Employer of Record (EOR) Singapore
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As the preferred choice for businesses expanding globally, an Employer of Record (EOR) Singapore is the legal anchor for your workforce. Operating under the umbrella of a Global Professional Employer Organization (Global PEO), our Employer Of Record Singapore encompass comprehensive oversight of various employment facets. From ensuring meticulous adherence to Singapore’s labor laws and regulations to managing critical tasks such as payroll, taxes, and statutory benefits, our role as your Employer of Record Singapore is designed to offer a hassle-free employment experience.
In Singapore, an Employer of Record (EOR) takes charge of:
- Ensuring meticulous compliance with Singapore’s employment laws.
- Managing the intricacies of the local payroll process efficiently.
- Skillfully handling the submission of employment-related taxes and necessary documentation.
- Providing employees with accurate and timely payslips.
- Facilitating swift and secure salary payments to employees.
Opting for our Global PEO services means embracing a seamless global expansion strategy without the complexities of entity setup. With Mercans as your trusted Employer of Record Singapore, you gain a partner committed to legal compliance, intellectual property protection, and dedicated support for your core business activities. Facilitate streamlined global mobility, obtain necessary work visas, and foster a diverse and efficient global workforce with Mercans as your Employer of Record in Singapore. Choose compliance, efficiency, and success – choose Mercans, your Employer of Record in Singapore.
Employment Contracts in Singapore
| Aspect | Employee (Contract of Service) | Contractor (Contract for Service) |
|---|---|---|
| Nature of Relationship | Has an employer-employee relationship | Has a client-contractor type of relationship |
| Business Engagement | Employee does business for the employer | Contractor carries out business on their own account |
| Coverage by Employment Act | May be covered by the Employment Act | Not covered by the Employment Act |
| Terms of Employment | Includes terms such as working hours, leave benefits, etc. | Statutory benefits do not apply |
| Control and Decision-Making | - Who decides on recruitment and dismissal? | - Who determines the production process, timing, and method? |
| - Who pays for employees' wages and in what ways? | - Who is responsible for the provision of work? | |
| - Ownership of factors of production (tools, equipment, etc.) | ||
| Economic Considerations | - Is the business carried out on the person's own account? | |
| - Can the person share in profit or be liable to any risk? | ||
| - How are earnings calculated and profits derived? |
Note: There is no single conclusive test to distinguish between a contract of employment and a contract for services. Factors such as control, ownership, and economic considerations play a role.
Key employer terms (KETs)
Key Employment Terms (KETs) must encompass the following details, unless they are not applicable to the employee. KETs must cover the following, unless inapplicable. For PMEs exempt from overtime pay, exclude items 11 and 12.
Working Hours
In Singapore, standard contractual working hours are typically up to 9 hours per day or 44 hours per week for those working 5 days or fewer, and up to 8 hours per day or 44 hours per week for those working more than 5 days. Alternative arrangements may vary, with caps on hours and averaging applied. It’s crucial to refer to specific employment contracts and understand applicable terms.
Overtime Pay
Overtime work encompasses any work performed beyond the regular hours, excluding breaks. Eligibility for overtime claims is determined by the monthly basic salary: for non-workmen earning $2,600 or less and workmen earning $4,500 or less. Workmen, primarily engaged in manual labor, fall under this category. The overtime rate for non-workmen is capped at $2,600 or an hourly rate of $13.60. Employers must pay at least 1.5 times the hourly basic rate for overtime work, with payment due within 14 days after the salary period. To illustrate, if a non-workman earning $2,600 a month works 2 hours of overtime, the overtime pay is calculated as $13.60 × 1.5 × 2 hours, amounting to $40.80. Understanding the calculation methodology is crucial to avoid disputes or claims related to overtime pay.
Probation Period
In Singapore, the majority of employees typically begin their employment with a probationary period, typically lasting 3-6 months. Successful completion of the probation results in the appointment as permanent employees. However, the employer retains the right to terminate employment before the probationary period concludes by issuing notice, usually 1-2 weeks, or by providing salary in lieu of notice, as stipulated in the contract.
13th Month Salary (Annual Wage Supplement)
The AWS, often known as the “13th month payment,” is an annual bonus given in addition to an employee’s total annual wage. While not mandatory, it depends on the employment contract or collective agreement. Employers are encouraged to grant AWS as a reward for their employees’ contributions. The amount can be negotiated lower in challenging business years. There is a limit of 1 month’s salary for AWS if not paid before August 26, 1988. Bonuses, one-time year-end rewards, and variable payments for increased productivity are not obligatory unless specified in the employment contract or collective agreement.
Top Skills on Demand in Singapore
Singapore’s vibrant tech landscape has heightened the demand for skilled professionals. This article identifies the top 10 sought-after tech skills, including Data Science, Amazon Web Services, Digital Transformation, Cloud Computing, Databases, SQL, Data Analysis, Java, Python, and C#. Whether you’re a hiring manager or a tech candidate, this list guides you on the most valuable skills in today’s job market. For candidates, it signals areas to focus on for upskilling, while hiring managers may find the hiring process challenging but can improve their chances with strategic approaches. In this tech-driven environment, data becomes your best ally.
Payroll in Singapore
Minimum Wages
Singapore does not have a stipulated minimum wage. Wages are determined by market demand and supply dynamics.
Payroll Cycle
Employers are required to disburse salaries at least monthly, or at more frequent intervals if preferred. The payment must be completed within 7 days following the conclusion of the salary period, and the failure to do so constitutes an offense.
Mercans’ Payroll Capabilities
Navigating payroll complexities in Singapore demands meticulous attention and comprehensive solutions. Mercans simplifies this intricate process through its Employer of Record services, ensuring precision, compliance, and operational efficiency in the unique landscape of Singapore payroll.
Operating on a monthly cycle, Singapore payroll involves intricate stages such as setup, salary calculations, and reporting. Mercans’ Employer Of Record services adeptly handle these tasks with precision, providing a seamless payroll experience.
Facilitating payments in the local currency enhances convenience and minimizes currency exchange complexities. Mercans eases this process with its multi-country payment solutions, ensuring smooth financial transactions.
From initial payroll setup and processing to comprehensive administration, Mercans’ EOR services cover every aspect efficiently in the Singapore payroll landscape. Whether configuring software, processing salaries, or managing leave balances, Mercans ensures a streamlined payroll experience.
Compliance with local regulations is paramount, and Mercans offers seamless support for statutory filings, ensuring adherence to Singapore laws. As your trusted payroll partner in KSA, Mercans leverages its expertise in Employer Of Record services to provide accurate and streamlined payroll operations across various locations, making it a reliable choice for businesses operating in Singapore.
Social Security in Singapore
Social Security Contributions
The Central Provident Fund (CPF) is a mandatory social security savings scheme in Singapore funded by both employers and employees. It constitutes a vital component of the country’s social security system, addressing the retirement, housing, and healthcare needs of its citizens.
CPF contributions are allocated into three distinct savings accounts:
Ordinary Account
This account is versatile, allowing withdrawals for purposes such as home purchases, investments, and education at any time.Special Account
Reserved for retirement-related needs, the special account becomes accessible when the account holder reaches retirement age. It serves as a source of income for retirees.Medisave Account
Specifically designated for medical expenses, hospitalization costs, and payment for approved medical insurance.Employer contributions are mandated, ranging from 7.5 percent to 17 percent, contingent on the age and wage of the employee. Simultaneously, employees are required to contribute between 5 percent and 20 percent based on similar factors. The CPF system ensures a structured approach to financial security, encompassing diverse aspects of individuals’ lives in Singapore.
Singapore Employee Hiring Cost
In this hypothetical example of employing an individual in Singapore with a Gross Annual Salary of SGD 9,999.96, the employer incurs Total Annual Employer Costs amounting to SGD 1,725.00. These additional costs cover various components such as Employer CPF Contribution, Skills Development Levy, and Work Injury Compensation Insurance. The comprehensive Total Annual Cost, which includes both the Gross Annual Salary and the associated Employer Costs, sums up to SGD 11,724.96. This example underscores the holistic financial commitment involved in employing individuals, extending beyond the base salary to encompass various employer-related contributions and obligations in the Singaporean context.
| Gross Annual Salary | SGD 9,999.96 |
| Total Annual Employer Costs | SGD 1,725.00 |
| Skill Development Levy (SDL) | SGD 24.96 |
| Central Provident Fund (CPF) | SGD 1,700.04 |
| Total Annual Cost | SGD 11,724.96 |
Personal Income Tax
Income taxation in Singapore is applicable when income accrues within or is derived from Singapore, regardless of an individual’s residency status. However, income obtained from sources outside Singapore is taxable only if received in Singapore by a resident individual through a local partnership.
Residents and non-residents in Singapore face differing tax regulations. Residents benefit from personal reliefs and deductions and are subject to graduated tax rates ranging from 0% to 22% (24% from the year of assessment 2024). In contrast, non-residents face a flat tax rate of 22% (24% from the year of assessment 2024) without personal reliefs, except for employment income. Non-residents’ employment income is taxed at either a flat rate of 15% or the graduated resident rates with personal reliefs, whichever results in higher taxation. However, this concession does not extend to non-resident directors.
Below is an overview of the individual income tax rates for residents based on the years of assessment 2023 and 2024:
| Taxable income (SGD) | Year of assessment 2023 | Year of assessment 2024 |
|---|---|---|
| Over | Not over | Tax on column 1 (SGD) |
| 0 | 20,000 | - |
| 20,000 | 30,000 | - |
| 30,000 | 40,000 | 200 |
| 40,000 | 80,000 | 550 |
| 80,000 | 120,000 | 3,350 |
| 120,000 | 160,000 | 7,950 |
| 160,000 | 200,000 | 13,950 |
| 200,000 | 240,000 | 21,150 |
| 240,000 | 280,000 | 28,750 |
| 280,000 | 320,000 | 36,550 |
| 320,000 | 500,000 | 44,550 |
| 500,000 | 1,000,000 | 84,150 |
| 1,000,000 | - | 194,150 |
For non-residents, a flat tax rate of 22% (24% from the year of assessment 2024) is generally applicable. However, non-resident directors’ remuneration doesn’t qualify for the reduced rate and is subject to withholding tax (WHT) at the rate of 22% (24% from the year of assessment 2024).
Singapore imposes no additional local income taxes beyond the aforementioned regulations.
Employee Benefits in Singapore
Central Provident Fund (CPF):
A compulsory benefit for Singapore Citizens (SCs) and Permanent Residents (PRs), CPF is governed by legislation. Employers must adhere to these regulations and automatically enroll eligible employees in their monthly CPF declarations.
Currently, contributions from both employees and employers are determined by the age and income of the employee. Contributions are computed based on the first $6,000 of monthly wages, with adjustments to $6,300 on September 1, 2023, $6,800 on January 1, 2024, $7,500 on January 1, 2025, and $8,000 on January 1, 2026. For those below 55 and earning above $750 per month, the contribution is 37% of the basic monthly wage (employer 17%, employee 20%). Contribution levels vary for those earning less than $750 monthly and/or aged 55 and above.
CPF contribution rates increased on January 1, 2021, and currently, the 37% rate applies up to age 55, extending to 60. Contribution levels for ages 55-60, 60-65, and above 65 are 29.5%, 20.5%, and 12.5%, respectively. These rates will incrementally rise, with the full CPF rate applying to those aged 55-60 by 2030.
During prime earning years, CPF contributions are allocated to three accounts: Ordinary (housing and retirement), Special (retirement), and Medisave (basic healthcare). At 55, the Retirement Account is introduced.
Statutory Retirement Age:
The statutory retirement age is 63, but employers are encouraged to offer re-employment until 68.
Other benefits:
Employees in Singapore enjoy a range of benefits, including seven days of annual leave, which increases yearly, with employers commonly offering 14 to 28 days. Maternity and paternity leave benefits are provided, allowing pregnant employees 16 weeks of maternity leave, while fathers are entitled to two weeks of paternity leave. Both parents can also opt for shared parental leave. Sick leave is regulated by the Employment Act, ensuring a minimum of 14 days of outpatient leave and 60 days of hospitalization leave. Additionally, employees with children under 7 are entitled to six days of childcare leave, with the first three days employer-sponsored and days four to six government-sponsored. Parents with children aged 7 to 12 receive an extended childcare leave of two days.
Leaves
Annual Leave
Employees are granted seven days of annual leave during the first year (after the initial three months) and receive an additional day per year, culminating in 14 days by the 8th year of service. Most employees typically enjoy 14 days of annual leave per annum.
For those not engaged in manual labor earning over SGD 2,600 monthly, annual leave agreements in employment contracts can exceed statutory entitlements.
Public Holidays
There are 11 paid public holidays a year for employees under the Employment Act, offering payment in lieu or an alternative day off. If an employee works on a public holiday, they are entitled to an extra day’s salary.
| Date | Day | Holiday |
|---|---|---|
| 1 Jan | Sun | New Year's Day |
| 2 Jan | Mon | New Year Holiday |
| 22 Jan | Sun | Chinese New Year |
| 23 Jan | Mon | Chinese New Year Holiday |
| 24 Jan | Tue | Chinese New Year Holiday |
| 7 Apr | Fri | Good Friday |
| 22 Apr | Sat | Hari Raya Puasa |
| 1 May | Mon | Labour Day |
| 2 Jun | Fri | Vesak Day |
| 29 Jun | Thu | Hari Raya Haji |
| 9 Aug | Wed | National Day |
| 12 Nov | Sun | Deepavali |
| 13 Nov | Mon | Deepavali Holiday |
| 25 Dec | Mon | Christmas Day |
Sick Leave
Employees, after six months of service, are eligible for 14 days of paid outpatient sick leave and 60 days of hospitalization leave annually. Sick leave requires prompt notification to the employer and a medical certificate to be valid.
Maternity/Paternity Leave
Mothers receive 16 weeks of full-paid maternity leave, while fathers get two weeks of paid paternity leave, funded by the government. Additionally, adoptive mothers are entitled to 12 weeks of paid leave for adopting Singaporean children, with adoptive fathers receiving two weeks of paid leave.
Shared Parental Leave
Fathers can share up to four weeks of their wife’s maternity or adoption leave if eligible, capped at SGD 2,500 weekly, and if the child is a Singapore citizen.
Childcare Leave
Parents of Singapore citizen children receive six days of paid childcare leave per year, extendable to two days for kids between 7 and 12 years old. The employer covers the first three days, and the government covers the remainder, both capped at SGD 500 per day.
Extended Childcare Leave
For children aged 7 to 12, parents receive two days of extended childcare leave, reimbursed by the government and capped at SGD 500 a day.
Unpaid Infant Care Leave
Parents can take six days of unpaid leave annually for children under two years who are Singapore citizens.
National Service Leave
Male Singapore citizens may be called for up to 40 days of National Service (NS) training annually, with the government handling salary during this period. Employers are not obligated to pay the employee for this duration.
Termination, Severance Pay and Notice Period
In Singapore, employment termination is a significant aspect regulated by employment laws. Employers and employees need to adhere to specific guidelines regarding severance pay and notice periods. When terminating an employee, it is crucial to provide sufficient notice or salary in lieu of notice, as outlined in the employment contract. The notice period varies based on the terms agreed upon but typically ranges from one to three months.Severance pay, also known as retrenchment benefits, is not mandatory under Singaporean law. However, employers may provide it as a gesture of goodwill or as stipulated in the employment contract or collective agreement. The amount of severance pay, if applicable, is often determined by factors such as the length of service and the financial health of the company.
Employers may terminate employees for various reasons, including poor performance, redundancy, or misconduct. Regardless of the reason, employers should ensure fair and reasonable treatment throughout the termination process. Unfair dismissal may lead to disputes and potential legal consequences.
Work Permit
Singapore boasts a highly developed free-market economy, recognized as the world’s second most prosperous in the Global Competitiveness Report 2015. Attracting a significant number of foreigners, Singapore offers high salaries, abundant job opportunities, and an attractive tax system. According to the Ministry of Manpower (MOM), foreign workers constituted over 20% of Singapore’s workforce in 2018, reflecting the nation’s cosmopolitan nature.
To work in Singapore, foreign workers need a Singapore work visa, known as a Pass. This requirement applies to all, irrespective of visa status. Singapore offers various types of work visas based on the nature of work and skill level. The categories include:
Singapore Work Visas for Professionals:
Employment Pass
for foreign managers, executives, and professionals earning a minimum of S$3,600 per month.Personalized Employment Pass
offers flexibility for high-earning foreigners or existing Employment Pass holders.EntrePass
for investors or entrepreneurs starting a business in Singapore.Singapore Work Visas for Skilled and Semi-Skilled Workers:
S Pass
for mid-level skilled workers earning at least S$2,300 per month.Work Permit for Foreign Workers
for foreign workers in specific sectors.Work Permit for Foreign Domestic Workers (FDW)
for workers aged 23 to 50 from certain countries.Singapore Work Visas for Trainees and Students:
Training Employment Pass
for foreign nationals undergoing training for up to three months.Work Holiday Pass
for foreign nationals under the Working Holiday Programme.Training Work Permit
for unskilled or semi-skilled foreign students/trainees with training durations of up to six months.Short-term Work Passes for Singapore:
Miscellaneous Work Pass
for specific short-term work-related activities.Foreign workers must secure a job in Singapore before applying for a work visa. Employers or Employment Agencies handle visa applications through the MOM’s EP Online service. The process involves submitting an application, obtaining In-Principle Approval (IPA) or Rejection letters, traveling to Singapore, and obtaining the final work Pass. Certain professional and skilled workers can bring family members through the Dependent’s Pass, while others may use the Long Term Visit Pass (LTVP).
EOR Solutions in Singapore
- EOR for Prospective Employees: Mercans offers seamless Employer of Record (EOR) solutions for businesses that have already identified their ideal candidates in Singapore. Our services encompass every aspect of the employee lifecycle, ensuring compliance with Singapore labor laws and regulations.
- EOR + Recruitment: For those seeking assistance in talent acquisition, our EOR and recruitment services provide a holistic solution. We tap into our extensive network and expertise to help you find, onboard, and retain top talent, streamlining your expansion into the Singapore market.
- Visa Sponsorship and Global Mobility: Navigating the intricacies of expatriate employment is simplified through our visa sponsorship and global mobility services. We facilitate the relocation of your international workforce, ensuring compliance with Singapore immigration and employment laws.
- AOR for Contractor Payments: Businesses grappling with contractor payments can leverage our Assistance on Record (AOR) services. We handle the complexities of contractor payments, guaranteeing accuracy and compliance.
- Converting Freelancers to Employees:Mercans supports the transition from independent contractors to permanent employees in Singapore. Our expertise ensures smooth conversions while adhering to legal requirements.
- HCM Integration: Integrate Mercans’ EOR services seamlessly with your HCM system in Singapore for real-time data exchange, enhanced compliance, and cost-efficiency. Trust our expertise for a unified, compliant, and efficient approach, elevating your workforce management and payroll operations.
Conclusion
In conclusion, Mercans stands out as a reliable partner for Employer of Record (EOR) services in Singapore, offering a seamless and efficient solution for businesses navigating the intricacies of the local employment landscape. With a commitment to precision, compliance, and streamlined operations, Mercans facilitates payroll management, statutory filings, and other crucial aspects, ensuring businesses can focus on their core operations. Trustworthy and experienced, Mercans is dedicated to providing comprehensive support, making it a valuable choice for businesses seeking EOR services in Singapore.