How to Hire in Singapore
With a thriving economy, favorable tax code, and tremendous business potential, Singapore is an attractive place to live and work. According to the World Bank, Singapore ranked second out of 190 countries in ease of doing business. Hiring employees is a pivotal step for any business’s growth, as it presents unique opportunities and challenges.
As one of Asia’s leading business hubs, Singapore offers a conducive environment for businesses to thrive. However, navigating its employment landscape requires a clear understanding of local regulations and best practices.
How can businesses hire in Singapore?
Hiring employees in Singapore offers businesses access to a dynamic talent pool and a strategic location for expansion into the Asia-Pacific region. Singapore is a global air hub strategically located along the world’s major aviation routes. The nation has a highly educated workforce, a business-friendly environment, and stable economic growth. Singapore is also one of the best countries for.
Recent business surveys and economic indicators confirm Singapore’s emergence and dominance as an advantageous business location. Southeast Asia is a hotbed of global growth thanks to its robust trade infrastructure, bilateral agreements, and proximity. As a result, businesses can take advantage by integrating into the international market.
The three options for employers planning to hire employees in Singapore are:
- Work with independent contractors
- Hire direct employees
- Partner with a global Professional Employer Organization (PEO)
We’ll break down each option to help you make the best decisions for your business growth.
Hiring Contractors
Hiring independent contractors in Singapore is a flexible way to expand. However, not adhering to the rules can lead to misclassification and result in fines and legal issues. These rules include:
- Contractors can work for multiple companies at once and cannot be limited to working exclusively for your business.
- Contractors are responsible for their working status and schedule—the business cannot dictate specific hours of operation.
- Contractors must be project-based, or they must work for shorter periods. If a contractor extends their time with a company, they run the risk of being classified as an employee.
Although it may seem straightforward at first, there are many challenges associated with hiring contractors abroad. The government considers it a misclassification if a worker does not meet the above criteria. And if that happens, the worker can sue the company for benefits, overtime, and holiday pay.
Related: Independent contractors: Understanding the risk
If the agreement is not clear or followed, the government usually supports the contractor. In addition to these costs, the company may also face fines and penalties for the violation.
U.S. companies hiring and paying in Singapore need international contractors to fill out IRS Form W-8BEN. This certifies their foreign worker status in the eyes of the U.S. government. Although this step will resolve tax compliance for the employer in the U.S., the business will still need to abide by Singapore labor law.
Hiring an independent contractor in Singapore can be an efficient method of employment if the above guidelines are met.
Related: Guide to paying foreign contractors
Hiring Employees Directly
If you plan to hire part-time or full-time employees in Singapore, you will need to set up your own legal entity. Establishing a legal entity is expensive and time-consuming and can take two weeks to two months, depending on the licenses you need. Due to Singapore’s facilitation of foreign incorporation, the setup process is generally quicker and less complicated than other countries. But that doesn’t mean it’s easier.
Legal entities are the foundation of all operations within a country. They can impact every aspect of a business, including finance, accounting, IT, and other supply chain functions. If this is the route your business decides to pursue, it’s highly recommended that you work with an expert during this process. This ensures that the structure isn’t inefficient or costly to maintain.
In general, there are three primary components to incorporating a business in Singapore:
- Incorporation and Registration
- This includes preparing the right registration documentation, corporate governance structure, business licenses, tax ID, and more.
- Post Incorporation
- The work doesn’t stop once the legal entity is created. After incorporation comes the payroll setup, benefits registration, account setup, banking, and more
- Corporate Annual Compliance
- Finally, the entity will be reviewed annually after all the setup work is complete. This includes tax, payroll, statutory returns, and other important financial statements.
Related: 10 things to know about setting up a legal entity overseas
Outsource Hiring to a PEO Provider
If your company is looking to expand into Singapore without setting up a legal entity, outsourcing employment to a global Professional Employer Organization (PEO), also known as an Employer of Record (EOR), is the best option.
A PEO hires workers on your behalf and shoulders much of the administrative burden related to the HR function of a business. This reduces the potential risks and liabilities as the PEO provider is responsible for maintaining compliance with all local regulations. With a PEO, the company retains control over its employees’ daily activities, freeing up time and resources for other tasks.
By leveraging an existing network of legal entities, employers can rely on a PEO to ensure faster hiring, employee benefits, payroll administration, and more, without sacrificing compliance. Here are a few of the administrative services a PEO provides:
- Fast international hiring
- Payroll management
- In-country compliance
- Reduced risks with international contractors
- Global talent acquisition
- Best-in-class HR technology for the international workforce
- Singaporean employment contracts
Related: Singapore employer of record
Primary Components to Incorporating a Business in Singapore
Incorporating a business in Singapore involves several key components, including:
- Company name reservation: Start by reserving a company name with the Accounting and Corporate Regulatory Authority (ACRA). The chosen name must comply with ACRA’s guidelines and should not infringe on existing trademarks.
- Appointment of directors and shareholders: A company in Singapore must have at least one director who is a resident of Singapore. The company must also appoint, not more than 50,
- Registered address: Every company must have a registered office address in Singapore, which will be used for official correspondence.
- Company constitution: A company’s constitution outlines its internal rules and regulations, including the rights and responsibilities of directors and shareholders.
- Memorandum and Articles of Association: These documents contain the company’s objectives, rules governing its operations, and the rights of shareholders.
- Registration with ACRA: Once all necessary documents are prepared, the company can be registered with ACRA. This process involves submitting the required forms and paying the registration fees.
- Obtaining business licenses and permits: The Singapore Police Force or the Ministry of Manpower (MOM) may require additional licenses or permits according to the nature of the business.
Incorporating a business in Singapore is a relatively straightforward process, but it’s essential to ensure compliance with all legal requirements to avoid any potential pitfalls down the line.
Employment Law in Singapore
Singapore’s Employment Contracts
The following acts govern employment in Singapore:
- Employment Act of 1968
- Industrial Relations Act
- Trade Unions Act, the Work Injury Compensation Act
- Workplace Safety and Health Act, as well as by common law.
Any employment terms offered in Singapore must match or be more favorable than the Employment Act’s rules.
The different types of employment relationships are:
- Permanent Employment – Per the Employment Act of Singapore, permanent employment is regular and continual, lasting more than 14 days. The employment contracts must include essential conditions, such as working hours and notice period.
- Fixed-Term Contracts – A fixed-term contract ends at the expiration of a specific term unless renewed.
- Temporary Employment – Singapore’s Employment Act has no specific temporary employment provision.
Employers are not required to provide employees with written employment contracts, but having one in place can protect both you and the employee. At a minimum, employers must provide a list of key employment terms within 14 days after the commencement of employment. The list must include the following information:
- Employer’s full name
- Employee’s full name
- Employment commencement date
- Job title of an employee
- Job responsibilities of an employee
- The duration of the employment term, if it is a fixed-term agreement
- Work schedule
- Probation period (if any)
- Salary and payment cycle
- Fixed allowances
- Fixed deductions
- Additional incentives (e.g., bonuses)
- Benefits such as medical and dental insurance
- Leave entitlements (holidays, annual, maternity, sick leave, etc.)
Working Hours
The standard workweek in Singapore is 8 hours per day or 44 hours per week.
Probation Period
Singapore’s employment laws do not require probation periods. However, if an employer requires probation for a position, it must be stipulated in the employment contract.
Minimum Wage
Singapore doesn’t have any national mandatory minimum wage. The Progressive Wage Model sets minimum wages for security, landscaping, and cleaning jobs. Wages are determined by a tier system based on seniority and job responsibilities.
Bonuses
Although not required by law, many companies in Singapore provide bonuses to employees as outlined in their employment contracts.
Holiday Entitlement
Employees on the job for at least three months receive seven days of paid vacation annually. Workers accrue one additional day per year for each subsequent year of service, up to a maximum of 14 days of paid vacation leave.
In addition to the annual leave, employees receive paid public holidays mandated by Singapore’s Holidays Act:
- New Year’s Day
- Chinese New Year (two days)
- Good Friday
- Labor Day
- Vesak Day (Buddha’s birthday)
- National Day
- Hari Raya Puasa (End of Ramadan)
- Deepavali (Hindu New Year)
- Hari Raya Haji (Feast of Sacrifice)
- Christmas Day
Furthermore, Singapore employees also receive the following leaves:
- Maternity Leave
- Paternity Leave
- Sick Leave
- Adoption leave
- Childcare leave
Related: Why hire in Singapore?
Work with Global PEO Services
Growing globally can be an exciting time for an organization, but expanding globally has risks. Global PEO Services, a Safeguard Global company, can help mitigate these risks and help you stay in control of your daily operations.
Staying updated on the laws and regulations in Singapore can be difficult. This can make hiring employees in Singapore challenging. The difficulty arises from the need to comply with legal and tax requirements.
We manage all the legal requirements and payroll, while the business manages the international team on their daily tasks. For companies hoping to hire and pay in Singapore, GPS can help you grow and remain compliant.