Understanding Labor Law in Singapore | Acclimatize Singapore (2023)

One of the many legal requirements that businesses in Singapore must comply with is employment regulations. As an entrepreneur and employer you have responsibilities when it comes to hiring, supervising or firing employees. So how do you know if the actions you plan to take or the terms of the recruitment contract are in line with the Singapore Employment Act?

This article provides a general guide to the major employment laws of the Department of Human Resources (MOM) and what you need to know about contracts, compensation, and benefits.

Application of the Singapore Employment Act

In employment law, the term "employees" does not necessarily cover all types of employees. However, it covers local workers as well as foreigners working full-time, part-time or temporary. The law also covers employees regardless of how they are paid: monthly, daily, hourly or per piece.

However, labor law does not apply to:

• Officials employed by the Corporate Accounting and Regulation Authority (ACRA), Monetary Authority of Singapore (MAS) and other statutory bodies
• domestic staff
• Sailors
• Manager and executives with supervisory or decision-making functions
• Professionals with higher education and specialist skills, such as lawyers, accountants, doctors and others
• Independent contractors who provide services on your terms

The employment conditions of employees who do not fall under the Labor Act are based on a mutual agreement between the employee and the employer.

Also note that part-time workers who work less than 35 hours per week are coveredWork regulations (part-timers).

The meaning of the law

Labor law is the foundation on which Singapore's economic system is built and ensures the proper functioning of the labor apparatus. Well-defined labor laws eliminate unfair labor practices, ensure equal pay and keep the economy going without labor strikes.

As a business owner, you should follow best practices to avoid penalties such as a $5,000 fine, six months in prison, or both. Subsequent offenses will increase the fine to $10,000, one year in prison, or both.

employment contract

An employment contract (also known as an employment contract, letter of appointment or offer of employment) is a basic legal document that can be legally enforced. It defines the terms of the relationship between the employer and the employee and contains important clauses regarding:

• Work scope of the employee
• length of employment
• commencement date
• Trial if applicable.
• compensation package
• Working hours and overtime compensation
• Employee Benefits
• Code of Conduct
• End

It should be noted that the terms of the employment contract may not be less favorable than the provisions of labor law. Otherwise, the contract is no longer binding on both parties. In addition, employers are also required by law to:Core Terms and Conditions of Employment (KET)in writing to the employees.

Main provisions of labor law

The provisions of labor law are split into two: the basic provisions and the provisions of Part IV. The Core Laws apply to all employees and include core principles such as:

• Reward
• Paid Vacation: Annual Vacation, Sick Leave, and Public Holidays
• employment register
• termination of the employment relationship

Meanwhile, the provisions of Part IV only apply to a specific group of workers who enjoy a lower level of protection, such as workers earning less than SGD 4,500 per month and workers whose base salary is less than SGD 2,600 per month. The provisions of Section IV include provisions on normal working hours, overtime pay and public holidays.

Legal Requirements and Common Practices

Salary and wages

The legal requirement for salaries is that they must be paid within 7 days of the end of the accounting period. If an employee is entitled to overtime compensation, this must fall within 14 days after the agreed wage period. However, the Singapore Employment Act does not impose a minimum wage or bonus requirement.

It is common practice for pay to be based on the position and skills of the employee and negotiated between the employer and the employee. Most Singapore companies also offer an annual bonus: 13^Op- Monthly payment that may vary based on employee and company performance.

Working hours and overtime

The legal requirements for working hours and overtime are as follows:

• Employees have the right not to work more than 44 hours per week and not more than eight hours per day.
• Employees may not work continuously for more than six hours.
• Employees may not work more than 12 hours per day, including overtime, except in certain circumstances, such as an actual or threatened accident, defense or national security activities, or unforeseen circumstances that cause a stoppage of work.
• Shift workers may never work more than 12 hours per day.
• The employee is entitled to one day off and unpaid rest per week
• There should not be more than 12 days between two rest days.

It is customary that the above terms of the Labor Act do not apply to employees earning more than SGD 2,600 per month and that these terms should be freely agreed between employee and employer. In general, normal working hours in Singapore are from 9am to 5pm. M. to 6 p.m. to 7 p.m., Monday to Friday. Most employees work nine to ten hours on weekdays and half a day on Saturdays.

holidays

For employees earning less than SGD 2,600 per month, the legal requirements forHolidays in Singaporeare following:

• During the leave period, the employee is entitled to paid leave, but certain periods may be replaced by another day if the employer and employee mutually agree.
• Holidays falling on a Sunday or public holiday will be made up on the following Monday and will be considered as paid holiday.
• If a public holiday falls on a day that is not a working day according to the contract, the employee is entitled to compensation in the form of an extra pay day or an extra day off.

It is common practice in Singaporean companies for all employees to receive the same holiday allowance, regardless of salary.

Yearly holiday

The legal requirements for annual leave for employees earning less than SGD 2,600 per month are as follows:

• An employee must have worked for the employer for at least three months in order to be entitled to annual leave.
• Although the amount of annual leave depends on your employment contract, you must take a minimum of seven days in the first year of your employment and an additional day thereafter.
• Half a day's holiday per year is regarded as a full day's holiday, unless otherwise stipulated in the employment contract.
• An employee's vacation leave may be lost in the following cases (unless the employment contract specifies otherwise):
  • exemption for misconduct
  • Absence without leave of more than 20% of the working days in a month
  • Not taking annual leave within 12 months of any year.

It is common practice for Singaporean companies to offer about 14 days of annual leave per year.

sick leave

The legal requirements and common practice for sick leave and hospital leave in Singapore are as follows:

When returning to work, the employee must also submit a medical certificate from a physician appointed by the company or a recognized hospital doctor.

health insurance

There is no legal obligation under IMO employment law to provide private health insurance. Singapore citizens or permanent residents (PRs) are automatic beneficiaries of MediShield, a low-cost basic insurance policy. A portion of Central Provident Fund (CPF) members' contributions are automatically credited to their MediSave accounts, enabling employees to cover medical expenses for themselves and their dependents.

It is common practice for Singaporean companies to provide additional private health insurance at the discretion of the employer. This is common in large companies, but not so common in smaller companies. In addition, larger companies that employ foreign workers and have an employee card often also offer private health insurance.

Maternity leave and child care

Legal requirements and common practices apply to employees with more than three months of service. They are entitled to paid maternity leave benefits and:

• Eligible employees are entitled to a maximum of 16 weeks of leave.
• Employers are prohibited from dismissing employees on maternity leave
• In the event of termination by the employer without a valid reason within three months after the leave, the employer is obliged to continue to pay for the maternity leave in full.
• Employees who have worked for more than three months and are the mother of a child under seven years of age are entitled to six additional days of parental leave per year.

Trial

While the Singapore Employment Act has no probationary provisions, it is common practice to require employees to complete three to six months' probationary period.

termination of the employment relationship

There is no legal requirement for days notice and it will be based on what is agreed in the contract, which should be the same for employer and employee. Either party may terminate the agreement by giving written notice or by paying a fee in lieu of notice. However, if there is an intentional breach of contract, the employment contract can be terminated by either party without notice. In addition, employees can use accrued vacation days to compensate for the notice period.

It is common practice among Singaporean companies to require two weeks' notice for trial periods and one month for official employment. In addition, Singaporean courts have deemed it impractical for employees to surrender their wages in exchange for dismissal, although the Employment Act makes the same requirement for both parties.

Layoffs, layoffs or discounts

For employees earning less than SGD 2,600 per month, the legal requirements are as follows:

• The employer is obliged to pay the employee wages and benefits on the last day of his work.
• The notice period is based on the employment contract.
• Employees who have worked for the company for at least three years can receive a severance package. However, there is no clause in employment law regarding the nature or amount of such benefits and they must be mutually agreed between the employer and the employee.
• An employee who has worked for less than three years is not entitled to a severance payment.

It is common practice among Singaporean companies to base reduction benefits on the size and financial status of the company.

Contributions to the Central Provident Fund (CPF)

The legal requirements and common practice for a mandatory retirement savings scheme are as follows:

• CPF is required for Singapore citizens and PRs and both the employer and employee must contribute monthly
• CPF is not required for foreign workers who haveGoing to workor a work permit
• The maximum CPF rate for employers is 17% and for employees 20%. Rate may be reduced based on age, PR status and other factors.
• Employers are required to submit monthly payslips on the 14th day for both employers and employees^Opin the next month
• The CPF contributions are deducted from the employees' wages

Benefits and Non-Statutory Benefits

Singapore companies also offer additional fringe benefits to employees at their discretion. Some of the most common are:

personal good

Many Singapore companies also offer private health insurance, which also covers employees' dependents.

Travel expenses

Some employees receive a daily wage for travel-related work.

moving package

Employees who need to move their families to Singapore sometimes receive an expatriate compensation package that includes shipping costs, airfare, accommodation, utility bills, and childcare and education costs. These packages vary in terms of full expats, half expats or full residents. If no accommodation is available, employees are also temporarily accommodated in hotels or serviced apartments paid for by the company.

Employee Stock Purchase Plans (ESPP)

This is a benefit normally given to older workers in some Singapore companies.

Other benefits include corporate membership, continuing education, leisure class vouchers, gym memberships, telecommunications plans, company tours, job recommendations, and more.

Employer compliance strategy

There are various systems that can be implemented to ensure that the labor process and terms of employment comply with the Labor Law of the Human Resources department.

Hire a local HR manager

A Singapore-based Human Resources (HR) manager who is well versed in local laws and compliance can oversee compensation and benefits development, recruitment, training and performance reviews. They can also manage organizational changes to comply with legislative changes.

Browse contracts and templates

One of many hiring best practices is writing out standard contracts, offer letters, or employment contracts to protect both employer and employee. It is also recommended that you regularly review your contracts to ensure that the terms are still valid.

Outsource recruitment to a trusted company

Take the burden of contracting and compliance off your shoulders and outsource these tasks to a trusted company. You can free your employees from writing employment documents and periodic work compliance checks. Rest easy knowing that your employment process is in compliance with Singapore's labor laws.

last words

The Singapore Employment Act contains several provisions that companies must follow when hiring, managing or firing employees. To ensure full compliance and avoid fines, partner with a business service provideroutsourcing of all aspects of the labor process. Partnering with Acclime allows you to focus on your business while our HR experts ensure best practices are followed when recruiting employees in Singapore.