Are you considering expanding your workforce in Singapore without the hassle of establishing a legal entity in the country? Look no further than NNRoad’s exceptional Employee Leasing or Employer of Record (EOR) services. Our dedicated solutions cater to your needs, enabling you to hire employees in Singapore while ensuring compliance with local labour laws and regulations.
Navigating PEO/Employer Of Record Services in Singapore
NNRoad takes on the role of a Professional Employment Organization (PEO) in Singapore, assuming all vital employment responsibilities. From crafting meticulous employment contracts to handling payroll, individual income tax, and social security contributions, we ensure meticulous adherence to Singapore’s Labor Laws. Our approach allows your company to benefit from the skills and efforts of Singapore-based employees, without the complexities of legal administration.
Key Considerations Before Hiring Employees in Singapore
- Expanding the Coverage of the Employment Act: Singapore’s Employment Act now encompasses managers and executives earning a monthly basic salary exceeding SGD 4,500. This inclusion means that nearly all employees in Singapore, except seafarers, domestic workers, and public officers, are now covered under core provisions including annual leave, paid public holidays, sick leave, and protection against wrongful dismissal.
- Crafting Comprehensive Employment Contracts: To foster a transparent and productive working relationship, it is advisable to establish written employment contracts in Singapore. These contracts should explicitly outline compensation, benefits, and termination requirements. Additionally, ensure that all salary and compensation figures are stated in Singapore currency. Employment terms can encompass full-time, part-time, temporary, or contract-based arrangements.
Navigating HR and Labor Laws
- Managing Working Hours: Singaporean labour laws stipulate that an employee must not work for more than 6 consecutive hours without a leisure period of at least 45 minutes. Furthermore, the daily work limit is set at 8 hours, with a weekly maximum of 44 hours. Exceptions are made for cases of exemption, but no employee is allowed to work over 12 hours in a day or more than 72 hours of overtime within a month.
- Understanding Minimum Wage: Unlike in some countries, the Employment Act of Singapore does not mandate a minimum salary for employees. Consequently, salaries are subject to negotiation between employers and employees. Nonetheless, it is obligatory for employers to pay salaries at least once a month, within 7 days of the salary period’s conclusion. Overtime pay, if applicable, must be disbursed within 14 days of the salary period. Additionally, there are no stipulations for bonus payments under the Employment Act.
Exploring Payroll Service Options
- Remote Payroll Outsourcing: Non-resident companies may opt to incorporate their Singaporean employees into their existing payroll systems. However, local regulations might pose challenges. An alternative is to entrust payroll responsibilities to an external service provider like NNRoad.
- Internal Payroll Management: Large corporations planning a prolonged presence in Singapore might consider an internal payroll management approach. This necessitates an expanded HR budget to accommodate in-house staff for these operations.
- Singapore Payroll Processing Company: Some companies choose to collaborate with local payroll companies, necessitating a formal entity setup in Singapore. This option combines outsourcing with adherence to Singapore’s legal requirements.
- Effortless Payroll via NNRoad: For the swiftest, safest, and most streamlined payroll processing, companies can fully outsource their employment and payroll tasks to NNRoad. This approach guarantees efficient salary distribution while ensuring compliance with Singapore’s regulations.
Decoding Social Security Contributions
Social security contributions, or Central Provident Fund (CPF) contributions, are mandatory for Singaporean citizens and permanent residents employed in the country. However, foreign individuals working in Singapore are not eligible for CPF scheme participation. The contribution rates, which differ based on age groups and permanent resident status, are illustrated in the accompanying table.
CPF contributions are calculated based on a percentage of an employee’s monthly wages. As of July 2023, the contribution rates are as follows:
|Age of employee||By employer||By employee||Total Rates|
|55 and below||17%||20%||37%|
|Above 55 to 60||14.5%||15%||29.5%|
|Above 60 to 65||11%||9.5%||20.5%|
|Above 65 to 70||8.5%||7%||15.5%|
Individual Income Tax Rates
As of July 2023, the individual income tax rates for residents are as follows:
|Chargeable Income||Income Tax Rate (%)||Gross Tax Payable (SGD)||Total Income Tax in this income bracket|
|First SGD $20,000 Next SGD $10,000||02||0 200||200|
|First SGD $30,000 Next SGD $10,000||– 3.50||200 350||550|
|First SGD $40,000 Next SGD $40,000||– 7||550 2,800||3,350|
|First SGD $80,000 Next SGD $40,000||– 11.50||3,350 4,600||7,950|
|First SGD $120,000 Next SGD $40,000||– 15||7,950 6,000||13,950|
|First SGD $160,000 Next SGD $40,000||–18||13,950 7,200||21,150|
|First SGD $200,000 Next SGD $40,000||– 19||21,150 7,600||28,750|
|First SGD $240,000 Next SGD $40,000||– 19.50||28,750 7,800||36,550|
|First $280,000 Next SGD $40,000||– 20||36,550 8,000||44,550|
|First SGD $320,000 In excess of SGD $320,000||– 22||44,550||–|
Income Tax for Non-Residents
- There is a flat income tax rate for Non-Residents.
- For employment income, tax is charged at a flat rate of 15 percent or at the resident rates, whichever is higher.
- Other income of a non-resident individual is generally taxed at 22%
Employee Termination Policies
Employment termination guidelines as stipulated in the Employment Act is applicable to those employees protected under the Act. The table below illustrates the circumstances under which a contract can be terminated:
|Employer Initiated Termination||Employee Initiated Termination||Natural Termination|
|Unsatisfactory ProbationBreach of contract by the employeeEmployee dismissal on grounds of misconductEmployee dismissal on grounds other than misconductEmployee transferEmployee retirementEmployee retrenchment||ResignationBreach of contract by the employerRetirement||Expiry of the fixed-term contractEnd of the probationary periodDeath of either party|
Termination With Notice Period
|Length of Service||Notice Period|
|Less than 26 weeks||1 day|
|26 weeks to less than 2 years||1 week|
|2 years to less than 5 years||2 weeks|
|5 years or more||4 weeks|
The notice period can be waived upon mutual agreement between both parties
- Employees who have fully served the required notice period, are entitled to Central Provident Fund (CPF) contributions for the notice period salary that they receive.
Termination Without Notice Period
- Either you or your employer may terminate employment without notice when the terms of employment have been breached.
- The party that breached the terms of employment must pay compensation in lieu of notice.
The Employment Act of Singapore does not require a probation period for an employee. In Singapore, it is common that employees are asked to serve a probation period ranging from 3 to 6 months.
Public Holidays/Rest Days
- New Year’s Day – January 1
- Chinese New Year – January 25-26
- Good Friday – April 10
- Labour Day – May 1
- Vesak Day – May 7
- Hari Raya Ruasa – May 24
- National Day – August 9
- Deepavali – November 14
- Christmas Day – December 25
Hire Employees In Singapore With NNRoad
Singapore’s Employment Act contains strict employee protections, which require close attention to detail and a solid understanding of local labour practices.
Singapore is also a very lucrative market to expand your business. NNRoad can help you handle HR matters, the entity set-up, tax and accounting, and payroll in Singapore all the while ensuring you are in compliance with local labour laws.
At NNRoad, we’re committed to simplifying the process of hiring employees in Singapore. By providing tailored solutions, we empower your company to tap into Singapore’s talent pool while staying fully compliant with the nation’s labour laws. Contact us today to explore the possibilities of expanding your workforce in Singapore.