Employment and employee benefits in Singapore: overview
A Q&A guide to employment and employee benefits law in Singapore.
The Q&A gives a high level overview of the key practical issues including: permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; pensions; intellectual property; restraint of trade agreements and proposals for reform.
To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits Country Q&A tool.
The Q&A is part of the multi-jurisdictional guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-mjg.
Scope of employment regulation
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
Under Singapore law, the relationship between the employer and employee is regulated almost exclusively by contract. The governing law of the contract will depend on the choice of law clause in the contract. Parties are generally free to contract as they choose under an employment contract, subject to certain statutory requirements and limits as provided for in legislation and public policy.
The Singapore Employment Act (Cap. 91) (Employment Act) is the primary piece of legislation which governs hiring, employing and dismissing employees. However, the provisions of the Employment Act generally only apply to low level employees, and not to those in executive or managerial positions (except for provisions relating to the payment of salary for executives earning SGD$4,500 or less (as at 1 August 2012, US$1 was about SGD$1.2)).
The definition of "employee" under the Employment Act does not include:
Any domestic worker.
A person in a managerial or executive position.
Most government employees.
In addition to the Employment Act, Singapore employment law is governed by the common law.
Laws applicable to foreign nationals
Some Singapore employment laws will apply to foreign nationals working in Singapore regardless of a choice of law clause in the employment contract. These include the right to maternity protection and benefits and childcare leave for parents, and the right to workmen's compensation for injuries sustained at work.
Laws applicable to nationals working abroad
Singapore employment laws rarely apply to Singapore nationals working abroad unless the employment contract expressly provides that Singapore law is to apply.
Restrictions on managers and directors
There are no age restrictions on who can be a manager. Company directors must be at least 18 years of age.
There are no nationality restrictions on who can be a manager or company director. However, every company incorporated in Singapore must have at least one director ordinarily resident in the jurisdiction.
Grants or incentives
The Singapore government pays employers a Special Employment Credit to encourage them to hire workers aged 50 years and above. Further information can be obtained at the Singapore government's Special Employment Credit website (www.sec.gov.sg/).
Companies can also claim up to SGD$90,000 for recruiting eligible workers (those who are aged 30 years and over and have been out of work for at least three months) on a part-time or flexible work basis under the Singapore Workforce Development Agency's (SWDA's) "Flexi-Works!" initiative. Further information can be obtained at the Singapore Ministry of Manpower's (MOM's) website (www.mom.gov.sg/employment-practices/work-life-harmony/Pages/flexi-works.aspx).
Further, the SWDA also offers employers the "ADVANTAGE! Scheme" to facilitate the re-employment of workers who have reached retirement age. Further information can be obtained at the SWDA website (www.wda.gov.sg/content/wdawebsite/programmes_and_initiatives/L223A-AdvantageScheme.html).
Employers must file Central Provident Fund (CPF) contribution details for each new employee they hire with the CPF Board. Further information can be obtained from the CPF Board's website (www.cpf.gov.sg).
Permission to work
Foreign nationals must usually obtain prior approval in the form of a Work Pass to work in Singapore.
Foreign nationals performing certain kinds of activities in Singapore need not apply for a Work Pass where their stay in Singapore is for less than 60 days. Further information on Work Pass-exempt activities can be found on the MOM's website (www.mom.gov.sg).
Procedure for obtaining approval. A foreign national can work in Singapore if they obtain one of the following types of Work Pass (all references to salary in the following paragraphs refer to basic salary, and allowances, overtime pay, bonuses and commissions are excluded):
Work Permit. This is for unskilled or semi-skilled workers, and the following apply to the Work Permit:
under current administrative practice, a foreign national whose salary per month does not exceed SGD$2,000 must obtain a Work Permit to work in Singapore;
a levy is imposed on an employer employing a foreign national on a Work Permit;
there are quota restrictions as a matter of practice;
the employer must furnish a security bond for non-Malaysian employees as a matter of practice;
the Work Permit is usually valid for two years, after which it can be renewed;
there are special categories of Work Permits for foreign domestic workers, confinement nannies and foreign performing artists (further information on these special categories can be obtained from the MOM's website (www.mom.gov.sg)).
Employment Pass. This is for professionals, managers and executives, and the following apply to the Employment Pass:
under current administrative practice, a foreign national whose fixed monthly salary exceeds SGD$3,000 and who holds an acceptable university degree, professional qualification or specialist skill can apply for an Employment Pass;
there are various classes of Employment Passes: Q1 Pass (for young graduates from good institutions who earn at least SGD$3,000, and older applicants commanding higher salaries commensurate with their work experience); P1 Pass (for applicants with a fixed monthly salary of at least SGD$4,500); and a P2 Pass (for applicants with a fixed monthly salary of at least SGD$8,000).
the Employment Pass is usually valid for two to three years, after which it can be renewed.
S Pass. This is for mid-level skilled foreign professionals, and the following apply to the S Pass:
in practice, the applicant's monthly salary must be at least SGD$2,000;
a levy is imposed on employers of S Pass holders;
there are also quota restrictions for employers of S Pass holders;
it is usually valid for two to three years, after which it can be renewed.
Personalised Employment Pass. This is for foreign professionals whose last drawn salary overseas was at least SGD$8,000 per month. The following classes of employees with Employment Passes can also apply for a Personalised Employment Pass:
former P1 Pass holders who are residing overseas and are not unemployed for longer than a continuous period of six months at the point of application;
P1 Pass holders;
P2 Pass holders who have worked on a P2 Pass in Singapore for at least two years (they must have earned a fixed salary of at least SGD$34,000 in the preceding year);
Q1 Pass holders who have worked on a Q1 Pass in Singapore for at least five years (they must have earned a fixed salary of at least SGD$34,000 in the preceding year);
with limited exceptions, foreign graduates from institutions of higher learning in Singapore with at least two years' working experience on a P or Q1 Pass (they must have earned a fixed salary of at least SGD$34,000 in the preceding year).
Training Employment Pass/Work Permit. These are for applicants undergoing training (they are usually valid for six months), and the following apply:
The Training Employment Pass is for foreign nationals undergoing practical training attachments for professional, managerial, executive or specialist jobs whose minimum monthly salary is at least SGD$2,800, or who has acceptable tertiary or professional qualifications;
The Training Work Permit is for applicants who are unskilled or semi-skilled foreign nationals undergoing training in Singapore and who are not eligible for a Training Employment Pass (levies are payable in respect of employees on Training Work Permits).
Miscellaneous Work Pass. This is for foreign nationals working on the following short-term assignments (assignments for a period of not more than 60 days):
a foreign national who is involved in activities directly related to the organisation or conduct of any seminar, conference, workshop, gathering or talk concerning any religion, race or community, cause, or political end;
a foreign religious worker giving talks relating directly or indirectly to any religion; and
a foreign journalist, reporter or an accompanying crew member not supported or sponsored by any Singapore Government agency to cover an event or write a story in Singapore.
There is also a Multiple Journey Visa which is available for foreign nationals from countries whose citizens ordinarily need to apply for a visa to enter Singapore. The Multiple Journey Visa is tagged to the Employment Pass so that a pass holder can make multiple trips out of Singapore while their Employment Pass is valid without having to apply for a visa to enter Singapore each time they return. The same administrative fees apply as for the Employment Pass (though the issuing fee is SGD$30). If the applicant is from a country whose citizens ordinarily do not require a visa to enter Singapore, then they need not apply for a Multiple Journey Visa.
Further details on the computation of quotas and levies for Work Permits, S Passes and Training Work Permits, as well as the application process for each of the above Work Passes, can be found on the MOM's website (www.mom.gov.sg).
Cost. The following fees are payable in relation to each of the above Work Passes:
Work Permit. An administrative fee of SGD$20, together with an issuing fee of SGD$20 per Work Permit.
Employment Pass. An administrative fee of SGD$20, together with an issuing fee of SGD$120 per Employment Pass.
S Pass. An administrative fee of SGD$20, together with an issuing fee of SGD$60 per S Pass.
Personalised Employment Pass. An administrative fee of SGD$20, together with an issuing fee of SGD$150 per Personalised Employment Pass.
Training Employment Pass. An administrative fee of SGD$20, together with an issuing fee of SGD$120 per Training Employment Pass.
Training Work Permit. An administrative fee of SGD$20, together with an issuing fee of SGD$20 per Training Work Permit.
Miscellaneous Work Pass. An administrative fee of SGD$40.
For further information on fees for the special categories of foreign domestic workers, confinement nannies and foreign performing artistes listed under the Work Permit, see the MOM's website (www.mom.gov.sg).
Time frame. The time frames for obtaining approval in relation to each Work Pass are as follows:
Work Permit. It takes one day to process a Work Permit application submitted online and seven working days to process one submitted manually. However, on approval, there are certain conditions that the Work Permit applicant must fulfil before he is allowed to collect his Work Permit. Further information on the conditions and time frames for the special categories of Work Permits for foreign domestic workers, confinement nannies and foreign performing artists can be obtained at the MOM's website (www.mom.gov.sg).
Employment Pass. 80% of online applications are processed within seven days. Manual submissions and applications made through a sponsor are usually processed in five weeks.
S Pass. 80% of online applications are processed within seven days. Manual submissions are usually processed in five weeks.
Personalised Employment Pass. Online applications are usually processed within two weeks. Manual submissions are usually processed in five weeks.
Training Employment Pass/Work Permit. The following time limits apply to these:
Training Employment Pass: 80% of online applications are processed within seven days. Manual submissions are usually processed in five weeks.
Training Work Permit: for both online and manual submissions, applications are processed by the next working day and an in-principle approval letter will be issued to the applicant. This letter must be mailed to the MOM by the applicant for final approval.
Miscellaneous Work Pass. This can only be done by manual submission. Applicants will be notified of the outcome of their application, usually three weeks after submission (excluding two working days for postage).
Regulation of the employment relationship
Written employment contract
It is not mandatory to have a written employment contract. Employees covered by the Employment Act must enter into a "contract of service" with their employer. This contract of service can be in writing or oral, express or implied.
Terms can be implied into an employment contract by:
Statute. For example, employees covered by the Employment Act have the implied right to terminate the contract by giving notice, or salary in lieu of notice.
The court. For example, an employer has a duty to indemnify any expenses, losses or liabilities incurred by an employee while carrying out his duties.
Custom. Terms can be implied on the basis of custom or practice provided the custom or practice is general, uniform, certain and reasonable.
Collective agreements between labour and management must be renewed every two to three years. To be binding, the collective agreements must be certified by the tripartite Industrial Arbitration Court (IAC).
The IAC can refuse certification on the grounds of public interest, although in practice it has never refused to certify a collective agreement for this reason. Transfers and retrenchments are excluded from the scope of collective agreements, although unions have the right to ask for the reasons behind the retrenchment and are not precluded from negotiating compensation for workers in these cases.
Disputes can be settled by means of consultation, negotiation and conciliation through the Ministry of Manpower, where the procedures are clearly laid down by the Industrial Relations Act. If conciliation fails, the parties can submit their case to the IAC for determination.
Generally, an employer cannot unilaterally change the terms and conditions of employment. However, in some circumstances, the terms of employment can be modified or varied unilaterally if the contract of employment provides for it.
The terms and conditions of employment can be varied with the employee's consent. That variation must be supported by consideration, for example, the employer may promise additional benefits and the employee may in return agree to take on a heavier workload than that actually required by the contract.
Employers can also lawfully terminate the contract of employment and then re-hire the employee on new terms.
Restrictions on working time
The only restrictions on working hours are those imposed by Part IV of the Employment Act. Part IV of the Employment Act protects:
Workmen whose salaries do not exceed SGD$4,500 per month.
Employees to whom the Employment Act applies, whose salaries do not exceed SGD$2,000 per month.
A "workman" is defined under the Employment Act as someone whose job involves manual labour.
The general rule is that employees covered by Part IV of the Employment Act cannot be made to work:
For more than six consecutive hours without a period of leisure.
For more than eight hours in a day.
For more than 44 hours in a week.
There are certain provisos that apply to the above, which can be found in Part IV of the Employment Act.
Part IV employees are entitled to one rest day a week. This rest day can either be Sunday or a rest day determined by the employer. Where employers determine a Part IV employee's rest days, the employer must prepare a roster before the start of the month to indicate the days on which the Part IV employee's rest days fall.
Part IV employees should not have to work on their rest days unless they are shift workers. When requested to do so by their employers, they must be paid:
A sum at the basic rate of pay for one day's work, if the period of work on their rest day does not exceed half their normal hours of work.
A sum at the basic rate of pay for two days' work, if the period of work is more than half, but does not exceed, their normal hours of work.
A sum at the basic rate of pay for two days' work and a sum at the rate of not less than one and a half times the hourly basic rate of pay for each hour (or part of an hour) that the period of work exceeds their normal hours of work for one day; if the period of work exceeds the normal hours of work on one day.
Shift workers can be required to work more than six consecutive hours, more than eight hours in any one day or more than 44 hours in any one week, but the average number of hours worked over any continuous period of three weeks must not exceed 44 hours per week.
Minimum holiday entitlement
Only employees covered by the Employment Act have a minimum holiday entitlement. These employees are entitled to be paid on public holidays. In addition, employees and workmen covered by Part IV of the Employment Act (see Question 8 for an explanation of which employees are covered by Part IV of the Employment Act) are entitled to seven days' paid leave per year if they have already worked with their employer for a minimum period of three months. This entitlement is increased by one day per year for every additional year that the Part IV employee remains in his employer's service. It should be noted that this entitlement is subject to certain provisos which can be found in section 43 of the Employment Act.
The traditional public holidays are as follows:
New Year (1 January).
Chinese New Year (depends on the Chinese lunar calendar but typically in late January to mid February).
Good Friday (variable, usually in April).
Labour Day (1 May).
Vesak Day (variable, usually in May).
National Day (9 August).
Hari Raya Puasa (variable, depends on the Muslim lunar calendar).
Deepavali (variable, depends on the Indian lunar calendar).
Hari Raya Haji (variable, depends on the Muslim lunar calendar).
Christmas Day (25 December).
Illness and injury of employees
Entitlement to time off
Only employees covered by the Employment Act are entitled to time off in the case of illness or injury. If they have worked for their employer for at least six months they are entitled to:
14 days' sick leave a year.
Hospitalisation leave of either (whichever is lesser):
60 days a year; or
the aggregate of 14 days plus the number of days the employee is actually hospitalised.
The number of days of sick leave and hospitalisation leave is lower for employees who have worked for their employers for less than six months. There is no sick leave entitlement for employees who have worked for their employer for less than three months. For full details, see section 89 of the Employment Act.
Employees are only entitled to sick or hospitalisation leave if they have seen and obtained certification (at their employer's expense) from a doctor appointed by their employer.
Entitlement to paid time off
Employees covered by the Employment Act who take medically certified sick leave or hospitalisation leave are entitled to be paid.
Recovery of sick pay from the state
Employers are not entitled to recover sick pay from the government.
Statutory rights of parents and carers
Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
Carers (including those of disabled children and adult dependants)?
Female employees covered by the Employment Act have a right to 12 weeks of maternity leave provided that:
They have fewer than two children (excluding the newborn).
They have worked for their employer for at least 90 days before delivery.
They have given their employer one week's notice before going on maternity leave.
They have informed their employer as soon as practicable of the delivery.
Female employees are entitled to be paid by their employer for the first eight weeks of maternity leave at their monthly gross rate of pay.
Female employees not covered by the Employment Act are eligible for 16 weeks of paid maternity leave under the Child Development Co-Savings Act if:
The child is a Singapore citizen.
The child's parents are lawfully married.
The mother has worked for her employer for at least 90 days before delivery.
Singapore law makes no provision for paternity rights.
Singapore law makes no provision for surrogacy rights.
Female employees do not have a right to adoption leave unless their employment contract or collective agreement provides otherwise.
However, under the Child Development Co-Savings Act, if a female employee is granted and takes adoption leave for one or more periods (not exceeding 24 days in aggregate) in respect of a child less than six months of age, and she is paid at the gross rate of pay during that adoption leave, her employer can claim reimbursement from the government, inclusive of the employer's share of CPF contributions, provided certain conditions are fulfilled. Reimbursement is subject to a stated limit which is currently SGD$10,000.
Employees who meet the relevant criteria under the Child Development Co-Savings Act are entitled to a maximum of six days of childcare leave a year if they have children under seven years of age and if they have worked for their employer for at least 12 months. The entitlement is lower if the employee has worked for that particular employer for less than 12 months, and the employee is not entitled to childcare leave if they have worked for the employer for less than six months. The first three days are employer-paid and the last three days are paid for by the government (currently capped at SGD$500 a day, including CPF contributions).
Employees covered by the Employment Act are entitled to paid childcare leave for a maximum of two days a year if they have children under the age of seven years and have worked for their employer for at least three months.
If the employee satisfies the eligibility criteria under the Child Development Co-Savings Act, the employee is entitled to unpaid infant care leave for their children under two years of age if they have worked for the employer for a continuous period of three months.
Singapore law makes no provision for carers' rights.
Continuous periods of employment
Employees covered by the Employment Act enjoy some benefits from continuous employment. For example, under Part IV of the Employment Act, no employee will be eligible for retirement benefits unless he has been in the employer's service for a continuous period of five years. See the Employment Act for more instances of continuous employment creating benefits for employees.
Consequences of a transfer of employee
For employees covered by the Employment Act, section 18A deals with the transfer of employment where an undertaking (or part of an undertaking) is transferred from one person to another.
Section 18A provides that the transfer of an undertaking (or part of it) will not operate to terminate the contract of service of any employee employed by the transferor in the undertaking (or part of it) which is transferred. The contract of service will have effect after the transfer as if originally made between the employee and the transferee.
As a result, any terms in the contract which are made dependent on the length of service (for example, the amount of redundancy payments to be made in the event of redundancy) are not lost or reduced.
Temporary and agency workers
The terms of employment for workers not covered by the Employment Act are generally governed by the employment contract between the employer and the employee. Therefore, it is possible for an employer to employ a temporary or agency worker and offer them the same terms as a permanent employee. Singapore law does not prevent an employer from offering terms to its temporary or agency workers that are less favourable than those offered to its permanent employees.
Where a temporary or agency worker enters into an employment contract with an employer and additionally meets all the requirements for the provisions of the Employment Act to apply to them, they will enjoy the same rights accorded to employees by the Employment Act. Certain rights under the Employment Act require employees to have worked for their employer for a minimum period, and those who do not meet those minimum periods of employment will not enjoy those rights.
There is currently no data protection legislation in Singapore. While there is a model data protection code which organisations can voluntarily adopt, its adoption has not been widespread. Further, the model code does not have the force of law and takes effect only to the extent that it is incorporated and constitutes part of a contract between the information holder and the information owner.
Data Protection legislation is due to be enacted in late 2012 or early 2013.
Discrimination and harassment
Protection from discrimination
The only type of employment discrimination legislation in Singapore prohibits age discrimination. The Retirement Age Act (Cap. 274A) applies to all employees, including executives and managers, and prohibits the dismissal of any employee who is below the retirement age of 62 years (or other retirement age prescribed by the Minister of Manpower) on the grounds of age, notwithstanding any agreement to the contrary.
Singapore does not have any legislation which prohibits discrimination on the grounds of race, ethnicity, religion, gender, handicap or sexual orientation.
While Article 12 of the Constitution does provide that all persons are entitled to the equal protection of the law and that there shall be no discrimination based on religion, race, descent or place of birth, challenges on constitutional grounds are rare.
The Tripartite Alliance for Fair Employment Practices has non-binding guidelines on fair employment practices.
Protection from harassment
Singapore law recognises a general tort of harassment which applies to conduct in the workplace and outside the workplace. The tort of harassment creates liability for conduct which is sufficiently repetitive in nature and which would cause worry, emotional distress or annoyance to a reasonable person.
There are some laws that protect whistleblowers, for example:
Section 36 of the Prevention of Corruption Act ensures that a complainant's identity will not be disclosed, even during court proceedings, unless the court finds that they have wilfully made a false statement in their complaint.
Section 208 of the Companies Act offers protection to company auditors by ensuring that they will not be liable for defamation for any statement made in the course of their duties.
Dismissal of employees
The Employment Act provides that either employees covered by the Employment Act or their employers can terminate the employment contract by giving notice. The minimum notice periods are based on the employee's period of service, and are as follows:
Less than 26 weeks' service: one day's notice.
26 weeks or more, but less than two years' service: one week's notice.
Two years or more, but less than five years' service: two weeks' notice.
Five years' service or more: four weeks' notice.
It is possible for an employee's contract to provide for a different period of notice which can be shorter. However, the period of notice must still be the same for both the employer and the employee covered by the Employment Act.
Under common law, employees not covered by the Employment Act have an implied right to terminate a contract of employment by giving reasonable notice unless:
The employment contract is for a fixed term.
As a matter of construction of the contract, it is clear that the parties did not intend the contract to be terminated by one or both of the parties by notice.
What constitutes reasonable notice depends on the circumstances surrounding the particular termination.
If the contract provides for termination with notice, or salary in lieu of notice, Singapore law recognises the right of the employer to contractually terminate the employment contract without having to give any reasons.
In respect of employees covered by the Employment Act, the Act stipulates only that employees with three years or more continuous service with a company are entitled to retrenchment benefits. Further, an employee with less than five years' continuous service with an employer is not entitled to any retirement benefit except for the sums payable under the Central Provident Fund Act (CPF Act).
A guideline released by the Ministry of Manpower on 19 November 2008 recommends a rate of between half a month to one month's wages as retrenchment payment for each year of service. Aside from this stipulation the rights and obligations of the employer and employee relating to retrenchment benefits are determined by the terms of the employment contract. It is rare for employment contracts to provide for severance payments unless the employee is of a very senior level.
Procedural requirements for dismissal
Under Singapore law, dismissal from employment refers to a termination without notice for misconduct or other specified grounds.
There are no procedural requirements for the dismissal of a local employee. An employer terminating the employment of foreign employees must inform the Inland Revenue Authority of Singapore (IRAS) of the termination a month in advance and withhold all monies payable to the foreign employee until a tax clearance from IRAS is obtained. IRAS will only issue a tax clearance when the foreign employee pays their outstanding taxes.
Under common law, an employee can be dismissed on the grounds of misconduct without any notice or salary in lieu of notice. The employment contract can stipulate what constitutes misconduct or the employer can rely on the specified acts which are classified as misconduct under the common law, for example:
Wilful disobedience of lawful orders.
Fraud or dishonesty.
Physical violence in the office.
Intoxication or drug use during office hours.
Breach of confidentiality.
The position under the Employment Act is generally similar to the common law position. Section 11 provides that either party to a contract of service can terminate a contract of service, without notice or without waiting for expiry of the notice by making a payment in lieu of notice. An employer can terminate an employee's employment contract (where that employee is covered by the Employment Act) where:
There is wilful breach by the employee of a condition in the contract of service under section 11.
The employee has committed any misconduct inconsistent with the fulfilment of the express or implied conditions of their service under section 14(1).
The employee has been continuously absent from work for more than two days without prior leave from their employer, without reasonable excuse, or without informing or attempting to inform their employer of the excuse for that absence under section 13.
Protection against dismissal
Protection against dismissal is provided to female employees on maternity leave (see Protected employees). In addition, employees covered by the Employment Act who have been dismissed may make representations to the Minister for Manpower to be reinstated to their former employment.
The protection given to female employees on maternity leave under the Employment Act is also available to female employees covered by the Child Development Co-Savings Act.
It is unlawful for an employer to give a female employee on maternity leave notice of dismissal during her leave of absence or on such a day that the notice will expire during her absence.
However, the employer is entitled to give a notice of dismissal, where there is sufficient cause for the dismissal, provided the notice of dismissal is given six months preceding the estimated delivery date, or within six months preceding the actual date of delivery.
Definition of redundancy/layoff
Redundancies and layoffs are more commonly known as retrenchments in the Singapore context and are defined to refer to a portion of the staff or the labour force being discharged due to a surplus of employees.
Singapore law does not have any mandatory procedural requirements that the employer must follow when making employees redundant. However, the Ministry of Manpower recommends that, as far as is possible, affected employees should be informed of the impending retrenchment before notice of the retrenchment is given.
The Employment Act states that employees covered by Part IV who have been in the continuous service of their employer for less than three years are not entitled to retrenchment benefits. Employees covered by Part IV with the requisite length of service are entitled to retrenchment benefits.
However, employees not covered by Part IV of the Employment Act will have a right to retrenchment benefits where these are provided for in the employment contract or collective agreement.
Employee representation and consultation
See Question 20.
Consequences of a business transfer
Employees covered by the Employment Act are statutorily protected on a business transfer under section 18A. Other employees not covered by the Employment Act will have their employment contracts terminated on a business transfer under the common law.
Automatic transfer of employees
Section 18A of the Employment Act provides for the automatic transfer of employees. The employee's contract of service is also automatically transferred so that there is no break in the continuity of service as regards the contract of employment.
Protection against dismissal
Considering the legislative intention behind section 18A, it is likely that the transferor of a business is entitled to dismiss employees before the transfer takes place.
Harmonisation of employment terms
Section 18A(12) allows the transferee and the employee, or the trade union representing the employee, to negotiate different terms if they need to.
Employer and parent company liability
An employer can be liable for the acts of its employees?
A parent company can be liable for the acts of a subsidiary company's employees?
Health and safety obligations
Under the Workplace Health and Safety Act, it is the duty of every employer to take, so far as it is reasonably practicable, such measures as are necessary to ensure the safety and health of their employees at work.
Further, manual labourers are protected under the Work Injury Compensation Act (WICA). Under WICA, compensation is payable to a manual labourer who is injured at work. The compensation can be paid to, or for the benefit of, the manual labourer injured, or where death results from the injury, to the deceased's estate or for the benefit of their dependants.
Taxation of employment income
Foreign nationals working in your jurisdiction?
Nationals of your jurisdiction working abroad?
A foreign national working in Singapore is liable to pay income tax where they have tax residency status. A person is considered to be tax resident in Singapore for the calendar year concerned if they stay or work in Singapore either:
For at least 183 days in a calendar year.
Continuously for three consecutive years.
For at least 183 days for a continuous period over two years.
A tax resident will be taxed on all income earned in Singapore. The income, after the deduction of tax reliefs, will be taxed at progressive resident rates. Any foreign-sourced income brought into Singapore on or after 1 January 2004 is tax exempt.
Nationals working abroad
Generally, overseas income received in Singapore on or after 1 January 2004 is not taxable and does not need to be declared. This includes overseas income paid into a Singapore bank account. Overseas income is taxable in Singapore if it is received in Singapore through partnerships in Singapore, or if the overseas employment is incidental to the employee's Singapore employment (that is, as part of the employee's work in Singapore, the employee needs to travel overseas).
Rate of taxation on employment income
Income tax is charged at a progressive rate, and the tax rates for 2012 are as follows:
For every dollar of the first SGD$20,000: 0%.
For every dollar of the next SGD$10,000: 2%.
For every dollar of the next SGD$10,000: 3.5%.
For every dollar of the next SGD$40,000: 7%.
For every dollar of the next SGD$40,000: 11.5%.
For every dollar of the next SGD$40,000: 15%.
For every dollar of the next SGD$40,000: 17%.
For every dollar of the next SGD$120,000: 18%.
For every dollar exceeding SGD$320,000: 20%.
Social security contributions
Employers in Singapore must make contributions to the Central Provident Fund (CPF) accounts of their employees who are Singapore citizens or permanent residents. Employees' contributions to the account are deducted by the employer from the employees' salary and paid into the account. CPF contributions represent a compulsory form of pension system in Singapore which is administered by the CPF Board.
Further information on the contribution rates payable by employers and employees can be found on the CPF Board's website (www.cpf.gov.sg).
Contributions paid to the government
Taxation of contributions
While an employer's compulsory contributions to CPF are not taxable, the employer's voluntary payments, that is, payments in excess of the compulsory contributions, are taxable. Contributions made from 1 January 2004 in relation to employment outside Singapore are not taxable as this is considered as foreign-sourced income.
Monthly amount of the government pension
Is linked to the employee's salary?
Is linked to employer and/or employee contributions and investment return on those contributions?
Supplementary pension schemes are not compulsory and not commonplace in Singapore. Other than the CPF, there is a supplementary scheme for designated government administrative employees, senior police and intelligence officers and political appointees under the Pensions Act (Government Pension) and the Saver Scheme for designated members of the Singapore Armed Forces (SAF). In the private sector, it is entirely up to employers to decide whether to implement supplementary pension schemes.
Linked to the employee's salary
Both the Government Pension and the Savings and Employees Scheme are linked to the employee's salary.
Linked to employer and/or employee contributions
The Government Pension only applies to a very limited number of government employees and its terms and conditions are not published. As such, there is little information on the Government Pension apart from that provided in the Pensions Act.
SAF as an employer can make contributions to the CPF Top-up Account of a SAF member's Saver Scheme. When the SAF member retires from the SAF, this money goes into his CPF account. Therefore, while the value of the CPF Top-up Account is linked to SAF's contributions, the value of the other two accounts of the Saver Scheme (the Savings Account and the Retirement Account) are not linked to SAF's contributions as employer.
The Accountant-General's Department (AGD) oversees the Government Pension and a Board of Trustees (BOT) appointed by the Armed Forces Council (AFC) oversees the Saver Scheme.
The Saver Scheme is managed by the BOT, with inputs from professional fund managers and the Monetary Authority of Singapore. The AFC administers matters pertaining to the Singapore Armed Forces (SAF) under the Singapore Armed Forces Act (SAF Act). The SAF, in turn, is overseen by the Ministry of Defence.
The AGD is a department of the Ministry of Finance.
The government does not administer or oversee supplementary pension schemes in the private sector.
Tax on pensions
Automatic transfer of pension rights
See Question 12. Where an employee's (who is covered by the Employment Act) contract provides for pension benefits, and that employee is covered by the Employment Act, those pension benefits will survive a business transfer by virtue of section 18A of the Act.
Employees who are working abroad?
Employees of a foreign subsidiary company?
In Singapore, when a company is wound-up, the Companies Act ensures that employer's contributions to the employee's CPF must be paid out of the remaining assets of the company in priority to all other unsecured debts of the company. There is no similar protection for private supplementary pension schemes.
Intellectual property (IP)
Restraint of trade
Restriction of activities
Restrictive covenants in employment are based on the common law. It is possible to restrict an employee's activities during employment and after termination. However, the restriction must be reasonable with reference to the interest of both the employer and the employee, that is, it must relate to a legitimate proprietary interest of the employer (for example, trade secrets or customer connections) and must not be unreasonably wide.
In addition, the restriction must be reasonable in reference to the interests of the public.
Post-employment restrictive covenants
Under Singapore law, employers generally do not have a duty to pay a former employee while they are subject to post-employment restrictive covenants.
Proposals for reform
On 17 April 2012, the MOM announced that they will be reviewing the Employment Act to keep up with the times and changes in employment practices. In particular, the MOM said that it would look at improving the wage conditions of its low-wage workers.
CPF Board policies and regulations are very often adjusted. It is prudent for employers to keep abreast of the latest developments by regularly visiting the CPF Board's website (www.cpf.gov.sg).
Ministry of Manpower
Description. Provides information on employment practices in Singapore.
Central Provident Fund
Description. Provides information on the Central Provident Fund.
Special Employment Credit
Description. Provides information on the Special Employment Credit.
Workforce Development Agency
Description. Provides information on initiatives and grants given by the Workforce Development Agency.
Singapore Statutes Online
Description. Website providing full text of Singapore statutes.
Shook Lin & Bok LLP
Qualified. England & Wales, 1997 (Barrister-at-Law (Middle Temple); Solicitor); Singapore, 1998 (Advocate & Solicitor)
Areas of practice. Litigation; arbitration; employment.
- Partner in Shook Lin & Bok LLP's litigation and arbitration practice, leading the employment practice.
- Acted as lead counsel in numerous High Court, Court of Appeal and international arbitration matters involving general commercial disputes, shareholder disputes, employment disputes, banking and finance related disputes, as well as domestic and cross-border insolvencies.
Shook Lin & Bok LLP
Qualified. England & Wales, 2008 (Solicitor); Singapore, 2006 (Advocate & Solicitor)
Areas of practice. Litigation; arbitration; employment.
- Partner in Shook Lin & Bok LLP's litigation and arbitration practice.
- Actively involved in contentious and non-contentious employment matters, acting for employers and employees.
- Advised and represented individuals, multi-national corporations and international banks on a range of issues including contract, trust, insolvency, banking, employment, defamation and professional negligence.
- Specialises in civil and commercial litigation.