Minimum 7 days for the first year and 1 extra day for each additional year of service. |
The common practice in Singapore includes giving all employees around 14 days per year of annual leave |
| Sick Leave |
As per the Employment Act, employees earning less than SGD2,600/month are entitled to the following statutory sick leave entitlements based on their length of service with the company: ∙ Worked for at least 6 months for the company, an employee will be entitled to 14 days of sick leave and 60 days of hospitalization leave (inclusive of 14 days of sick leave) per year. ∙ Worked for at least 5 months but less than 6 months; an employee will be entitled to 11 days of sick leave and 45 days of hospitalization leave (inclusive of 11 days of sick leave) per year. ∙ Worked for 4 months but less than 5 months, an employee will be entitled to 8 days of sick leave, and 30 days of hospitalization leave (inclusive of 8 days of sick leave) per year. ∙ Worked for 3 months but less than 4 months; an employee will be entitled to 5 days of sick leave and 15 days of hospitalization leave (inclusive of 5 days of sick leave) per year. |
Common practice is to follow the minimum requirements of the Employment Act. This applies to all employees. |
| Health Insurance | There is no statutory requirement for companies to provide health insurance to their employees. | Common practice depends on the employer. Most large companies offer additional private medical insurance benefits to their employees. Smaller companies do not offer such benefits. |
| Probation Period | There is no statutory requirement pertaining to the probation period for employees. | As a common practice, employees are asked to serve a probation period between 3 to 6 months. During the probation period, employees are usually subjected to a shorter termination notice period. |
| Maternity and Childcare Leave |
Female employees who have been employed for more than 3 months may be eligible for maternity leave benefits.
∙ 16 weeks of maternity leave. ∙ Employers are prohibited from dismissing any employees on maternity leave. ∙ Maternity leave will be fully paid. ∙ 6 days of childcare leave per year if the an employee has worked longer than 3 months and is the parent of a child below 7 years of age. |
Common practice is to follow the guidelines in the statutory requirements. |
| Termination of Employment | Either party can terminate the employment contract by giving sufficient written notice or by paying salary in lieu of notice to the other party. There is no statutory requirement on the duration of the notice period. | Common practices include providing a 2-week notice period during the probationary period and 1 month’s notice following confirmation of employment. |
| Retrenchment |
As per the Employment Act, employees earning less than SGD2,600/month will be subjected to the following rules: ∙ The Company shall pay all salaries and benefits due to the employees on their last day of work. ∙ The duration of notice shall be as per the employment contract. ∙ Employees in the company for at least 3 years should be paid some retrenchment benefits. |
Common practice is to follow the guidelines in the statutory requirements. |
| Central Provident Fund (CPF) Contribution | CPF is a mandatory requirement for all Singapore Citizens and Permanent Residents. Foreign employees are not required to contribute to CPF. Employee contributions will be deducted from their monthly salary, and employers will be required to contribute 7.5% to 17%, depending on the age of the employee. | There is no variation in common practice as the practice will be the same as the statutory practice. |
| Education and Training | There is no statutory requirement pertaining to the probation period for employees. | There is no common practice to offer training and skills upgrade benefits to employees. However, some companies do offer reimbursements or allowances for training and skills upgrade purposes. |
Final Thoughts
In conclusion, this guide's purpose is to provide you with a general introduction to the statutory requirements as per the Singapore Employment Act.
This guide also included common practices that are considered special benefits to employees.
After all, benefits and remuneration packages might decide between accepting a job offer from your company or rejecting it.
FAQs
Who is not covered under the Singapore Employment Act?
Managerial and Executive positions, specialized professionals such as lawyers, doctors, dentists, domestic workers, seamen, and most government staff.
Is an employment contract compulsory in Singapore?
Is there a minimum salary amount in Singapore according to the Employment Act?
My company does not provide medical insurance benefits; is that against the Employment Act?
