Singapore Employment Act Guide

The guide will provide a general introduction to the statutory requirements as per the Singapore Employment Act and common practices that are applicable to employment contracts, wages, and benefits upon hiring employees in Singapore. This guide does not address the specialized industries that involve blue-collar workforce and manual labor.

The purpose of this guide is to give you an idea, as to what your responsibilities are in case you decide to hire employees for your newly incorporated company.

An efficient employee benefit and compensation plan recognizes and rewards the best company employees. Successful employee benefits strategies increase employee retention, raise productivity, and have a positive impact. Matching the benefit packages of bigger companies is very difficult for small-to-mid-size companies (SMEs) in Singapore. Therefore, a small company should offer a benefits package that is competitive with what other SME companies and meets employee needs.

• Nature of Appointment position
• Date of employment commencement
• Duration of employment contract, if applicable
• Remuneration package
• Employee benefits
• Hours of work
• Code of conduct
• Termination
• Probation clause, if applicable

Statutory Requirement

Minimum salary that every employee must be paid is not regulated by the Employment Act. Therefore, there is no minimum requirement of salary and is subject to the agreement / negotiation between the employee and the employer. However, the salary has to be paid within seven days after the end of the salary period at least once in a month. Overtime has to be paid within 14 days of the specified salary period, if applicable. The bonus payment does not come in the domain of Singapore Employment Act.

Common Practice

The amount of salary that an employee gets depends upon the position and skills required. In Singapore, an annual bonus equivalent to at least 1 month’s salary has become a common practice. It is commonly known as 13th-month payment. The exact amount of annual bonus is tied to the employee’s well as the performance of the company. It normally varies from employee to employee as per the company policies. The employment contract in Singapore specifies the details of the annual bonus policy. In Singapore, during good economic times, it is not uncommon for companies to give their employees a yearly bonus of two to three-time of their monthly salary.

In Singapore, keeping in view the multicultural community, public holidays are adjusted so as to accommodate different ethnic communities. Considering the multicultural society of Singapore, public holidays are designed to accommodate many different. The holidays' list include Christmas Day, Labor Day, Vesak Day, National Day, New Year’s Day, Chinese New Year, Good Friday, Hari Raya Puasa, Deepavali, and Hari Raya Haji.

Statutory Requirement

Following rules are mandated under the Singapore Employment Act for employees who are earning less than S$ 2,600/month:

• The employees are entitled to pay on public holidays, though the specific dates of the holiday can be substituted by some other day provided it is mutually agreed upon by the employer and employee.
• In case a public holiday falls on Sunday, the following Monday is considered as a paid holiday.
• In addition to this, if the public holiday falls on a day when an employee is not required to work as per the contract, he/she shall be compensated with an additional day’s salary or by an extra off as a substitute.

Common Practice

Singapore Employment Act does not enforce any rules regarding public holidays for employees earning above S$ 2,600/month. However, as a general practice, all employees in Singapore are given the same public holiday benefits as have been mentioned above.

Additionally it is common practice to allow half-day leave on the eve of specific holidays for the specific employees. (On the eve of Deepavali, to Hindu employees, and on the eve of Hari Raya to Muslim employees). But in practice, this half-day is granted to all employees regardless of race.

Statutory Requirement

Singapore Employment Act gives out the statutory sick leave entitlements for employees earning less than S$ 2,600/month. These entitlements are mentioned below:

• If an employee has served in a company for a period of at least 6 months: He / she is entitled to a sick leave of 14 days in a year and 60 days leave (including 14 days sick leave) if the individual has been hospitalized.
• If an employee has served in a company for a period of at least 5 months: He / she is entitled to a sick leave of 11 days in a year and 45 days leave (including 11 days sick leave) if the individual has been hospitalized.

• If an employee has served in a company for a period of at least 4 months: He / she is entitled to a sick leave of 8 days in a year, and 30 days leave (including 8 days sick leave) if the individual has been hospitalized.
• If an employee has served in a company for a period of at least 3 months: He / she is entitled to a sick leave of 5 days in a year, and 15 days leave (including 5 days sick leave) if the individual has been hospitalized.

For an employee to claim above mentioned leave entitlements is required to produce a medical certificate from the doctor employed by the company, or a government doctor or doctor from a hospital that is approved by the company.

Common Practice

The sick leave entitlement of all the company employees in Singapore is generally in consonance with the Singapore Employment Act.

Statutory Requirement

The statutory requirements are as under:

• Female employees who have worked for an employer for a minimum period of three months are entitled to paid maternity leave.
• The females who are eligible for maternity leave are entitled to sixteen weeks leave. (Exact duration depends if the child born is Singapore citizen or not)
• Any employee on maternity leave cannot be dismissed by the employer.

• If an employee is given the notice of dismissal without sufficient cause within three months of employee's confinement, maternity leave is required to be paid in full.
• If a female employee has worked for three months for an employer and has a child below the age of seven years, she is entitled to a six days childcare leave per year, provided the child is a Singapore citizen, otherwise the leave claimed can be 2 days only.

Common Practice

In common practice, the maternity and childcare leave benefits for the employees parallels the minimum requirement of the Singapore employment act as above.

Statutory Requirement

Employer and employee both can terminate the employment contract by giving a notice or one month's salary. There is no requirement of a minimum time period for the notice. The notice period depends upon the employment agreement. The employees can offset the notice period by utilizing accrued annual leave. If any party commits a willful breach of contract other party can terminate the contract without any notice.

Common Practice

It is a common practice to provide two weeks’ notice period to the employee during the probationary period and one-month to three-months notice period after the confirmation of the employment. Although the Singapore Employment contract allows both employer and employee to give one month's pay in lieu of termination notice, however, Singapore courts have decreed that employee cannot terminate the contract by providing salary in lieu of notice because of the practical problems that can be faced by the employer.

Statutory Requirement

The employer is required to make contributions to the CPF for employees that are Singapore Citizens or Permanent Residents. Both the employee and employer make the monthly contributions. The employer is responsible for sending the CPF payment that includes the contribution from both employer and employee by the 14th of the following month. The portion of the employee's contribution is later on deducted from his/her salary. The maximum contribution rate of CPF is 20 % for the employer and 16% for the employee. The amount can be lower depending upon certain factors like the age of employee and status of residence etc. There is no CPF contribution for the foreign employees holding the employment pass or the work permit in Singapore.

Common Practice

The common practice is precisely the same as that of the statutory requirement for CPF contributions.

• Healthcare, well-being, and personal benefits – Most companies in Singapore offer medical insurance to their employees that extends to their dependents and covers most medical bills especially the personal accident and hospitalization.
• Per Diem – The jobs that include move and stays away from the place of duty, most companies provide a per day allowance, transport allowance, and reimbursement of expenditures incurred while traveling. This is called Per Diem. The amount of Per Diem depends upon the place the employee is going to.