Expanding your business in Singapore by hiring employees is a significant move that requires careful consideration of various factors, including taxation, Central Provident Fund (CPF), employment law, and insurance.
This guide aims to provide foundational insights into the hiring procedures, ensuring a compliant and competent approach to this critical aspect of business expansion.
Who Can Be Considered Employable in Singapore?
Singapore allows the employment of individuals above the age of 18. Additionally, specific regulations govern the employment of children and young persons aged 13-17 under certain circumstances.
Elements to Consider in the Employment Contract
Crafting a comprehensive employment contract is crucial for both employer and employee. Key elements to include are:
- Position and Job Title - Clearly define the employee's role and responsibilities.
- Commencement Date and Duration of Contract - Specify the start date of employment and the contract's duration.
- Probation Period - If applicable, outline the duration and terms of the probationary period.
- Salary and Compensation - Detail the salary, payment frequency, and any additional compensation or benefits.
- Working Hours - Specify standard working hours, breaks, and days off.
- Leave Entitlement - Clearly outline types of leave and corresponding entitlements.
- Termination Clause and Notice Period - Define conditions for termination and notice periods for both parties.
- Code of Conduct, Policies, and Confidentiality - Include expectations regarding conduct, adherence to policies, and confidentiality.
- Intellectual Property - Clarify ownership of intellectual property created during employment.
- Benefits and Perks - List additional benefits, allowances, or perks provided by the company.
- Performance Reviews and Grievance Procedures - Outline the review process and steps for addressing grievances.
- Health and Safety - Highlight the commitment to providing a safe and healthy work environment.
- Applicable Law and Jurisdiction - Specify jurisdiction for dispute resolution and governing laws.
Hiring Without an Employment Contract
While verbal employment agreements are legally valid in Singapore, having a written contract is recommended. A written contract provides clarity and legal protection for both parties.
CPF Contribution
The CPF system in Singapore requires both employers and employees to contribute a percentage of the employee's monthly income to the CPF. The employer's contribution is higher than the employee's, and contributions are subject to a cap. It's mandatory to enrol in the CPF scheme within 7 days of hiring an employee.
The following table summarises the current contribution rates for Singaporeans and SPRs (from third year and onwards) across the different age groups.
|
Employee's age (years) |
Contribution rates from 1 January 2024 (monthly wages > $750) |
||
|
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 |
9 |
7.5 |
16.5 |
|
Above 70 |
7.5 |
5 |
12.5 |
Employee's Insurance
Under WICA, employers are required to maintain insurance for the following employees:
- all employees involved in manual work; and
- all other non-manual workers earning S$2,600 or less a month.
However, employers are susceptible to legal liability for claims under both WICA and also the Common Law for all employees, even if they are not under the categories mentioned above.
Employers often provide additional insurances such as health, life, accident, and medical insurance to enhance employee well-being.
Hiring Students
Singapore allows the hiring of students, both citizens/Permanent Residents (PRs) and foreign students. Internships and part-time employment are common for students, and they are entitled to CPF contributions.
Hiring Foreign Employees
Singapore encourages hiring locally, but foreigners with valuable skills may be employed with a valid work visa. The Employment Pass is for skilled professionals, while the S Pass is for mid-skilled workers.
Using a Singapore Company to Hire Abroad
Hiring employees abroad for your Singapore company involves considerations of taxation, CPF, employment law, and insurance. Understanding tax implications, CPF requirements, compliance with local employment laws, and securing relevant insurance coverage are essential for a seamless process.
Conclusion
Hiring employees in Singapore is a strategic move for business expansion. Whether hiring locally, students, foreign employees, or exploring international hiring, a thorough understanding of employment law, taxation, and insurance is crucial.
Consult our professionals specializing in employment and taxation matters to ensure compliance and success in your hiring processes.