A Guide to Singapore Employment law
6 minute read
Singaporean employment laws are known for their light-touch regulation and business- friendliness.The jurisdiction is perceived as ‘employer-friendly’, with much of the employee-employer relationship being governed by the contract between the parties. Generally under Singapore law, parties are free to contract as they choose and any matters arising between them would have to be resolved by looking at the express and/or implied terms of the contract in question.
However, employers in Singapore will still need a good understanding of the statutory rules governing the employee-employer relationship, including certain minimum employee entitlements under law. In 2019, significant changes were made to employment law in Singapore, including new statutory leave entitlements such as the laws regulating paternity leave, maternity leave, adoption leave and shared parental leave, and extension of the Employment Act to wider categories of employees.
Keep reading to find out more about Singapore’s employment law and practices below.
Overview:
- What is the Employment Act Singapore?
- Who is covered under the Employment Act?
- Does the Employment Act cover foreigners?
What is the Employment Act Singapore?
Singapore’s Employment Act (EA) is the main labour legislation that governs the relations between the employees and the employer in Singapore companies.
The way Singapore defines the employment relationship between both the employer and their employee is largely through the service agreement between an employer and employee. The EA summarizes all the legal responsibilities of employers whose employees are covered under the Act.
Why is the Employment Act important?
The Employment Act is what ensures that employees covered under the Act have certain minimum entitlements under law.
For instance, some employers tend to deduct salaries based on arbitrary decisions. Some of them simply justify this by certain marginal reasons while the real reason is to save up by penalizing an employee.
The Employment Act protects the employees in the sense that the employers have to justify the deduction with firm proof. Additionally, one’s salary cannot be deducted beyond a certain threshold.
Who is covered under the Employment Act?
The scope of employees covered was expanded in 2019 so that generally speaking, all employees (regardless of nationality) who work under a contract of service with an employer are covered, except for seafarers, domestic workers and statutory board and government employees. Also, Part IV of the Act which covers rest days, hours of work, and other conditions of service, does not apply to certain types of employees, as further detailed below.
The terms stipulate that an employee can work:
- A full-time job
- A part-time job
- Temporarily
- Under a special employment contract
Additionally, an employee can be compensated on an hourly, daily, monthly, or piece-rated basis.
Bear in mind that if employees work 35 or fewer hours a week, they are considered to be part-time employees. This kind of employment is still regulated by the Employment Act but the Employment of Part-Time Employees Regulations should also be referred to. A part-time employee would still be entitled to employment benefits including paid public holidays, sick leave, annual leave and childcare leave. However such benefits would be pro-rated according to the number of hours worked by a similar full time employee.
Individuals not covered by the Employment Act have their employment terms and conditions principally governed by their employment contracts, however they may also be covered in other legislation or regulation (e.g. seafarers, domestic workers).
Contracts can be fixed or indefinite. Term Contract employees (i.e. those on a fixed-term contract of employment) are an important part of the overall workforce and can still be covered under the Employment Act.
Who is covered under Part IV?
Part IV stipulates terms and conditions regarding rest days, hours of work, and other conditions of service.
It only applies to:
- A workman (manual laborer) earning a basic monthly salary of not more than $4,500.
- An employee who is not a workman, but is still covered by the latest Singapore Employment Act and earns a monthly basic salary of not more than $2,600.
Keep in mind that Part IV of the Act also does not apply to managers or executives.
Does the Employment Act cover foreigners?
Yes, the Employment Act covers employees regardless of nationality, working in Singapore, subject to the exceptions set out above (e.g. it excludes domestic workers who are foreign).
Employers of foreign employees will in addition have to consider the Employment of Foreign Manpower Act (EFMA) which regulates the employment of foreign employees and specifies the conditions for the grant of Employment Passes, S Passes, work permits (all types of work visa depending on the type of employee) to foreign employees. The EFMA empowers the Ministry of Manpower to require all employers to make reasonable efforts to provide fair employment opportunities to Singapore citizens.
The EFMA lists different responsibilities related to application and cancellation of work passes, medical insurance, levy, employment cancellation, and repatriation.
What needs to be included in an employment contract?
The Employment Act requires all employers to issue key employment terms (“KETs”) in writing to employees covered under the Employment Act who have been hired on or after 1 April 2016 and employed for a continuous period of 14 days or more.
KETs must include as a minimum certain specific terms, covering details such as job title, working arrangements, salary and overtime payments, bonuses, leave entitlement, medical benefits and notice period. Common key employment terms can be covered in an employee handbook or on the company intranet instead. While the EA does not contain any provisions relating to probationary periods, periods of between one and six months are common. An employer must also issue itemised pay slips to an EA employee, covering salary details, allowance, additional pay and other deductions, overtime details, and net salary paid in total.
Minimum employment rights
An employee’s minimum employment rights depend on whether he or she is covered under the EA or not. Generally, minimum entitlements apply to EA employees only. For employees not covered under the EA, any employment rights must be agreed and specified in the employment contract, unless such worker comes under other legislation. Of course employers may grant contractual benefits that exceed these minimum entitlements.
Minimum wage and social insurance
Wages are stipulated according to the agreed terms of the employment contract between the employer and the employee. The Employment Act does not prescribe any details regarding the minimum salary or wage for employees, so the minimum salary will be determined by the employer. Nevertheless, many employers choose to have regard to guidance provided by the National Wages Counsel when setting wages, and annual guidelines give recommendations on appropriate wage increases, based on the country’s economic circumstances.
Singapore has a comprehensive social security system called the Central Provident Fund (“CPF”). It was established to provide financial security to employees when they retire, but also provides housing, education, medical and death benefits. Coverage is mandatory for Singaporean citizens and permanent residents (with very limited exceptions) and the employer is required to make contributions to its employees’ CPF accounts if the employee earns more than $50 a month (applicable even if you are working on a part-time/ ad-hoc/ contract basis or during your probation). The contribution rates vary depending on factors such as the employee’s age, salary and whether the employee is a Singapore citizen or a permanent resident. It is common for employers to offer additional benefits to more senior employees. Employers are required to pay both the employer and employee’s share of CPF contributions every month. Employers are entitled to recover the employee’s share of the contribution from the total wages if the employee earns more than $500 per month.
Working hours (Part IV)
Only employees covered under Part IV of the EA have limits on their working time (see above). In general, an employee covered under Part IV of the EA should have contractual working hours
not exceeding 8 hours a day or 44 hours a week (excluding break time for rest, meals or drinks and overtime). Any hours of work above this are considered overtime and overtime pay must be at least 1.5 times the hourly basic rate of pay, irrespective of the basis on which his rate of pay is fixed. Overtime must not exceed 72 hours per month. The employee is also not required to work more than 6 consecutive hours without a break. Employers have to confirm the hours of work in the employment contract.
Employers under Part IV must also have one (unpaid) rest day per week. Generally, with certain exceptions,the maximum hours of work which can be done in one day is 12 hours.
Rest days (Part IV)
This provision applies to employees covered under Part IV of the Employment Act. Employees can have one rest day per week without pay. This day can be any day of the week.
If an employer can’t allow an entire day for rest to shift workers, the rest day has to be a continuous period of 30 hours.
Public holidays
Every year, employees are entitled to 11 paid public holidays. If you are required to work on a holiday, the employer should pay an extra day’s salary or grant a day off in lieu.
If a public holiday falls on any of the rest days, a paid holiday will be the next working day.
The 10 annual public holidays are:
- New Year’s Day (1 January)
- Chinese New Year (two days in January / February)
- Good Friday (March / April)
- Hari Raya Puasa (March – May)
- Labour Day (1 May)
- Vesak day (May)
- Hari Raya Haji (May – July)
- National Day of Singapore (9 August)
- Deepavali (October / November)
- Christmas (25 December)
Annual leave
If an employee has been working for the employer for at least three months, they are entitled to paid annual leave. The number of days of annual leave is based on the years of service completed by the employee in the company; an employee is entitled to paid annual leave of 7 days for the first year of continuous service with the same employer, and one additional day for every subsequent year with the same employer, but subject to a maximum of 14 days’ annual leave.
The employment contract may stipulate entitlement to more annual leave. For employees not covered under the EA, their entitlements to annual leave will depend on what has been agreed in the contract of employment.
Sick leave
An employee is entitled to paid sick leave if they meet the conditions listed below:
- The employee must have been working for the company for a minimum of 3 months.
- They must inform, or have tried to inform, their employer about their absence within 48 hours.
- They need to submit a certificate from a government doctor or a company’s doctor.
The number of sick leave days an employee is entitled to varies depending on whether the employee has been in continuous service for 3, 4, 5, or 6 months or more. Paid sick leave is up to 14 days per year if the employee has 6 months of continuous service (where hospitalisation is not required) and up to 60 days where hospitalisation is required.
Parental Leave
The changes made to the EA in 2019 included enhanced maternity leave benefits as part of a drive to boost Singapore’s birth rate. Generally, all female employees who are working mothers can claim paid maternity leave and are protected from dismissal during maternity leave. The Child Development Co-savings Act of Singapore (Chapter 38A) (“CDCA”) provides extended maternity leave benefits beyond those laid out in the EA, but with more stringent eligibility requirements. A CDCA eligible employee is entitled to a total of 16 weeks of maternity leave whereas an employee who is only covered under the EA is entitled to 12 weeks of maternity leave. To qualify for paid maternity leave under the CDCA, the child must be a Singaporean citizen and the employee must have worked for her employer for at least three months before the child’s birth.
For paternity leave, since 1 January 2017, fathers are entitled to two weeks of paternity leave under the CDCA. Similarly, to qualify for this paid leave under the CDCA, the child must be a Singaporean citizen and the employee must have worked for his employer for at least three months before the child’s birth. In addition,the father must be or must have been lawfully married to the child’s mother between conception and birth.
Paid Childcare leave
Eligible employees whose youngest child is under 7 years old are entitled to annual paid childcare leave. Working parents of a Singaporean citizen child have enhanced entitlements under the CDCA and receive 6 days of paid childcare per year. Working parents of non-citizens can get 2 days of childcare leave a year in accordance with the Employment Act. To be eligible, the employee must have worked for their employer for at least three months.
Terminating an employment contract
Terminating employment is relatively straightforward in Singapore and largely governed by the written agreement between the employee and the employer. An employer is not required to state its reason for terminating employment, so long as termination is effected in accordance with the contract and the notice period stipulated in it.
Statutory minimum notice periods apply to employees covered under the EA, ranging from one day to four weeks, depending on their length of service.In the absence of a longer notice period set out in the employment contract, the following shall apply
- Employment duration shorter than two weeks: one-day notice period
- Employment tenure of 26 weeks to two years: one-week notice period
- Employment tenure of 2 to 5 years: two weeks’ notice period
- Employment tenure of 5 years or more: Four-week notice period
It is possible for an employer to pay the employee salary in lieu of notice. There is no form of statutory severance payment and it is not common for employers to make such payments.
Misconduct is the only legitimate reason for dismissal without notice. An employer may, after due enquiry, dismiss an employee without notice for misconduct. Misconduct includes but is not limited to theft, dishonest or disorderly conduct at work, insubordination, and bringing the organisation into disrepute. If an employer intends to dismiss an employee without notice on this ground, then it is important that the employer can demonstrate that there has been some form of due inquiry before a termination is exercised (to avoid a claim for wrongful dismissal if the employer is unable to prove such misconduct). A proper inquiry includes providing an opportunity for the employee to be heard.
Wrongful dismissal
As above, provided that an employment contract is terminated with proper notice (in accordance with an employee’s minimum EA rights if applicable), contractual terminations are presumed not to be wrongful since both employer and employee have a right to terminate the employment in accordance with the contract. Employers do not need to give a reason for termination and should consider carefully if they do so other than stating they are relying on the contractual right to termination. Employers should ensure that there are no facts, incidents, or situations which could suggest the employer’s intention was to terminate due to discrimination, to deprive the employee of benefits and entitlements, and/ or to punish an employee for exercising an employment right.
The following are examples of wrongful dismissal. Wrongful dismissal can be evidenced by the notice given (if a reason was provided) or by recent conduct / events in the company (if a reason was not provided in the notice or where the employee was summarily dismissed).
- Dismissal on discriminatory grounds (i.e. if it is based on age, gender, disability, family responsibilities, nationality, pregnancy, race or religion);
- Dismissal to deprive an employee of benefits or entitlements (e.g. a dismissal based on ill-health as the company is intending to deprive the employee of their medical entitlements under the statute and/or employment contract, or employees dismissed shortly after informing they are pregnant).
- Dismissal to punish an employee for exercising an employment right;
- Dismissal based on grounds which are unsubstantiated The most common ground cited in terminations with or without notice tends to be poor or unsatisfactory performance or misconduct. If this is cited as the reason for dismissal, the employer bears the burden of proving that ground for dismissal and if the employer is unable to prove this, the dismissal may be considered wrongful.
- Involuntary resignation: Most employees who rely on this ground state that they were placed under duress by the company and had involuntarily resigned or were forced to resign, and as a consequence, they were deprived of certain employment benefits, such as retrenchment or the full notice per their employment contracts.
Redundancies or retrenchment
There is no legislation specifically relating to collective or individual redundancies. The Employment Act states that employees who have worked with an employer for less than two years are not entitled to retrenchment benefits, therefore implying that employees who have served at least two years or more may be eligible for such retrenchment benefits. In any event, the Employment Act does not specify the quantum of such benefits. The Ministry of Manpower has produced guidance which employers should follow in a redundancy situation and encourages businesses to take reference from guidance which employers should follow. The guidance urges companies to pay employees retrenchment benefits benchmarked at two weeks to one month per year of service. This guideline may be departed from, depending on a company’s financial position and industry practice. While this guidance does not constitute binding legislation, employers are strongly recommended to abide by it. Non-compliant employers may face administrative penalties such as fines and curtailment of work pass privileges, or face closer scrutiny from the Ministry.
Employers with at least 10 employees will have to notify the Ministry of Manpower of all staff retrenchments or redundancies regardless of the number of employees affected from 1 November 2021. This mandatory retrenchment notification with the Ministry of Manpower must be filed within five working days of giving notice of retrenchment to affected employees.
Employment Claims Tribunal for wrongful dismissal and salary-related disputes
On 1 April 2017, the Employment Claims Tribunal (“ECT”) was set up for the purposes of providing employees and employers with a speedy and low-cost forum to resolve salary-related disputes and, from 2019, wrongful dismissal claims. Employees can also claim for a breach of employment contract in the civil courts.
The ECT is a division of the State Courts. The ECT covers all employees (except domestic workers, public servants and seafarers) regardless of salary levels.
Before a claim is filed at the ECT, employees must first submit a mediation request at the Tripartite Alliance for Dispute Management (TADM). On being issued a claim referral certificate by the TADM mediator if the dispute remains unresolved, a claim can be filed at the ECT.
Useful links (last updated in December 2022)
If you have any questions, feel free to contact us.
- The Ministry of Manpower website has useful resources for employers and employees. The following in particular might be helpful:
- Guide on employment practices
- If you cannot find your answer on the website, you can send an enquiry to MOM
- National Wages Counsel 2022/2023 guidelines
- Tripartite Guidance on fair employment practices in Singapore
- ECT website
- Employment Claims Tribunal Guide
