Expanding your business into Singapore is a strategic move that offers access to one of the world’s most dynamic economies. However, establishing a legal presence, navigating complex employment laws, and managing local HR functions can be daunting and resource-intensive. For many companies, the most efficient route to market entry is leveraging Employer of Record (EOR) services.
An Employer of Record (EOR) serves as a vital bridge for international businesses, allowing them to hire top talent in Singapore legally and compliantly without the need to incorporate a local entity immediately. This guide explores everything you need to know about EOR services, from how they function to the strategic advantages they offer for your business expansion.
Key Takeaways
- Bypass lengthy incorporation procedures and deploy local staff in Singapore within days rather than weeks or months.
- Leverage specialised expertise to adhere to Singapore’s strict employment laws, including Ministry of Manpower regulations and CPF contributions, reducing legal risks.
- Convert fixed administrative overhead into variable expenses by outsourcing payroll, tax filings, and benefits administration, eliminating the need for an in-house HR team.
- Provide competitive health insurance and perks to remote teams by using the EOR’s collective bargaining power to attract top talent.
- An EOR is ideal for testing the market, executing short-term projects, or managing compliance without establishing a permanent local entity immediately.
What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organisation that legally employs staff on behalf of another company. In this arrangement, the EOR becomes the legal employer for tax and compliance purposes, while the client company retains control over the employees’ daily activities, workload, and performance.
Essentially, the EOR handles the “business of employment,” while you handle the “business of business.” This distinction is crucial for foreign companies that want to test the Singapore market or deploy a local team quickly without the administrative burden of setting up a subsidiary or branch office.
It is important to note that Employers of Record cannot apply for work passes for foreigners who are working for overseas companies to be based in Singapore. This is because work passes are for foreigners to work for Singapore-based companies with a legal presence in Singapore only. Failure to do so – for example, businesses that engage foreign employees through Singapore-based EORs to service offshore clients – constitutes a criminal offence.
How EOR Services Work in Singapore
The EOR model is designed to be seamless. Once you have selected the candidate you wish to hire, whether they are a local Singaporean or a foreign expatriate, the EOR steps in to formalise the employment.
Here is a breakdown of the typical workflow:
- Onboarding: The EOR drafts a compliant employment contract based on Singapore’s Employment Act. They ensure all statutory requirements, such as working hours and leave entitlements, are met.
- Payroll and Taxation: The EOR calculates and processes monthly salaries, ensuring accurate deductions for the Central Provident Fund (CPF) for local employees and handling necessary tax filings with the Inland Revenue Authority of Singapore (IRAS).
- Benefits Administration: The EOR manages employee benefits, including health insurance, statutory leave, and other perks, often leveraging their buying power to secure better rates.
- Compliance: Throughout the employment tenure, the EOR monitors changes in local labour laws to ensure your business remains compliant, mitigating legal risks.
Key Benefits of Using EOR Services in Singapore
Partnering with an EOR provider offers significant advantages, particularly for companies looking to streamline operations and reduce overhead.
1. Swift Market Entry
Incorporating a company in Singapore involves regulatory procedures that, while efficient, still take time. Setting up bank accounts, registering for taxes, and establishing HR systems can delay your go-to-market strategy. An EOR allows you to bypass these setup phases. You can deploy local staff and start operations in a matter of days rather than weeks or months.
2. Compliance With Local Laws
Singapore’s employment landscape is strictly regulated. The Ministry of Manpower (MOM) enforces rules regarding fair employment practices, work hours, and termination procedures. Non-compliance can result in hefty fines and reputational damage.
An EOR provider possesses specialised knowledge of these regulations. They ensure that contracts, termination procedures, and workplace policies adhere to the latest MOM guidelines, shielding your company from liability.
3. Cost-Effective HR Administration
Maintaining an internal HR team to manage a small remote workforce in Singapore is often not cost-effective. It requires investment in payroll software, legal counsel, and administrative staff.
EOR services convert these fixed costs into a variable expense. You pay a service fee for the EOR to handle the administrative heavy lifting, allowing you to allocate capital toward revenue-generating activities like sales and product development.
4. Access to Comprehensive Benefits
Attracting top talent in Singapore requires a competitive benefits package. Small foreign entities often struggle to negotiate favorable rates for group insurance or wellness programs. EORs, by pooling employees from multiple clients, can access enterprise-level benefits packages. This allows you to offer your remote team high-quality health insurance and perks that rival those of large multinational corporations.
When Should You Use an EOR?
While an EOR is a powerful tool, it is particularly beneficial in specific scenarios:
- Testing the Market: If you are unsure about the long-term viability of the Singapore market, an EOR allows you to hire a sales representative or country manager to test the waters before committing to a full incorporation.
- Project-Based Hiring: For short-term projects requiring specialised local skills, an EOR provides a flexible hiring solution without long-term administrative commitments.
- Compliance Outsourcing: When you do not have a local HR or finance team and do not want to learn the nuances of Singapore’s “Progressive Wage Model” or annual IR8A tax filings, an EOR can assist with compliance across these functions.
A Strategic Choice for Growth
In the competitive global marketplace, agility is a key differentiator. Employer of Record services provide the agility needed to expand into Singapore with confidence. By outsourcing the complexities of employment, payroll, and compliance, you free your management team to focus on what matters most: growing your business and capturing new opportunities in Southeast Asia.
Whether you are a startup looking for your first international hire or a multinational enterprise expanding your footprint, EOR services offer a compliant, cost-effective, and scalable solution for your manpower needs. Ready to start? Contact our team at InCorp today to find out how we can help!
FAQs about Employer of Record (EOR) Services
What are the best EOR companies in Singapore?
- While there are several recommended EOR companies in Singapore, InCorp is a leading EOR service provider serving companies in the city-state and beyond.
Is EOR allowed in Singapore?
- Yes, Employer of Record (EOR) services are allowed in Singapore and are widely used by businesses to streamline their market entry and manage various functions.
What is an EOR used for?
- An Employer of Record (EOR) is used by businesses to simplify and streamline the process of hiring and managing local employees in Singapore.
Find out more about EOR services and how they can benefit you
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