Singapore

Employer of Record in Singapore‍

Did you know a recent survey concluded that as many as 36% of international firms plan to grow their operations in Singapore within the next two years? 

The country’s flourishing digital economy and highly skilled workforce have made Singapore a fertile ground for sustainable business growth.

Singapore’s highly trained labor force and educational institutions are considered the best worldwide. 

Most universities, polytechnic schools, and art institutes in this country maintain a high graduation rate (90%). 

This makes it much easier for businesses to find and hire the right candidates who are properly equipped with the necessary knowledge and skills to succeed in any job role. 

Singapore at a Glance‍

Population: 6.1 million

Languages: English, Malay, Mandarin, and Tamil

National language: Malay

GDP: USD 466.79 billion 

Currency: Singapore Dollar

Furthermore, Singapore boasts extremely favorable tax conditions. One key factor is that businesses operating in this country do not need to pay taxes on their foreign-sourced income. 

Additionally, Singapore has no capital gains tax. This means that companies can sell their investments or capital assets without being required to pay taxes on the funds they receive. 

However, companies face numerous challenges and obstacles when it comes to actual hiring. 

Whether it is the complicated Singapore tax requirements or the intricate labor laws, you will have to deal with non-compliance issues, legal penalties, and more without proper guidance or expertise. 

But don’t worry. Skuad is the perfect solution to this problem.

As a reputed and trusted EOR solutions company in Singapore, Skuad is responsible for handling the onboarding, taxes, background checks Singapore, and payroll of Singapore employees in strict compliance with local laws and regulations.

With the help of our employee cost calculator, you can get an estimate of your hiring expenses, and effortlessly hire employees in Singapore. 

The best part? You do not need to set up a separate legal entity to do business in Singapore.

Hire Employees in Singapore

The traditional way of hiring employees in Singapore is direct hiring, which means you will need to set up a legal business entity in the region, manage all payroll and tax complications yourself, and ensure compliance with the country's relevant labor laws.

A simple and efficient alternative to this approach is to hire through an employer of record in Singapore. 

Simply put, EOR services in Singapore are third-party organizations that assume the legal responsibility of employing individuals on your behalf. 

This means they will automatically take on all the crucial hiring tasks, such as dealing with payroll and visas, administrating employee benefits and insurance, and maintaining adherence to labor regulations. 

Below, we have provided a detailed explanation of both methods so that you can select the one that best suits your business needs.

Direct Hiring: Setting Up A Subsidiary in Singapore

Singapore is a favorite business destination for all budding entrepreneurs because of its business friendliness. 

Businesses in Singapore can be very profitable as they offer tremendous opportunities for growth and expansion. 

You can start your business in Singapore using the following three methods.

• Representative office
• Branch office
• Subsidiary company

You must follow the following process to establish a subsidiary company in Singapore.

1. Register your company’s name.
2. File the Memorandum of Association, Articles of Association, Statutory Declaration Form 6, Identity Certificate, Notice of Registered Office, and Consent to Act as a Director.
3. Appoint representatives such as the Director, Agents, and Company Secretary.
4. Get a company seal.
5. Open a bank account.
6. Provide for Employee Insurance via the CPF.

Following this, you can begin with the hiring process. 

The popular route is to go through hiring platforms in Singapore, such as Jobstreet, Gumtree, Beam, CareerBuilder, and Freelance Zone, which have skilled and adept talent willing to work for your organization. 

These platforms are advantageous as they help you find the right candidates and save you time and money. However, it entails having to screen several applications to find the right one.

Hiring Via An Employer Of Record In Singapore: Skuad

Skuad provides a holistic solution for incorporating a holding company in Singapore. 

Skuad’s Singapore Employer of Record (EOR) solutions help you expand your business smoothly in Singapore. 

Hiring employees in another country can be time-consuming and arduous as it requires knowledge of the local laws and regulations. 

Skuad simplifies this task by offering customized solutions for your human resources needs.

Skuad is a one-stop destination to meet all of the business's HR requirements, as it handles all the paperwork and formalities on your behalf. 

You can free up time and resources to explore the business opportunities in Singapore and magnify the scale of your business. 

After understanding the desired qualifications, responsibilities, duration of service, and salaries of the employees, Skuad drafts an employment agreement that complies with local laws. 

The new employee is then registered for payroll, which Skuad manages and prepares payslips for every month.

A dedicated Account manager is appointed to each client and is responsible for tracking all the details and the employees' payslips. 

Skuad assists with employee performance evaluations and terminations whenever required. 

‍Book a demo to learn more.

Onboarding and Agreements

When hiring employees from Singapore, the first step is to draft a formal employment agreement outlining the terms and conditions of the working relationship. 

These include details such as 

• Full name of employer and employee
• Job title, main responsibilities, and duties
• Duration of employment (if it is a fixed-term contract)
• Salary period
• Basic salary
• Fixed allowances and deductions 
• Medical benefits
• Leave policies, and
• Notice period, among others. 

Under the labor laws of Singapore, employment agreements can be categorized into two main types:

• Permanent employment contracts: These refer to agreements in which the employee is hired on a long-term or permanent basis and is subject to the terms and conditions specified in the contract.

• Fixed-term contracts: Fixed-term contracts are typically used for project-based work, seasonal employment, or temporary staff hiring. They define a specific period of employment, such as a fixed number of months or years.

Depending on your business's needs, you can hire employees in Singapore by drafting any of the above-mentioned agreements. 

The next step is to proceed with the employee onboarding process. This process refers to a set of pre-defined steps for incorporating a new team member into a company and familiarizing them with its culture and policies. 

Employee onboarding can be categorized into two main phases. 

The various tasks that comprise this process differ depending on each stage.

Taxes

Let’s look at the Singapore income tax structure for both employees and employers. 

Singapore Taxation Rate for Employers

Singapore Tax Rate For Employees

Compliance

Singapore's business-friendly environment makes it a lucrative destination for expanding business. 

Organizations planning to grow their business in Singapore must have an in-depth knowledge of Singapore labor laws. 

A clear understanding of Singapore’s employment laws enables you to comply with regulations and easily employ workers.

The demand for knowledge workers has drastically increased in recent years. The other prominent sector is banking and finance.

The main tenets of Singapore’s Employment Act of 1968 are given in the following table: 

The complex nature of employment laws and guidelines in Singapore makes the services of professional EORs indispensable. 

Skuad helps organizations manage a remote team in Singapore through its advanced global HR platform. Book a demo to learn more.

Independent Contractor vs. Full-Time Employees

Organizations can opt to hire full-time employees or contractors according to their business needs. An employment contract in Singapore states the terms of the relationship between an employer and an employee. 

An employment agreement is essential in Singapore as it specifies the rights and obligations of the employer and employee. 

The main points of distinction between a full-time employee and an independent contractor are as follows:

• A full-time employee is paid monthly, while a contractor is a temporary employee paid a lump sum or commission for their services.
• Employers can control full-time employees and direct them to work according to their business needs. However, an independent contractor uses their discretion to work independently.
• An organization must contribute to the Singapore Central Provident Fund (SCPF) for its full-time employees. The employer and the employees contribute to the SCPF monthly. An independent contractor is not entitled to this benefit.
• An employee’s entire income is taxable, and personal expenses cannot be deducted for tax computation. However, an independent contractor would deduct their business expenses from their income and compute the tax liability.
• Full-time employees are entitled to all the benefits covered under the Employment Act. Contractors are not entitled to receive employee benefits.

Organizations should hire full-time employees for regular duties that are necessary for the long term and contractors or freelancers for specific services that are required in the short term. 

Skuad helps organizations find the right blend of full-time and contract-based employees, keeping in mind the diverse organizational requirements. 

Skuad ensures that your company complies with the Employment Contract Law, Singapore, and follows labor practices—partner with Skuad to learn more and increase your business's scale and reach.

Fines/Penalties for Worker Misclassification

In the event of worker misclassification in Singapore, employers will face significant tax penalties and social security fines, such as the following,

• Fines up to SGD 5,000.
• Depending on the severity of the offense, there could be a 400% penalty for the tax uncharged, fines up to SGD 50,000, and/or jail time up to five years.
• A surcharge of 50% of the tax adjustment.
• Social security fines range from SGD 1000 to SGD 5000, jail time of up to six months, or both.
• Social security fines range from SGD 2000 to SGD 10000, a prison time of up to 12 months, or both (for repeat offenders).

IP Protection

IP refers to the creation of the mind. This can be anything from inventions and works of art to computer programs and logos. 

Mentioned below is a detailed overview of the various types of IP and their subsequent terms of protection under the IP laws of Singapore.

Types of Visas in Singapore 

Foreign workers must mandatorily possess proper visas as per the immigration laws of Singapore. Skuad helps you arrange Singapore work visas and permits for your employees. The major types of work visas are as follows:

As a reputed EOR in Singapore, Skuad offers a hassle-free mechanism and takes responsibility for arranging visas and sponsoring them in Singapore in compliance with Singapore work visa requirements. Talk to us to find out more.

Work Permits

As an EOR, Skuad sponsors the work permits required by Singaporean employees. Skuad arranges Singapore work permits for foreigners without a job offer. 

The work permits are processed in seven to fourteen days. 

Skuad’s local entity applies for the work permit and receives an in-principle approval (IPA) letter for the employee. 

This letter allows the employee to enter Singapore. Skuad applies for a pass for the employee. The employee register their fingerprints and a photograph with the Employment Pass Service Centre (EPSC) to receive their pass. 

The pass is valid for one year and can be renewed.

Learn more about work permits in Singapore with Skuad’s global HR solutions.

Payroll

Business organizations aiming to explore Singapore's potential to grow their business must follow the payroll and taxation rules of Singapore. 

This is especially important when processing payments to your employees directly, either through bank transfers, cash, cheques, or payroll cards.

Not only do you need to be wary of the Singapore minimum salary requirements, but you also need to be aware of the latest currency exchange rates and all other statutory rules for paying employees. 

This can sometimes get extremely confusing, especially when hiring multiple employees at a time.

A simple alternative to this is to hire employees in Singapore through EOR. 

Partnering with an EOR solutions company in Singapore and outsourcing the payroll mechanism is a convenient and cost-effective method to follow the tax legislation on employees in Singapore.

Skuad’s unified platform has robust features that make international payroll processing seamless and streamlined. It includes,

• Automated invoicing and payments.
• Multi-currency payroll
• Built-in compliance
• Expense management and 
• Real-time reporting, among others. 

To know more, connect with our experts today.

Benefits and Compensation

The statutory employee health benefits in Singapore comprise two main schemes. They are,

• Central Provident Fund (CPF): This is a mandatory savings scheme that requires contributions from both employers and employees. Its primary purpose is to help build retirement savings and provide funds for housing and healthcare needs. 
• ‍Work Injury Compensation: Under the Work Injury Compensation Act, Singapore employees are entitled to compensation insurance if they fall ill or are injured while working. The benefits can range from medical leave wages and medical expenses, such as hospital bills and other charges, to a lump sum compensation for permanent incapacity to work.

Worker Rights

Here is a detailed overview of Singapore's various types of employee statutory entitlements. 

Standard Working Hours in Singapore

The statutory working hours in Singapore are 44 hours a week.

Singapore Minimum Wage

There are currently no guidelines related to minimum wage SG or Singapore minimum salary.

Overtime Pay

An employee working overtime can be paid one and a half times their hourly salary.

Probation Period

The probation period for employees in Singapore varies from three to six months in different organizations. 

Upon completing the probation period, an employee is treated as a permanent employee of that organization.

Confidentiality of Employees

The Personal Data Protection Act of Singapore states that employers cannot use employees’ personal information without their consent and knowledge.

Anti-Discrimination Laws/Acts

The Workplace Fairness Legislation is the primary law in Singapore that prohibits discrimination against individuals at the workplace based on nationality, age, sex, race, religion, pregnancy status, and mental health conditions, among other factors.

Workplace Health and Safety Laws

The Workplace Health and Safety Act is the primary legislation covering the safety and welfare of individuals at the workplace. 

It lays down a series of duties and responsibilities of stakeholders for ensuring the safety and health of workers and others affected by work.

The complex nature of employment laws and guidelines makes Singapore's professional Employer of Record services indispensable. 

Skuad helps organizations manage a remote team in Singapore through its advanced global HR platform. 

‍Book a demo to learn more.

Remote & Hybrid Work

While complying with local tax and labor regulations is a key ingredient of successful hiring in Singapore, let’s not forget the importance of remote readiness.

In simplest terms, remote readiness refers to an organization's ability to maintain productivity and communication outside a traditional office environment. 

Post-COVID-19, remote work has gained immense popularity worldwide as more businesses have switched to a remote or hybrid work model. 

But what exactly does remote readiness comprise? There are three main characteristics of this model. They include:

• Technology and Infrastructure

Investing in suitable and proper technology and infrastructure that can amplify remote readiness is important for every organization that wishes to hire employees in Singapore. 

By technology and infrastructure, we mean the basics of a work environment, such as a reliable internet connection, appropriate hardware, like laptops and mobile devices, and software, such as collaboration tools.

• Flexible Work Guidelines

Having the required and relevant work policies that enhance clarity and effectiveness is equally important for fostering remote readiness at an organization. 

Your company must include work guidelines that highlight some of the key areas of remote and hybrid work, such as time management, performance evaluation, and communication expectations.

• Feedback and Improvement

By regularly collecting feedback from your team members and other employees about their remote and hybrid work experiences, you will be able to pinpoint areas of concern that need to be addressed. 

Then, you can take the necessary action to improve remote work practices at your workplace.

Salary

The compensation package in Singapore is not fixed, meaning it can differ based on various criteria, such as the employee's experience level, the industry your business operates in, the organization itself, or even the location of work. 

For example, an employee who has previously worked in other organizations and has many years of experience in a particular field will undoubtedly command a higher salary than someone who has just graduated and has no prior work experience. 

Similarly, the salary of employees in Singapore will also differ based on the nature of their work. 

If the job role is integral to a company's daily operations, such as that of a manager or C-Suite executive, then the compensation package will be much higher than that of a junior-level staff member.

Skuad’s salary insights tool helps you discover the latest salary trends, and Singapore salary tax and tap into robust compensation data so that you can always offer fair and reasonable packages to your employees.

Leave Policy

Employees are entitled to certain leave benefits in addition to mandatory health benefits and other working conditions. Here is a detailed list of the leave policy in Singapore.

Medical Leave

If an employee has worked for an organization for three months, they are entitled to claim paid outpatient sick leave and paid hospitalization leave. 

An employee can take up to 14 days of paid outpatient sick leave and 60 days of paid hospitalization leave, which includes 14 days of paid outpatient sick leave. 

If they have completed six months of service, they will receive full entitlement.

Annual Paid Leave

An employee is entitled to paid leave if they have worked for an employer for three months or more. 

The number of paid annual leaves depends on the number of years the employee has served the organization.

Singapore Maternity Leave Policy

Expecting mothers are allowed to take maternity leave in Singapore. The length of the leave depends on the child's nationality. If the child is a Singapore citizen, the mother is entitled to 16 weeks of maternity leave. 

In other cases, according to the Employment Act, working women can claim maternity leave of 12 weeks from their employer, provided they have completed three months of service.

Leave Expiry

If an employee fails to use their leaves in a year, they are forfeited at the end of the year and not carried forward.

Leave Cash Out

An employee is entitled to receive the accrued leaves in cash at the time of termination of service.

Public Holidays

According to the Employment Act, employees in Singapore are entitled to 11 public holidays a year. Employees who work on a public holiday should be paid extra or get a compensatory off.

Here’s the list of Singapore official holidays:

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

Background Checks

An employment background check in Singapore is a crucial part of the hiring process. It not only helps mitigate risks but also ensures that your selected job candidates have all the necessary qualifications and skills to excel in their job roles. 

Below, we have highlighted some of Singapore's most common types of background checks:

• Criminal Record Check

A criminal record check can be conducted in Singapore by obtaining a Certificate of Clearance (COC) from the Criminal Investigation Department of the Singapore Police Force. 

It helps to confirm whether or not a job candidate has a criminal conviction within a specific period of residence in this country. 

• Credit Report Check

A credit report check involves evaluating an individual's credit payment history, compiled from different retail banks and financial institutions. 

The primary body governing this pre-employment background check in Singapore is the Credit Bureau Singapore (CBS). However, a credit report check is only permissible with proof of the individual’s consent and authorization.

• Employment History Check

This type of background check in Singapore is conducted to verify an individual's work experience. 

The employer may contact the job candidate’s previous employers directly to gather all necessary information related to their job title and responsibilities, employment dates, job performance, and work ethics.

Termination and Offboarding

Employment termination in Singapore should be done with utmost care because it entails huge risks for employers. 

Using the assistance of an established EOR solutions company in Singapore, such as Skuad, helps prevent future litigation. 

Skuad offers complete guidance and support in probation and employee termination.

Get in touch with Skuad experts to learn about the probation period and termination of employment in Singapore.

Cultural Considerations

The work culture in Singapore is shaped by Asian values, particularly influenced by Confucian principles. 

These include key characteristics such as respect for authority, prioritizing education, and valuing close family relationships.

In most organizations, a clear line of authority is established. Decision-making is usually done using a top-down approach in Singaporean culture. 

This means that a manager's instructions are followed with due diligence and without question, thereby creating a sense of order and direction.

Another notable feature of Singapore's business culture is diversity. Thanks to its multicultural society, this country's workforce is incredibly diverse. 

Teams usually consist of individuals from different ethnic backgrounds. 

One of the main benefits of this is that it fosters a sense of creativity in the workplace and leads to better and more innovative problem-solving. 

Professional Employer Organization (PEO)

A professional employer organization (PEO) renders similar services offered by EOR solutions company. 

The key difference is that a PEO acts as a co-employer of your remote team and manages all human resources activities while you remain the legal employer, whereas an EOR besides handling all human resources operations becomes the legal employer of your employees and the liability of employees lies with them.

Skuad offers EOR solutions. You may opt for a PEO or an EOR depending on the level of involvement you prefer in human resources operations. 

Book a demo for comprehensive support and guidance.

Conclusion

Skuad has carved a niche in the EOR solutions industry with its highly professional and successful services. 

Skuad has the expertise and experience to help you amplify the scale of your business in Singapore. 

Learn more about Skuad’s synchronized approach to give an impetus to your business and widen its horizons.

‍Talk to us for enhanced support regarding HR management in Singapore with our holistic EOR solutions.

FAQs

1) What is an employer of record in Singapore?

Employer of Record companies in Singapore (EOR) helps you legally hire Singaporean talent without setting up a local entity. An EOR, like Skuad, legally hires your employees and handles payroll, taxes, and mandatory contributions to Singapore's social security system (CPF). EORs in Singapore ensure compliance with labor laws, minimizing legal risks associated with international recruitment.

2) What is an EOR agreement?

An Employer of Record agreement formalizes the partnership between an EOR service provider and your company. The agreement states the EOR's legal employment responsibilities for your global staff, which include tasks like payroll processing, tax withholding, and benefits administration.

3) What is the employer of record for international employees?

Employer of Record services help companies seeking to leverage international talent pools. They take up legal employer responsibilities in your target market, eliminating the need for a local entity.

4) What is the difference between employer of record and PEO?

Employer of record services in Singapore (EOR) legally employs individuals on behalf of another company and handles all compliance, payroll, and HR tasks. A professional employer organization (PEO) merely co-employs staff, sharing responsibilities with the client company but demanding the client to have a local entity.

5) Why use an EOR?

An EOR simplifies and speeds up global hiring costs effectively without needing a local entity. They act as the legal employer for your international talent, handling HR complexities like payroll, taxes, and compliance.

6) Is the employer of record legal in Singapore?

‍Yes, utilizing an Employer of Record (EOR) service is completely legal in Singapore. Singapore EOR services operate in compliance with local employment laws and regulations to provide businesses with a hassle-free way of employing staff in the country. It's a legitimate and widely recognized practice that ensures all legal and HR responsibilities are managed effectively.

7) How do I choose an employer of record in Singapore?

To select the right EOR provider in Singapore for your organization, you need to look at several factors, such as cost and flexibility, services offered, local expertise, and support for growth. 

8) How much does an EOR cost?

There is usually no fixed cost for hiring EOR solutions in Singapore. It can differ based on numerous parameters, such as the company itself, the kind of service you require, or the number of employees you wish to hire in a foreign land.

9) What is the difference between an employer of record and a staffing agency?

One of the main differences between an EOR in Singapore and a staffing agency is that the former acts as the legal employer on your behalf, meaning they will handle all administrative and legal responsibilities of international hiring. On the other hand, a staffing agency handles some legal aspects and usually does not cover all compliance requirements, especially in international hiring.

10) What are the benefits of EOR?

Partnering with EOR services in Singapore carries several benefits for an organization, such as on-time payment processing, guaranteed compliance, risk management, scalability, and reduced overhead costs.