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- Mjellma Gonzales.
Singapore remains one of the strongest economies in the world. The country also boasts of a friendly business environment for both locals and foreigners. In fact, the World Bank ranked it as the best country in the world for doing business for ten consecutive years up to 2016. This coupled with friendly taxes, ease of company formation, strategic geographical location and a productive workforce make Singapore a good choice for business expansion. However, different rules and regulations govern the country. Understanding the employment and labor laws and regulations is paramount if you are to employ workers compliantly to avoid running into legal issues. Read on to discover the basic statutory requirements as stipulated in the employment act.
An overview of the Employment Act
When you want to register a company in Singapore, it is crucial to familiarize yourself with the set regulations alongside company registration requirements.
The Employment Act that states the minimum standards that employers must comply with when hiring employees. It protects employees, local and foreign, hired on full-time, part-time, temporary and contractual basis. However, it exempts seafarers, domestic workers, civil servants and statutory board employees.
The act is divided in two categories. The first one is the Core Provisions that provide regulations concerning salary payment, paid annual leave, paid sick leave, paid public holidays, dismissal and maintenance of employee records. The other category is the Part IV Provisions that stipulates guidelines for normal hours of work, rest days and payment of overtime. However, this second category applies to workmen earning a basic salary below $4,500 monthly and non-workmen earning below $2,600 monthly.
Employment contract
It is required to have an employment contract that abides by the Employment Act in place. This can be written, oral, expressed or implied. However, for the sake of minimizing disputes, a written one is advisable by the Ministry of Manpower. Generally, an employment contract refers to an agreement between the employer and employee and defines the relationship between the two. The ministry recommends that the following among other information is included in the contract:
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Employer and employee full names
Employment start date
Employment duration
Work hours, leave and rest days
Probation terms where applicable
Salary, deductions and allowances
Salaries and deductions
The law doesn’t provide a minimum salary, the employer and employee negotiate the amount to pay. However, it is stipulated that salary must be paid at least once a month. This must be paid within a period of seven days after the lapse of the salary period. Moreover, overtime must be paid within 14 days after the end of the salary period at a rate of at least 1.5 times the hourly basic pay rate.
In addition, the employer has a responsibility to remit Central Provident Fund (CPF) contributions by the 14th of the following month. The contributions are made by the employer at a maximum rate of 16% and the employee at a maximum rate of 20%. The employee contribution is deducted from the monthly salary every month. However, this is not applicable for foreign employees.
Working hours
The employment act recommends working up to 8 hours a day or 44 hours a week where the employee is required to work for more than 5 days a week. If the employee works for less than 5 days a week, then up to 9 hours a day is acceptable. Additionally, the act requires employees not to work for more than 6 hours without a break. Furthermore, a day can’t go beyond 12 hours even with overtime included, including shift workers. However, exceptions are made under certain circumstances such as those working for national security or where work interruptions occur among others.
Public holidays and leave days
Employees in Singapore are entitled to one rest day per week. In addition, they are entitled to 11 paid public holidays in a year. If a paid public holiday happens to fall on a rest day, then the next day is considered a paid holiday. Where employees are required to work on a paid public holiday, compensation of extra pay or 1 day off in lieu is recommended.
Employees who have worked for at least 3 months are entitled to paid annual leave. The employment act states a minimum of 7 days for the first year of service and one additional day for each additional year, with a maximum of 14 days in the 8th year and thereafter.
Paid sick leave depends on the duration of employment, but must have completed 3 months in service to qualify. 3 months of service equals 5 paid outpatient and 15 paid hospitalization leave days per year. 4 months of service is 8 days outpatient and 30 days hospitalization, while 5 months is 11 days outpatient and 45 days hospitalization. 6 months and thereafter is 14 days outpatient and 60 days hospitalization. However, the hospitalization days are inclusive of the outpatient days. Moreover, employees must give a notice of absence within 48 hours and bring a medical certificate from an approved hospital.
Termination
Both the employer and employee can terminate the contract of employment in Singapore. This can happen if the employer resigns, the contract duration expires or the employer dismisses the employee. In case of dismissal or resignation, either the employer or employee must give an advance notice in writing. The notice period recommended must be the same for the two parties. If an employee has worked for less than 26 weeks, a 1 day notice is required. Less than two years but more than 26 weeks, 1 week, 2 years to 5 years, 2 weeks and 5 years and more, 4 weeks notice periods are recommended. In case an employee fails to give a notice as required, he or she is required to compensate the employer in lieu.
Conclusion
There you have it! The above describes the basic regulations and laws governing employment in Singapore. It is important that you pay attention to each one of them to ensure that you hire employees compliantly in the country. This may not be exhaustive, so seek to understand them in detail. Moreover, working with legal and HR experts in the country can go a long way in helping with compliance.
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