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Summary of Employment Laws in Singapore | Singapore Employment Act

Like many other jurisdictions, the relationship between employer and employee in Singapore is determined by the contract of service between them. The Singapore Employment Act (EA) in Singapore outlines the basic terms and conditions of employment, statutory requirements employers must comply with as well as the rights and responsibilities of employers and employees under a contract of service. This guide provides Ministry of Manpower employment act details and Summary of Employment Laws in Singapore.

1. What is the Singapore Employment Act?

Precisely speaking, the Singapore Employment Act (Ministry of Manpower employment act) is the main labour law that protects the rights and outlines the responsibilities and statutory requirements of both employee and employer. Besides, the Singapore government also ensures that the Act is in line with the international legislation to provide sufficient protection to all parties involved in the process of employment.

 

2. Who Does the Employment Act Cover?

The Employment Act covers every employee (regardless of nationality) who is under a contract of service with an employer, except:

• Any person employed in a managerial or executive position with a monthly basic salary above $4,500 [i.e. Professionals, Managers and Executives (abbreviated as PMEs)];
• Any seamen;
• Any domestic workers;
• Any person employed by a Statutory Board or Government

However, under Part IV of the EA (i.e. rest days, hours of work and other conditions of service), it only applies to the following:

• Workmen (i.e. manual workers) earning not more than $4,500 monthly basic salaries
• Employees earning not more than $2,500 basic monthly salaries

 

3. What Is the Difference Between Contract of Service and Contract for Service?

A contract of service is any agreement whether in writing, verbal, expressed or implied, whereby:

• One person agrees to employ another as an employee
• The other person agrees to serve the employer as an employee

It can be in the form of a letter of appointment or employment, or an apprenticeship agreement. However, to minimize disputes on the agreed terms and conditions, the agreement should be in writing.

Employers cannot change or alter any terms and conditions of employment without the consent of the employee. Any terms and conditions of employment, in a contract of service, that is less favourable than the relevant provision under the Employment Act is illegal, null and void. The provision of the Act will take precedence over a particular contractual term that is less favourable.

A contract for service is an agreement whereby a person is engaged as an independent contractor (e.g. self-employed, vendor or freelancer) for a fee to carry out an assignment or project for the company. Under such working arrangement, they are not covered under the EA and statutory benefits do not apply for them.

 

4. Essential Clauses Under the Employment Contract

Key Employment Terms (KETs)

With effect from 1 April 2016, all employers is required to issue KETs in writing to all employees who:

• Enter into a contract of service on or after 1 April 2016
• Are covered by the Employment Act
• Are employed for 14 days or more. This refers to the length of contract, no the number of days of work.

Employers can either attached the KETs with together with the employment contract or include all the following KETs items inside the employment contract.

1. Full name of employer
2. Full name of employee
3. Job title, main duties and responsibilities
4. Start date of employment
5. Duration of employment (if employee is on fixed-term contract)
6. Working arrangements such as
   • Daily working hours (e.g. 8.30am to 6pm)
   • Number of working days per week (e.g. 6)
   • Rest day (e.g. Sunday)
7. Salary period
8. Basic salary
   For hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay (e.g. $X per hour, day or piece).
9. Fixed allowances
10. Fixed deductions
11. Overtime payment period (if difference from item 7. Salary period)
12. Overtime rate of pay
13. Other salary-related components
    • Bonuses
    • Incentives
14. Types of leave
    • Annual leave
    • Outpatient sick leave
    • Hospitalisation leave
    • Maternity leave
    • Childcare leave
15. Other medical benefits
    • Insurance
    • Medical benefits
    • Dental benefits
16. Probation period
17. Notice period
18. Place of Work (optional)
    Used if the work location is different from the employer’s address.

 

Hours of Work

Employees who are covered under Part IV of the Employment Act their working hours are regulated and they are entitled to breaks, overtime pay and rest days.

For common work arrangements, the contractual hours are as follows:

Working Days	Contractual hours of work are
5 days or less a week	Up to 9 hours per day or 44 hours a week
More than 5 days a week	Up to 8 hours a day or 44 hours a week

 

Salary and Overtime

Singapore does not impose a minimum wage or salary. The salary is subject to negotiation and mutual agreement between Employers and Employees. The salary shall be paid at least once a month and within 7 days after the end of the salary period.

Employers cannot deduct more than 25% of the employee’s salary for accommodation, amenities and services expenditure.

With effect from 1 April 2016, all Employers are required to issue itemized payslips to employees covered by the Employment Act. The payslips should include the following items unless the item is not applicable:

1. Full name of employer
2. Full name of employee
3. Date of payment (or dates, if the payslips consolidates multiple payments)
4. Basic salary
   For hourly, daily or piece-rated workers, indicate all of the following:
   • Basic rate of pay (e.g. $X per hour)
   • Total number of hours or days worked or pieces produced
5. Start and end date of salary period
6. Allowances paid for salary period
   • All fixed allowances (e.g. transport)
   • All ad-hoc allowances (e.g. one-off uniform allowance)
7. Any other additional payment for each salary period
   • Bonuses
   • Rest day pay
   • Public holiday pay
8. Deductions made for each salary period
   • All fixed deductions (e.g. employee’s CPF contribution)
   • All ad-hoc deductions (e.g. deductions for no-pay leave, absence from work)
9. Overtime hours worked
10. Overtime pay
11. Start and end date of overtime payment period (if different from item 5. Start and end date of salary period)
12. Net salary paid in total

The overtime rate payable is capped at $2,250 to help Employers manage costs even though the salary threshold of non-workmen has been increased to $2,500.

Failure to stay compliant with the EA is considered an offence where employees (who are not paid for work done) can report their employers to Ministry of Manpower for investigation.

 

5. Employee Benefits

Employee benefit is one of the important clauses in the employment contract that includes annual leave, medical leave, pension fund contributions, staff incentives and bonuses as well as family-related benefits (maternity, paternity and childcare).

Annual Leave

According to EA, a Singaporean employee is eligible to have paid annual leave after he or she has served a minimum of 3 months with their employer. An employee is entitled to at least 7 days of paid annual leave in the first year of his or her service (the standard practice in Singapore is at least 14 days of paid annual leave per annum).

Sick Leave

Under the EA, employees are entitled to paid sick leave if they fulfilled the following criteria:

• served the employer for at least 3 months;
• notified their superior about their sick leave within 48 hours with the supporting document (medical certificate which has been proven by a doctor, general practitioner or dentist).

The number of sick and hospitalization leave days depends on the duration of the service of an employee. Generally, employees are eligible for at least 5 days of sick leave and 15 days of hospitalization leave if they worked for the employer for three months (an employee is entitled to the maximum number of 14 and 60 days of sick and hospitalization leave).

Maternity Leave

In Singapore, female employees are entitled to 16 weeks of paid maternity leave under the Child Development Co-Savings Act (CDCA), if:

• The child is a Singapore Citizen;
• The mother is legally married to the child’s father; and
• Employee has served her employer for a minimum of 3 months before the child’s birth OR has been continuously self-employed for at least 3 months before the child’s birth and has lost her source of income during her maternity leave period.

The 16 weeks statutory maternity leave benefit under the CDCA is extended to unmarried mothers from early 2017. This means that both married and unmarried mothers will be entitled to 16 weeks of maternity leave, subject to the conditions under the CDCA.

Female employees who are covered under the Employment Act but not the CDCA will be entitled to 12 weeks of maternity leave.
Paternity Leave

In Singapore, male employees are entitled to 2 weeks of paid maternity leave if:

• The child is a Singapore Citizen;
• The father is legally married to the child’s mother; and
• Employee has served his employer for a minimum of 3 months before the child’s birth OR has been continuously self-employed for at least 3 months before the child’s birth and has lost his source of income during his paternity leave period.

Shared Parental Leave

Working fathers including self-employed are entitled up to 4 weeks shared parental leave, if:

• The child is a Singapore Citizen;
• The child’s mother qualifies for Government-Paid Maternity Leave; and
• The father is legally married to the child’s mother

Childcare Leave and Extended Childcare Leave

Employees are eligible for 6 days Childcare Leave under CDAC, if:

• The child is below 7 years old;
• The child is a Singapore Citizen;
• The parent has served the employer at least three calendar months OR engaged in his/her work for at least 3 continuous months and have lost income during the childcare leave period.

From 1 May 2013, working parents are eligible for 2 days extended childcare leave every year, if:

• The youngest child is aged 7 – 12 years (inclusive)
• The child is a Singapore Citizen;
• The parent has served the employer at least three calendar months OR engaged in his/her work for at least 3 continuous months and have lost income during the childcare leave period.

Parents of non-citizens or single (unmarried) parents covered under the Employment Act are entitled to 2 days of childcare leave, if:

• The child (including legally adopted children or step children, non-natural parent) is below 7 years of age; and
• The employee has served at least three months of service

Unpaid Infant care Leave

Employees are eligible to 6 days of unpaid infant care leave, if:

• The child (including legally adopted children or step children) is below 2 years of age;
• The child is a Singapore Citizen; and
• The employee has served at least three months of service

 

Retirement Fund Contributions

The Singapore Employment Act (Ministry of Manpower employment act), EA does not mandate employers to pay retirement benefits to their employees (unless it is stated in the employment contract).

That said, an employer in Singapore is required make monthly CPF (Central Provident Fund) contributions for all Singaporean and Singapore Permanent Resident staff who is earning more than S$50 per month. However, CPF contributions is not applicable to foreign workers.

The CPF contribution has to be done together with the submission of the employee’s contributions at the rates set out by the CPF Act, by 14^th of the following month.

For Overseas Singaporeans and self-employed Singaporeans, voluntary contributions to their CPF accounts are the alternative to save up for their retirement funds.

Staff Incentives and Bonuses

Many Singapore companies offer staff incentives that come as monetary bonuses and variable payouts as a way to retain and attract talents. There are usually three types of staff incentives in Singapore:

• Annual Wage Supplement (AWS) – It is also known as the 13^th-month “bonus” to supplement the annual wage.
• Bonus – A reward for the employee’s contributions or increased productivity.
• Variable payment – A variable payment is an incentive payment to increase productivity or reward employees for their contributions.

 

6. Code of Conduct

An employer must adhere to the code of conduct as in the Employment Contract and the employer cannot change the terms and conditions of an Employment Contract without the written consent of the employee. In other words, both parties must negotiate if either party does not agree to the changes.

7. Termination and Retrenchment

Either party (be it the employer or the employee) may terminate the employment contract if either of them has breached the contract. A written notice, as according to the notice period in the contract, from either the employer or the employee, is required in the case of termination of employment relationship.

If there is no notice period stated in the employment contract, the notice period will fall back on the EA, ranging from 1 day to 4 weeks.

However, if either party wishes to terminate the employment before the notice period, either party must pay the other a sum equal to the salary in lieu of notice. Please note that the employer cannot reject an employee’s resignation.

8. Age Considerations

a) What is the youngest legal age to work in Singapore?

In Singapore, the legal age to work is 13 years old though children aged between 13 – 15 years are only allowed to do light or casual work, that means they are not eligible to work in industrial sectors unless he or she is under the personal charge of a parent. However, youth aged 16 years old and older are eligible to do industrial work upon fulfilling medical requirements and notifying the Commissioner for Labor.

b) Retirement age

According to the Retirement Age Act (RAA) in Singapore, the retirement age is 62 years. That said, employers are required to offer re-employment opportunities to eligible employees up to the age of 65 years.

9. Employing Foreign Employees

Under the Employment of Foreign Manpower Act (EFMA), all foreign workers are mandated to possess the valid Singapore work visa to work in Singapore. Failure to comply may face a fine between $5,000 and $30,000, or imprisonment for up to 1 year, or both. For subsequent convictions, it will be mandatory imprisonment and a fine between $10,000 and $30,000.

Hence, you will have to apply for a Singapore Employment Pass or S Pass on your foreign employee behalf before him or her commencing employment with you