Starting a Recruitment Agency: Your 10-Steps Go-to Guide
Rising unemployment, growing hiring needs, foreign talent recruitment and an inflationary economy – all make recruitment a lucrative business. If you are looking at starting a recruitment agency, here’s an ultimate guide that can help you with setting up and growing this business. In Singapore, recruitment agencies place both local or foreign candidates in positions from entry to executive levels. Some specialize in certain industries while others operate on a more general scale. With the country being an attractive option for foreigners – especially those in executive and middle-management levels – recruitment agencies have been a good source for them to find suitable candidates to work here.
This article will discuss how to start a recruitment agency in Singapore, the legalities surrounding it, and the processes involved.
Overview:
- Check whether you need an Employment Agency (EA) license
- Decide which kind of license you need
- Preparing to submit your EA license application
- Who must submit the application
- Submit your EA license application
- Your in-principle approval
- Appealing a rejection
- Your EA license and how it can be suspended or revoked
- How to incorporate your company in Singapore
- Get started with Sleek
Opening a recruitment agency in Singapore
There are two stages involved in starting a recruitment agency in Singapore. The first step is to incorporate your business, which is the usual process you’d have to go through regardless of the type of company you’re registering in Singapore. This is because only businesses, not individuals, can be licensed as an employment agency.
The second stage relates to obtaining the relevant licenses to operate a recruitment agency in Singapore. This is known as an Employment Agency (EA) license and comes under the jurisdiction of the Ministry of Manpower (MOM). This license is required whether you’re placing candidates in local or overseas positions.
Here are the 10 steps you need to follow to start the recruitment agency that you have been planning for.
1. Starting up a recruitment agency: Check whether you need an Employment Agency (EA) license
An EA license is needed if your business does any of the following activities:
- Communicate with jobseekers with the express purpose of processing their job-related applications
- Receive resumes from jobseekers for the purpose of potential employment
- Submit work pass applications on behalf of jobseekers or employers
- Place individuals looking for work with an employer
Businesses do not need an EA license if they’re recruiting candidates for their own company or outsourcing their staff to a customer’s office. This exception also applies to companies that are wholly web-based job portals, individuals or companies that operate job bulletin boards but do not process any placements, or organizations that submit work pass applications but do not match or place candidates.
So, if it is a recruitment agency you are looking to begin – you need an EA license.
2. Licenses recruitment agencies need to get: Decide which kind of license you need
There are four types of EA licenses, and what you apply for depends on the type of workers you want to place.
- Comprehensive License (All): Applies to agencies recruiting workers from any country.
- Comprehensive License (Local): For agencies recruiting only workers who are Singapore Citizens or Permanent Residents.
- Comprehensive License (non-FDW): This license is for the recruitment of local or foreign candidates who are not foreign domestic workers.
- Select License (SL): Applies to agencies that recruit candidates who earn more than S$4,500 a month.
All licenses are valid for three years and are obtained from MOM.
3. Certificate of Employment Intermediaries: Prepare to submit your EA license application
If your recruitment agency is applying for any of the comprehensive licenses, it’s essential to meet some other requirements\before submitting an application. All senior management and key personnel must get a Certificate of Employment Intermediaries (CEI). This is so that everyone in the senior team has good knowledge of Singapore’s employment laws and regulations. It also ensures that they understand their obligations under the law and can then advise their clients on their rights and responsibilities.
Key appointment holders need to be certified before the business is registered. Other employment agency personnel doing EA work should get this certificate before registration or within one month of registration. Candidates who do not get the CEI within the time frame will have their registration revoked. Any other personnel who need to be certified should do it before applying for a license.
There are two types of CEI courses:
- CEI (KAH) for key appointment holders (KAH) and other personnel.
This covers key legislation such as the Employment Act, Employment of Foreign Manpower Act (EFMA) and Companies Act. Depending on the license the company is applying for, the course will take 24, 32 or 40 hours. - CEI (Basic) for other employment agency personnel performing EA work.
This course covers only the key legislation relevant to their work. Its duration is also dependent on the company’s license, and ranges between 20 and 36 hours.
More information on where the courses are held and the fees involved can be found here.
4. Submission of Application to start a recruitment agency: Who must submit it?
Only certain individuals in a company can submit this application:
- Owner (for sole-proprietorship and partnership)
- Managing director and director (for company)
- Partner (for limited liability partnership)
- General partner (for limited partnership)
The person putting in an application also has to meet the following requirements:
- Be a Singapore Citizen or Permanent Resident
- Not be an undischarged bankrupt person
- Not have previous convictions for dishonesty or human trafficking
- Not have previously managed an employment agency that had its license revoked
5. Submission of your Employment Agency (EA) license application
Apply for your EA license through MOM’s platform, GoBusiness Licensing. A S$400 fee must be submitted with the application and a further S$100 has to be paid when the license is issued.
6. Your in-principle approval for starting a recruitment agency
Once an application has been submitted, you’ll receive an in-principle approval (IPA) notification via email or SMS within seven working days. You’ll then need to log in to GoBusiness Licensing to download the IPA letter. But there are still more processes involved here, before the license is issued.
- Within the next four weeks (which is how long the IPA is valid for), you’ll have to submit a security bond and banker’s guarantee documents.
- Get a security bond from a bank in Singapore in the form of a banker’s guarantee.
- The amount – known as the security deposit – varies depending on factors such as the type of license. All employment agencies in their first year of operation applying for a comprehensive license require a minimum security deposit of S$60,000.
- After that, it’s between S$20,000 and S$60,000, depending on factors such as if they have received any demerit points and the number of candidates placed in the space of a year.
- For agencies applying for a select license, the first-year sum is S$20,000. After this, it’s between S$20,000 and S$60,000 too.
The security deposit you require can be calculated here. Note that the security bond liabilities will be discharged six months after the license ends.
Fill in the Security Bond and Banker’s Guarantee forms provided by MOM (you cannot use any other type of forms for this submission). Note that the start date of the banker’s guarantee should be the date your IPA expires. Then take your IPA letter and this form to any bank to get the guarantee. The next step is to submit the security bond form, banker’s guarantee and other required documents by post to MOM.
It will take another seven working days to process your documents. Successful applicants will get a notification from GoBusiness Licensing that your application has been approved. Now, you have to pay the remaining S$100. Then your license will be processed and issued within three working days.
7. Appealing a rejection of the Employment Agency Application
If the processes are followed as they’re set out and all the required documents are submitted, your application should be accepted and a license granted. If, however, it is rejected, you have 30 days to submit a letter of appeal. This could take up to two weeks to process, as your case is assessed by a senior officer. You might also be asked to submit additional documents.
8. Your EA license and how it can be suspended or revoked
As mentioned, your EA license is valid for three years from the date it was issued. You can renew your license after this period but the application has to be submitted at least three months before your license expires. A S$400 application fee plus a S$100 renewal fee are required.
Recruitment agencies may be issued demerit points if they contravene the Employment Agencies Act, Employment Agencies Rules or Employment Agency License Conditions. Employment agencies that chalk up 24 demerit points will have their license suspended or revoked, depending on the case.
MOM can also revoke a recruitment agency’s license if it:
- Breaches licensing conditions
- Acts in a manner that is detrimental to clients’ or the public’s interests
- Ceases operating as an employment agency
- Stops EA operations for a continuous period of six months
- Commits a criminal offense
- Goes into liquidation or is wound up or dissolved
- Is no longer fit to continue holding this license
If your EA license has been suspended, you may continue working on any recruitment activities that have been initiated. But you cannot enter into any new placement negotiations or agreements. However, if your EA license has been canceled or revoked, you must immediately discontinue any recruitment activities.
If an EA continues to perform any prohibited activities while under suspension, MOM treats it as a company operating without a license. Personnel can then be fined up to S$80,000 or jailed up to two years, or both. They may also have their license revoked.
9. How to incorporate your company in Singapore
Here is all the essential info you need to register a Singapore company:
Company name: We recommend having a shortlist of three in case your first choice isn’t available.
1 or more directors: Directors must be individuals, aged 18 and above, who have not been disqualified to hold a directorship in Singapore or elsewhere.
1 or more resident directors: At all times you will need at least one locally-resident director. At the time of company registration, this is someone who is a Singapore Citizen, Permanent Resident, or holder of an EntrePass visa.
Between 1 – 50 shareholders: A shareholder can either be an individual or a legal entity like a trust or another company. Singapore permits 100% foreign ownership of Singapore companies.
Paid-up capital: The minimum paid-up/share capital for a company to register in Singapore is S$1. The share capital can be increased at any time post-business registration.
A registered address in Singapore: The address that is provided for the company must be located in Singapore. It must be a physical address; a P.O. Box will not be accepted.
Company secretary: Every company must appoint a company secretary. This individual will help the directors to prepare and file all necessary documentation to keep the company compliant.
Auditor: Unless the company has been exempted from audit (which is the case for most start-up companies), within three months of registration, every company must appoint an auditor.
For a definitive guide to registering a company in Singapore, check out our ultimate guide here. You’ll get the full picture of a Singapore company set up and will be ready for your company incorporation.
10. Get started with Sleek
Operating a recruitment agency is an ideal business idea in a market like Singapore, thanks to the buzzing corporate sector. With the right tools and legalities sorted out to run your company, your business journey could be an exciting one. If you’d like to learn more about how we can help you set up your Singapore recruitment agency, contact us here.
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