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A Comprehensive Guide to the Employment Act Singapore

A Comprehensive Guide to the Employment Act Singapore

Whether you are a business looking to hire people or an employee you must be aware of the Employment Act Singapore as it determines the employee rights, working hours and salary of every worker in the country. In this article, we will shed light on the Employment Act Singapore including the benefits, monthly basic salary and leave entitlements along with the exemptions.


Key Takeaways

  • A wide range of employees including temporary workers, contractual workers, and full-time and part-time workers are protected and covered in the Employment Act Singapore. However, certain designations like seafarers, domestic workers, executives, managers and public servants are exempted from the Act.
  • The Act underlines that all Key Employment Terms (KETs) like working hours, monthly basic salary, deductions and allowances should be clearly demarcated in the employment contracts within 14 days of employing a person to ensure transparency and prevent misunderstandings.
  • The Employment Act Singapore also mandates that companies offer employee benefits and leave entitlements including parental leave, paid sick leave and annual leave along with provisions that support work-life balance and fair treatment of people.

Scope of the Employment Act

Scope of the Employment Act

The Employment Act can be considered the hallmark of Singapore’s employment laws as it ensures that the employees’ rights are protected and high employment standards are maintained in the country. The Act has both manual labour and non-manual labour in its ambit, making sure that workers of both sectors are given a basic salary. While manual labour workers are liable to get a basic monthly salary of up to S$4,500, non-manual labour workers get up to S$2,600. The Employment Act Singapore includes both local and foreign employees in this safety net.

As per the Industrial Relations Act 1960 (which regulates the relationship between employers and employees), the terms and conditions of fair employment should be written in the contract to promote trust and clarity in professional engagements. However, there are exemptions granted in the Employment Act to cater to certain professional categories as per Singapore’s employment laws. This includes the following designated workers

  • Managers
  • Executives
  • Domestic workers
  • Public servants

This thorough but profession-specific approach ensures that the needs and conditions of every job role are appropriately fulfilled.

Employees Covered

Foreign companies trying to hire employees in Singapore must know that the Employment Act covers all types of employees including temporary workers, contractual workers, full-time workers and part-time workers. Hence both wholly and partly employed individuals are covered under this Act and companies should draft their contract of service considering that.

This all-inclusive coverage ensures that every employee gets their due and their fundamental rights are protected irrespective of the employment nature and nationality. The Act is specifically designed to protect manual labourers earning S$4,500 or less in a month, ensuring that such low-wage workers are duly compensated and have an annual wage supplement. Furthermore, the Act eliminates disparity between local and foreign employees by fostering an equitable work environment across Singapore.

Exemptions

Although the Employment Act Singapore has wide coverage the following exemptions are granted depending on the employer’s profession:

  • Managers and executives, who are exempt from Part IV of the Act, which deals with the hours of work, rest days, and other conditions of service
  • Domestic workers and public servants are not covered by the Act, recognising the unique nature of their work environments and conditions
  • Seafarers are exempted due to their distinct working circumstances

Key Employment Terms

The most crucial aspect of a Singapore employment relationship is the Key Employment Terms (KETs) which must be outlined in the contract of service to ensure that both sides are aware of their rights and obligations. As per the law, the KETs like working hours, basic salary, deductions and allowances should be written in the contract within 14 days of employing a person to prevent transparency in the employment relationship and prevent any misunderstandings.

Furthermore, the KETs should also include incentives, bonuses and other essential components of salary so that both parties have a clear understanding of the compensation and a comprehensive idea of financial expectations and commitments.

The employment contract should also demarcate the full names of both the employer and the employee along with the duration and start date of the employment in case of fixed-term contracts. This is critical to maintaining trust and clarity between employees and employers, ensuring that the employment contract is fair and transparent.

Written Employment Contracts

The Employment Act Singapore strongly recommends that companies do written employment contracts as they:

  • Help clarify the terms and conditions of employment
  • Avoid misunderstandings
  • Serve as a tangible record of the agreed-upon terms
  • Provide a reference point in case of disputes
  • This documentation shows that the employer is committed to fostering a fair and transparent working

This documentation shows that the employer is committed to fostering a fair and transparent working environment as they have included all key employment terms in the contract.

Basic Monthly Salary

For Singapore employment, companies have to pay a basic monthly salary to the employees which excludes deductions, allowances and bonuses. This salary is the core part of the financial agreement between the employer and the employee as it reflects the employee’s service value. Companies should clearly state the basic salary of the employee in the employment contract to maintain transparency in financial dealings.

While there’s no basic minimum wage in Singapore, companies should follow the Local Qualifying Salary (LQS) of at least S$1,400 per month to get government subsidies, other than the Act-mandated salary of not more than S$2,600 for non-manual labour work and S$4,500 for manual labour work.

Working Hours

According to the Employment Act, the standard working hours for Singapore employment are 8 hours per day and a maximum of 44 hours per week. These work time limits do not include meal breaks or resting time. However, the companies must plan for downtime to maintain smooth operations.

Businesses should also keep in mind that they have to compensate for overtime work at 1.5 times the basic hourly rate of pay, for those employees covered under Part IV of the Employment Act Singapore. Additionally, both the employers and the employees should confirm the hours of work and conditions in the employment contract so that they are aware of the work schedule.


Employee Benefits and Leave Entitlements

As the Employment Act Singapore is designed to propagate the well-being of the employees, leave entitlements and employee benefits form an integral part of it. Benefits like parental leave, paid sick leave, and annual leave helps employees to maintain a healthy work-life balance and get the necessary time off without any financial burden. However, each of these leaves has a specific eligibility criteria which depends on the employee’s length of service.

While all workers who have worked for at least 3 months in an organisation are liable to get an annual leave, the duration varies according to the years of service. Initially, it starts with a 7-day annual leave policy for the first year of employment but it gradually increases with the addition of more years of service, ensuring that long-term employees get more time off as annual leaves accumulate. This system rewards loyalty in service and promotes job satisfaction among employees.

The Paid Sick Leave on the other hand is a special entitlement offered to those employees who have served long in the company. Although it is based on the length of service, employees have to furnish medical certificates to claim it as the paid sick leave is for the employees to recover from illness without losing any income. Additionally, people who are balancing work and family responsibilities like the birth of a child can opt for parental leave like paid maternity or paternity leave.

Employee Benefits and Leave Entitlements

As the Employment Act Singapore is designed to propagate the well-being of the employees, leave entitlements and employee benefits form an integral part of it. Benefits like parental leave, paid sick leave, and annual leave helps employees to maintain a healthy work-life balance and get the necessary time off without any financial burden. However, each of these leaves has a specific eligibility criteria which depends on the employee’s length of service.

While all workers who have worked for at least 3 months in an organisation are liable to get an annual leave, the duration varies according to the years of service. Initially, it starts with a 7-day annual leave policy for the first year of employment but it gradually increases with the addition of more years of service, ensuring that long-term employees get more time off as annual leaves accumulate. This system rewards loyalty in service and promotes job satisfaction among employees.

The Paid Sick Leave on the other hand is a special entitlement offered to those employees who have served long in the company. Although it is based on the length of service, employees have to furnish medical certificates to claim it as the paid sick leave is for the employees to recover from illness without losing any income. Additionally, people who are balancing work and family responsibilities like the birth of a child can opt for parental leave like paid maternity or paternity leave.

Annual Leave

As per the Act, employees can get paid annual leave after three months of service which increases based on the years of service in the salary period. Annual leave can range from 7-14 days based on the service period. It is 7 days for the first year and reaches 14 days after 8 years of continuous service.

Paid Sick Leave

Depending on the months of service, Singapore employees are entitled to 14 days of outpatient sick leave and 60 days of hospitalisation leave if they furnish certificates declaring they are ill issued by recognised medical professionals. If the illness doesn’t occur in annual leave, rest days or non-working days, the employers have to reimburse the consultation fees of employees on sick leave.

Parental Leave

Certain employees are eligible to get paid maternity leave, paternity leave or shared parental leave based on conditions laid down in the Act. While mothers having a Singapore citizen child can get 16 weeks of government-paid maternity leave (GPML), fathers can get 2 weeks of government-paid paternity leave (GPPL) for a Singapore citizen child who is born after January 1, 2017. The parental leaves ensure that both parents get to spend time with their newborns with no financial strain.


Rest Days and Public Holidays

Getting resting time and public holidays is an important part of employee well-being and the Employment Act Singapore recognises that, mandating at least one rest day for the employees every week and 11 paid public holidays annually. These provisions ensure that the employees can maintain a healthy work-life balance and give enough time to their families.

Singapore companies have to keep in mind that they have to compensate for the public holidays that fall on non-working days with one day’s extra salary or by offering another day off. In case, the public holiday falls on a rest day, the next working day can be considered as a paid public holiday, ensuring that workers are compensated for missed work during public holidays and get fair compensation for their time.

Rest Day Entitlement

The Employment Act also mandates that workers are compensated for working on rest days through rest day entitlements which should be mentioned in the Key Employment Terms (KETs). However, the rest day entitlement compensation varies depending on who made the request – the employer or the employee. Usually, Sundays are designated rest days in a standard 5-day work week.

Public Holidays

Singapore recognises 11 gazetted public holidays, including:

  • New Year’s Day
  • Chinese New Year (2 days)
  • Hari Raya Puasa
  • Hari Raya Haji
  • Good Friday
  • Labour Day
  • Vesak Day
  • National Day
  • Deepavali
  • Christmas Day

Employees working on a public holiday can get an extra day’s salary or a substitute holiday as fair compensation for their time.


Termination and Retrenchment

Any retrenchment or termination issues should be handled with care following the Employment Act which mandates that the terms of termination and the notice of it have to be written in the contract of service. This ensures that both parties understand the obligations and that the termination process runs smoothly. In case of retrenchment, employers have to communicate their intentions to the employee before serving them a notice, allowing them to seek alternative employment. Moreover, the Ministry of Manpower (MOM) should be notified if the employees identified for retrenchment are not yet determined.

Termination Process

The termination process includes details such as probation periods and notice periods, which must be specified in the Key Employment Terms (KETs). Termination can occur with notice or salary instead of notice as per the employment contract, ensuring that the rights of both parties are respected.

Retrenchment Benefits

Retrenchment benefits are given to employees with at least two years of service. Employers can pay an Employment Assistance Payment (EAP) or a productivity incentive payment instead of retrenchment benefits to those employees who are being re-employed, ensuring financial support during the transition period.


Foreign Employees

Foreign employees are a crucial part of Singapore’s workforce but they are subjected to specific regulatory requirements like getting a valid work permit. Foreign employees can apply for work passes like the Employment Pass, S Pass or a work permit based on their type of work. Each work pass is tailored to suit a specific type of worker, ensuring that foreign employees are employed as per national standards.

Individuals get these work passes by submitting the necessary documents and paying the required fees. Companies hiring foreign employees have to ensure that they meet the conditions specified for each type of work pass. This is essential for the safety and protection of foreign employees under the Employment Act Singapore.

Work Passes

The employment pass is for foreign professionals, managers and executives with a basic monthly salary of S$5,000 for the non-financial services sector and S$5,500 for those in the financial services sector. The S Pass is for those with a job offer having a monthly salary of S$3,150 in the non-financial services sector and S$3,650 in the financial services sector. Both these work passes are designed to attract highly qualified individuals to Singapore.

Employment of Foreign Manpower Act

The Employment of Foreign Manpower Act (EFMA) outlines the following responsibilities and regulations for employing foreign employees in Singapore.

  • The application process
  • Medical insurance requirements
  • Levy obligations
  • Procedures for cancellation and repatriation of work passes

EFMA also underlines how many foreign employees can be hired by a company, ensuring that a sustainable and balanced workforce is maintained in the country. The Complementarity Assessment Framework (COMPASS) further evaluates Employment Pass applications based on a points system.


Central Provident Fund (CPF) Contributions

The Central Provident Fund (CPF) is a mandatory savings scheme in Singapore aimed at providing for retirement, healthcare, and housing needs. It is applicable to Singapore Citizens and Permanent Residents. CPF contributions are made by both the employer and the employee.

Employer and Employee CPF Contribution Rates

The contribution rates vary based on the employee’s age and ordinary wages. These rates are tiered and decrease as the employee ages.

Employee’s Age (Years) By Employer (% of Wage) By Employee (% of Wage) Total (% of Wage)
55 and below 17 20 37
Above 55 to 60 15 16 31
Above 60 to 65 11.5 10.5 22
Above 65 to 70 8 7.5 16.5
Above 70 7.5 5 12.5

The contribution rates are calculated based on the employee’s ordinary wages, which include their basic salary, allowances, bonuses, and other regular payments.

CPF Accounts

The CPF contributions are allocated to three accounts:

  1. Ordinary Account (OA): This account is primarily for housing. It can be used for down payments, mortgage instalments, and other housing-related expenses. Additionally, it can be used for investment, education, and insurance.
  2. Special Account (SA): This account is mainly for retirement savings. The funds in this account earn a higher interest rate compared to the OA, helping to grow the member’s retirement nest egg.
  3. MediSave Account (MA): This account is for medical expenses and hospitalisation insurance premiums. It helps to cover the costs of healthcare in Singapore.

Compliance and Penalties

To avoid legal hassles and maintain fair employment practices, businesses in Singapore must be compliant with the Employment Act as violations can lead to penalties like imprisonment, fines and mandatory corrective actions. In case of non-compliance, employers can face up to 6 months of imprisonment or a S$5,000 fine. Repeated violations can result in harsher penalties. If you are abusing or mistreating foreign workers you can be banned from hiring overseas talent in future or get fines and imprisonment charges.

Companies should have a Human Resources Information System (HRIS) in place to streamline recordkeeping, enhance data accuracy, and facilitate informed decision-making which ultimately reduces the non-compliance risk and facilitates greater operational efficiency.

Recordkeeping

Employers must indulge in recordkeeping as it ensures compliance with the Singapore Employment Act. This includes employee records like itemising pay slips to avoid penalties. In cases where businesses fail to furnish itemised payslips, a fine of up to S$1,000 can be levied for first-time offenders which increases to S$200 for subsequent offences. False payslips can lead to court charges and up to S$5,000 fines.

Penalties for non-compliance

Penalties for non-compliance with the Employment Act include financial penalties and mandatory corrective actions imposed by authorities. This includes offences like hiring foreign workers without valid work passes which can lead to imprisonment or fines.


Fair Employment Practices

The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) has a critical role in upholding fair employment practices in Singapore as it guides employers to adopt merit-based employment practices through its advisories. Companies are encouraged to provide equal employment opportunities to all depending on their merit to promote an inclusive workplace environment. They are also instructed to establish clear and effective grievance-handling procedures to counter harassment.

The Tripartite Guidelines on Fair Employment Practices (TGFEP) reflect Singapore’s commitment to workplace fairness and inclusivity as it emphasises on sensitivity towards diverse beliefs, cultures, and values in non-work-related activities. By adhering to these guidelines, employers can create a respectful and supportive work environment, free from discrimination and harassment.

Workplace harassment

As per the Protection from Harassment Act 2014 (POHA), workplace harassment in Singapore is strictly prohibited and employers are responsible for implementing policies to prevent and address harassment issues including establishing a grievance-handling process. Companies should prioritise safeguarding the confidentiality of individuals reporting harassment issues while drafting these policies.


Where to Next With InCorp

Understanding the Singapore Employment Act is crucial for ensuring legal compliance and fostering a positive workplace environment in the modern Singapore workplace. Whether you are a large enterprise or an SME, adhering to these guidelines can help you steer through the complexities of employment law in Singapore.

Ultimately, by implementing fair employment practices, you can comply with the law and enhance employee satisfaction and productivity, ensuring your employees will help your Singapore business flourish.

For more detailed insights on how the Singapore Employment Act applies to your business, contact InCorp today. Our team of experts can provide tailored advice and solutions to help you effectively manage your workforce in Singapore.

FAQs about Employment Act Singapore

  • All employees employed wholly or partly in Singapore are covered under the Employment Act, including manual labourers earning up to S$4,500 per month and non-manual workers earning up to S$2,600 per month. The act also covers foreign employees. However, certain professions like public servants, seafarers, domestic workers, managers and executives are exempted.
  • Key Employment Terms (KETs) are crucial employment terms like basic monthly salary, working hours, deductions, allowances, main duties and job title which should be included in the employment contract of service within 14 days of employing a person.
  • Overtime work is compensated at 1.5 times the hourly basic rate of pay for employees covered under Part IV of the Employment Act. The usual hours of work per day and week stand at 8 hours and 44 hours respectively, excluding breaks.
  • According to the Singapore Employment Act, employees in the country are entitled to an initial 7 days of annual leave when they complete 3 months of service, 14 days of outpatient paid sick leave and 60 days of hospitalisation sick leave if they provide medical certificates of their illness. The annual leave increases based on the years of service and can go up to 14 days after 8 years of continuous service. Paid maternity and paternity leave are also available for employees giving birth to a Singapore citizen child.
  • Non-compliance with the Employment Act can lead to a fine of up to S$5,000 or 6 months of imprisonment for each violation with harsher penalties reserved for repeated offenders. Mistreating or abusing foreign employees can also lead to fines and imprisonment, even a ban from hiring overseas workers in certain cases.

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InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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