Using an employer of record in Singapore

Singapore boasts an exceptional pool of highly qualified and hard-working talent. But employing this talent can be complicated. Employers in Singapore are required to comply with evolving labor and employment laws, primarily the Employment Act.

Using an Employer of Record in Singapore, such as Payoneer Workforce Management, may assist with simplifying this process. 

Find out more about how Payoneer Workforce Management can help your business, or keep reading to learn what an EOR in Singapore does.

How to hire employees in Singapore

There are 3 main ways for U.S.-based employers to hire talent in Singapore.

1. Setting up a local entity allows companies to operate smoothly within Singapore, but it can be expensive and time-consuming. 

2. Using independent contractors offers flexibility, but employers must be cautious not to misclassify workers as contractors.

3. Companies can partner with an Employer of Record in Singapore, which assists with onboarding, payroll, and compliance without setting up a local entity.

Using an Employer of Record in Singapore

An Employer of Record (EOR) is a company that legally employs talent on your behalf. Using an EOR in Singapore allows you access to Singaporean talent without having to incorporate a business there or set up registered offices.

Due to regulatory restrictions, only Singapore citizens and permanent residents can be hired via an Employer of Record in Singapore. Expats cannot be hired under this model, and the Employment Pass is not applicable under EOR.

Read the full statement on the MoM website.

How to onboard employees in Singapore

Onboarding, especially for new remote workers, is about more than making sure your new employee has the tools to complete their tasks. In Singapore, there may also be regulatory requirements.

Important onboarding tasks include:

• Completing a background check
• Conducting a Right to Work Assessment
• Sending an offer letter
• Setting them up on payroll
• Planning any essential training

Many of these tasks must be completed before your new hire begins their first day. Partnering with an Employer of Record in Singapore helps support compliance during onboarding, allowing you to focus on welcoming your new employee.

Paying employees in Singapore

Singapore provides clear and detailed guidelines on how and when payroll must be processed. Companies that pay their employees late or who do not meet other requirements are subject to fines, so it’s essential to get this right.

Employees must be paid once a month, typically on the last working day of the month, though companies are free to operate more frequent payrolls. There is no statutory minimum wage, but the Progressive Wage Model sets minimum levels for workers in specific sectors.

As an employer in Singapore, you will need to make the following contributions:

• Central Provident Fund (CPF): CPF contribution rates vary by age. Employers and employees contribute monthly, but rates are not fixed. Please refer to the CPF Board for current rates. Also, CPF contributions do not apply to expats.
• Foreign Worker Levy (FWL): If your employee requires a work permit to work in Singapore, you will need to pay an additional levy.
• Skill Development Levy: You must pay 0.25% of the monthly wages of each of your employees as a contribution towards upskilling the Singapore workforce.

As an employer in Singapore, you do not withhold income taxes. Instead, workers are responsible for filing their own taxes.

Employment laws in Singapore

The Employment Act is the main labor law in Singapore. This covers most of the key aspects of employment law, including workers’ rights, employers’ responsibilities, and how certain situations must be handled.

Here are some of the key regulations you need to be aware of:

• Working hours: Employees working 5 days per week are limited to 9 hours per day.
• Overtime: Overtime should be paid at 1.5 times an employee’s hourly rate. For non-workmen, overtime is capped at $13.60/hour.
• Probation period: There is no legal requirement for a probation period in Singapore, but many companies will include one. 3 to 6 months is typical.
• Rest days: Employees in Singapore are entitled to at least 1 rest day per week.
• Remuneration: Salaries must be paid once a month, usually on the last working day of the month..

With such complex rules, it’s often a wise decision to use an EOR in Singapore.

Minimum wage in Singapore

As mentioned, there is currently no mandatory minimum wage in Singapore, but the government does offer guidance on what is considered a reasonable wage for specific sectors. Low-paid workers earning less than SGD 2500 per month receive the Workfare Income Supplement (WIS).

Companies are required to pay workers in certain sectors according to the Progressive Wage Model. This sets out minimum salaries for those working in cleaning, food services, waste management, security, and more. 

Salary payment is subject to strict rules in Singapore. Salaries must be paid once a month, and non-payment or late payment is an offence. Employers are required to provide itemized payslips and to pay all salaries on the last working day of the month.

Other rules apply when an employee leaves or is terminated, as well as when remuneration includes commission. 

Leveraging one of the employer of record companies in Singapore is an efficient approach to navigate these regulations.

Employment contracts in Singapore

Employment contracts are mandatory documents in Singapore. As an employer, you must have a written contract with the employee that clearly defines the rights and obligations of both parties. 

There are different types of employment contracts in Singapore:

• Standard
• Part-time
• For foreign workers
• Commission-based

The Employment Act in Singapore details which employment terms must be specified in an employment contract (unless they are deemed not relevant for a particular employee). These are:

• Full name of the employer and employee
• Job title and main responsibilities
• Start date and duration (if the employee is on a fixed-term contract)
• Working arrangements, including working hours and rest days
• Basic salary, salary period, bonuses, and incentives
• Fixed allowance and deductions
• Overtime payment and rate of pay
• Allocated leave, including annual, sick, and maternity leave
• Medical benefits
• Probation period
• Notice period

An Employer of Record in Singapore can assist with creating compliant employment agreements.

Leave policy in Singapore

As in many countries, there are minimum amounts of leave that employers must offer their employees in Singapore.

Type of leave	Minimum number of days granted
Vacation	7 to 14 per year, depending on length of service
Public holidays	11 per year
Sick leave	Up to 14 days, depending on the length of serviceUp to 60 days if hospitalized
Maternity	16 weeks
Paternity	4 weeks
Shared parental	6 weeks in addition to maternity and paternity leave

Employers may also have to offer other forms of leave, for example, when childcare is required or if employees need to complete national service.

As an employer, it’s essential to know your legal obligations. This is one of the key Employer of Record services. In Singapore, you can use an EOR to help you navigate complex rules, not only about how much leave to offer, but also which payments can be reimbursed by the government.

Work permits in Singapore

Foreign nationals based in Singapore require a work visa to be allowed to work. Different visas are available for professional or managerial staff and skilled or semi-skilled workers. 

Employers are responsible for making sure that their employees have the correct visas before employment.

Moreover, due to a new law introduced in 2024, hiring expatriates via EOR is no longer permitted.

Now, the only ways for a U.S.-based company to obtain a work permit for a foreign worker in Singapore are to either set up a local representative office or incorporate a company.

Setting up a representative office is done through Enterprise Singapore’s (ESG) Representative Office scheme, while incorporating a company falls under the remit of the Accounting and Corporate Regulatory Authority (ACRA).

Background check in Singapore

Background checks are common in Singapore, but they are governed by strict data protection and privacy laws.

Common background checks employers run in Singapore include:

• Criminal record checks
• Employment verification
• Credit history check (in relevant sectors)
• Education history check
• Reference check
• Social media screening
• Medical screening

These are usually run before employment, and employers must obtain the candidate’s consent before running any background checks.

Although necessary to protect your business, background checks can be complicated and time-consuming, especially when you have to negotiate local laws. Background checks may be supported as an add-on service when engaging an Employer of Record in Singapore.

Employment termination in Singapore

Termination of employment in Singapore can be instigated by either the employee or the employer. If the employee wishes to leave, they are required to work the notice period specified in their contract.

As an employer, you can terminate an employee’s contract in the following ways:

• Termination with notice: The employee works their notice period and is paid until their final day.
• Termination without notice: The employee does not work their notice period, but is paid their salary for the duration of their notice period.
• Termination due to employee misconduct: You can terminate an employee immediately without paying any salary in place of a notice period if the employee has committed serious misconduct. You must investigate before taking this action.

Following termination of employment, final salaries are due either on the last day of employment or within 7 days, depending on the manner of termination.

Company registration in Singapore

Registering a company in Singapore is a big step, but it can be the right decision, especially if you’re expecting to develop a significant presence in the area or want to hire non-Singapore workers.

To incorporate a business in Singapore, you will need to decide which business structure is most appropriate for your needs and register your business with the ACRA.

ACRA will require you to:

• Specify your chosen business structure
• Select your business name
• Choose the correct primary and secondary business activities
• Register your business’s address
• Obtain any necessary licences or permits
• Register for Goods and Services Tax, if necessary

You will also need to ensure you understand regulatory compliance requirements and, if applicable, investigate any incentive programs offered by the Singapore Government.

More details can be found on the Economic Development Board website.

Global PEO in Singapore

For companies based in the U.S. or outside of Singapore, EOR services may be a strong option for building international talent.

A professional employer organization (PEO) is sometimes suggested as an alternative to an EOR. A PEO offers HR services to support your Singaporean workforce, but they do not employ workers on your behalf. You would still need to register or incorporate in Singapore.

For companies looking to create a genuinely international workforce, an EOR like Payoneer Workforce Management is a key ally, allowing you to hire and manage talent in 160+ countries.

Payoneer Workforce Management provides EOR services in Singapore

Working with an EOR may help simplify compliance, allowing you to focus on recruiting and nurturing the talent for your business.

If you’re ready to expand your business with Singaporean talent, contact us to explore our Employer of Record Services in Singapore.

FAQs about Singapore employer of record 

1) Is EOR in Singapore allowed?

Yes, EORs are legal and allowed in Singapore. Many companies benefit from using Employer of Record services in Singapore. They enable foreign companies to easily hire Singapore nationals and navigate the country’s complex local laws and regulations. However, foreign companies cannot use an EOR in Singapore to obtain work visas or permits for foreign employees wanting to be based in Singapore.

2) Can an Employer of Record in Singapore apply for work passes for foreigners to be based in Singapore while working for overseas companies?

No. Employers of Record in Singapore cannot apply for work passes for foreigners wanting to work in Singapore for companies that are not incorporated in Singapore or don’t have registered offices there.

3) Are there PEOs in Singapore?

PEOs operate in Singapore, offering outsourced HR services to companies that already have a permanent base within the country.