Singapore Employment Act
6 minute read
Singaporean labor laws are known for their efficiency, fairness, and business-friendliness.
This country has always held a high place in the world when it comes to the best labor-employer relations. It has been awarded more than once thanks to the great conditions it provides both for companies and employees.
However, just because Singapore is a great country for companies and workers from all across the globe, it doesn’t mean that there are no strict responsibilities regarding business and professional relations.
Employment-related regulations are an essential area of legal compliance and requirements that Singaporean companies have to follow. All businesses, in their capacity as employers, must comply with the employment laws when hiring, managing, and terminating workers.
As an employer, one has to decide the terms and conditions of an employment contract according to provisions of the employment law. If you have intentions of operating a business in Singapore or even working for a company there, it’s essential to understand this law.
Keep reading to find out more about the MOM Employment Act below.
What is Employment Act Singapore?
Singapore’s Employment Act of 1968 is the country’s primary labor legislation that governs the relations between the employer and the employees in a company. The act’s most important purpose is to maintain great employment standards and safeguard working conditions for employees.
The Ministry of Manpower Employment Act extends to the whole employment process. This includes the appointment stages all the way to an employee’s dismissal or termination. In other words, all fundamentals and terms of employment for all types of workers (there are various exemptions) are stipulated in this labour law in Singapore.
The way Singapore defines the relationship between an employer and an employee is through the service agreement between these two parties. The Employment Act (EA) summarizes all the legal responsibilities of employers. This means that all employers have to comply with the rights and duties of both employers and employees stipulated by the employment agreement.
Why is the Employment Act important?
The Employment Act is what ensures that these workers are properly compensated for their work. In other words, the Employment Act ensures that employers cannot exploit their employees.
For instance, some employers tend to deduct salary 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.
Should there be any suspicious activities, it is up to the employee to notify the relevant authorities about it. If their rights under the Employment Act are violated, legal action will be taken and the authorities will enforce the Act.
Who is covered under the Employment Act?
In general, all employees working under a contract of service are covered. However, there are certain exceptions.
For instance, Part IV of the Act dedicated to rest days, hours of work, and other conditions of service, does not deal with managers or executives.
The Act covers all individuals who are working under a contract of service with a company. It is valid both for local and foreign workers.
The terms stipulate that an employee can work:
- A full-time job
- A part-time job
- Under a special contract
Additionally, an employee can be compensated on the hourly, daily, monthly, or piece-rated basis.
Bear in mind that if an employee works 35 or fewer hours a week, they are considered to be a part-time employee. This kind of employment is regulated by the Employment of Part-Time Employees Regulations.
Individuals not covered by the Employment Act can find their terms and conditions in the employment contract they sign.
Contract employees are an important part of the overall workforce. In this case, employers are asked to adopt the Tripartite Advisory on Employment of Term Contract Employees.
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 Employment Act and earns a monthly basic salary of not more than $2,600.
Keep in mind that Part IV of the Act does not pertain to managers or executives.
Does the Employment Act cover foreigners?
The country’s Employment of Foreign Manpower Act (EFMA) regulates the employment of foreign employees and protects their well-being.
In addition, the Employment of Foreign Manpower Act prescribes all the necessary responsibilities and obligations for employing foreign employees in the city of Singapore. It deals with regulations and enforcement regarding offenses and work passes.
The EFMA lists different responsibilities related to work passes, applications, cancellations, medical insurance, levy, cancellation, and repatriation.
Foreigners covered by the Singapore Employment Act are entitled to:
- Hours of work, overtime, and rest days
- Public holidays
- Annual leave
- Sick leave
As an employer, you are encouraged to have a written employment contract with foreign employees that covers these areas.
Know that the well-being and entitlements for foreign workers (FDWs) are provided for under the EFMA. FDWs are not covered by the Employment Act.
Key changes to the act since 1 April 2019
Starting on 1 April 2019, the Employment Act went through various changes and amendments. The aim of this was to better cover all employed individuals.
The changes and amendments made to the Employment Act include the following:
- Coverage of all employees under the Employment Act
- Coverage of more non-workmen under Part IV of the Employment Act
- Wrongful dismissal claims to be heard by ECT
The changes listed here apply to all employees. They include existing and newly hired workers. Employers need to ensure that every employment term and condition complies with the revised employment law in Singapore from 1 April 2019.
Coverage of all employees under the Employment Act
Managers and executives earning a monthly basic salary of more than $4,500 are covered by the Employment Act. In other words, all employees in Singapore, excluding seafarers, domestic workers, and public officers, will be covered for core provisions.
- Minimum days of annual leave
- Paid public holidays and sick leave
- Timely payment of salary
- Statutory protection against wrongful dismissal
Seafarers, domestic workers, and public officers continue to be excluded from the coverage (the Employment Act). These categories are covered by other Acts and regulations because of the nature of their work.
Coverage of more non-workmen under Part IV of the Employment Act
Non-workmen that earn up to $2,600 are covered under Part IV of the Employment Act.
This part of the Act provides additional protections including hours of work, rest days, and overtime pay. At the moment, it covers workers earning up to $4,500 and non-workmen earning up to $2,500.
Wrongful dismissal claims to be examined by ECT
Any wrongful dismissal claims shall be heard by the ECT. These claims were examined by the Minister for Manpower prior to the changes of the Act.
Since the ECT already hears salary-related claims, this change aims at providing a more convenient one-stop service both to employees and employers.
Employees must register their wrongful dismissal claims at TADM (Tripartite Alliance for Dispute Management) for mediation. If it proves that the claims cannot be resolved through mediation, they shall be referred to the ECT.
Employers assistance package
If you are interested in how you can comply, please take a look at the guidebook provided here. It contains blank payslips and KETs that can be filled in by hand.
If you are getting IT service providers to adopt IT solutions for the Management and issuance of payslips, you can apply for Productivity and Innovation Credit (PIC).
If the company is an SME, it is also possible to contact the SME Centers for guidance on relevant government assistance schemes.
The Employment Act vouches for certain perks that all employees should know about. These perks include annual paid leaves, sick leaves, maternity benefits, paid public holidays, and so on.
Employers have to fulfill all the requirements stipulated by the Act and also draft the terms of contracts handed out to employees according to the Act.
Each employer has to follow the practices listed below when hiring individuals and keeping them employed.
All employers have to be aware that an employee needs to be at least 13 years of age to be eligible for any kind of employment. However, the age limit differs depending on the employee’s type of work.
For example, an employer cannot engage individuals aged 16 or below in any workplace with hazardous conditions that can lead to detrimental effects when it comes to a person’s health.
The wages are stipulated according to the agreed terms of the contract between the employer and the employee. The Employment Act does not prescribe any details regarding the minimum wage for employees.
According to the Act, the usual working hours of an employee are 8 hours a day up to a maximum of 44 hours a week. On top of that, no employee should work consecutively for 6 hours a day without any break.
Employers have to confirm the hours of work in the employment contract. The work hours do not include break-time for any meals, drinks, or rest.
This provision applies to employees that earn a monthly salary of no more than $2,500.
All employees are entitled to one rest day each week without pay. The rest day is either Sunday or any other day of the week.
If an employer can’t allow an entire day for rest to a shift worker, the rest day has to be a continuous period of 30 hours.
This provision applies to employees who earn a monthly salary of no more than $2,500.
Employees are guaranteed a total of 11 paid public holidays every year. The employer can replace the public holiday for another day by specifying the term in the agreement made between the two parties.
If a public holiday falls on any of the rest days, the next working day is considered a paid holiday. However, bear in mind that if an employee works on that day, the employer has to pay the employee full day’s pay.
An employee is guaranteed a paid annual leave if they have been working for the employer for at least three months. The number of days of annual leave is based on the years of service completed by the employee in the company.
- For 1 year of service, an employee is entitled to 7 days of annual paid leaves.
- For 2 years of service, an employee is entitled to 8 days of annual paid leaves.
- For 8 or more years of service, the employee is entitled to 14 days of annual paid leaves.
This does not mean that the employer cannot allow any additional leaves to an employee.
Again, this provision applies to employees that earn a monthly salary of no more than $2,500.
An employee is guaranteed paid sick leaves. However, they have to meet the conditions listed below:
- The employee must have been working for the employer for at least 3 months.
- They must tell their employer about their absence within a timeline of 48 hours.
- They need to submit a certificate by a company’s doctor or a government doctor.
The number of sick leaves an employee is entitled to depends on the years of service completed.
Parental and maternity benefits
According to the Act, a working mother can claim paid maternity leaves and working parents can claim paid child care leaves upon fulfillment of certain conditions.
For an employee to claim a leave of this kind, they must have completed at least 3 months in service. On top of that, the child for whom the employer provides such benefits has to be a citizen of Singapore.
MOM, along with the CPF Board, launched The Workright initiative in 2012. This initiative is designed to help employees and employers understand their rights and responsibilities stipulated by the Employment Act and CPF Act.
Workright organizes annual education campaigns through media publicity and on-site roadshows in the heartlands. Also, workright inspectors conduct workplace visits to ensure that employers comply with Singapore employment law.
As an employee, you should know about CPF contributions. This is an important part of the whole initiative, payable in cases of an employer-employee relationship (contract of service).
Employers have to pay both the employer and employee’s share of CPF contributions every month. They are entitled to recover the employee’s share from the employee’s pay.
CPF contributions are payable for Singaporeans and Singapore permanent residents (SPRs) who are:
- Working in Singapore under a contract of service
- Employed under a permanent, part-time or casual basis
On the other hand, if the employee is an SC or SPR working overseas, CPF contributions are not mandatory.
Singapore has been recognized as one of the best places for business thanks to its great laws. This is why business people from all parts of the world often choose Singapore as their business headquarters.
Nevertheless, understanding this very Act and employment laws of Singapore is of the utmost importance if you want to build a successful career or company in this country.
If you have any questions, feel free to contact us!