Overview of the Singapore Employment Act

In Singapore, the relationship between employer and employee is determined largely by the contract of service (COS) between them. Parties are free to contract as they choose and any matters arising between them would first have to be resolved by referring to either the express and/or implied terms of the contract in question.

The Singapore Employment Act (EA) provides the basic terms and conditions of employment, and the rights and responsibilities of employers and employees under a COS. This is to prevent unreasonable restraints and limitations on the parties involved.The Singapore government also ensures that the Act, while in line with the international legislation, provides adequate protection to all vested parties in the process of employment.

Developing a harmonious labor, industrial and government relationship has remained the top priority of the legislation.

The principal statutes regulating employment in Singapore are contained in EA and other pertinent statutes shaping employment practices. These include the Workplace Safety and Health Act (WSHA), the Child Development Co-Savings Act (Cap 38A) (CDCSA); the Retirement Age Act (Cap 274A) (RA); the Trade Unions Act (Cap 333) and the Industrial Relations Act (Cap 136) (IRA).

To reflect the massive change in employment landscape that is fast departing from the conventional practices in terms of time, payment, mode of work and type of talent, the EA (Cap 91), which was first passed in 1968, has been amended.

At present, some amendments to the EA have come into effect to better protect more workers, introduce some flexibility to employers, and enhance enforcement and compliance with employment standards.

Who does the Employment Act Cover?

The Singapore Employment Act does not cover the following groups of workers:

• Professionals, Managers and Executives (PMEs) whose basic monthly salaries (BMS) exceed $4,500
• Seamen
• Domestic workers
• Staff of the Singapore Government or a Statutory Board

However, the EA covers other employees under a COS, regardless of nationality, including:

• PMEs whose BMS are S$4,500 or less*
• Workmen (manual workers) whose BMS are S$4,500 or less and
• Other employees whose BMS are S$2,500 or less.

*except for part IV of the EA, which provides for protection for rest days, hours of work and overtime.

Related Post: What are the key labour law changes?

Summary of EA Coverage

What is a Contract of Service?

A Contract of Service (Employment Contract) is a verbal or written agreement expressing:

• one person’s agreement to employ another as a staff and
• the agreement of the other person to serve as a staff to the employer.

An apprenticeship or internship contract can be bound under a Contract of Service.

Important!

• If any terms and conditions in a contract of service are less favorable than the relevant provision under the Employment Act, then those terms are considered illegal, null and void. The provision in the EA will take precedence over that particular contractual term.
• An employer cannot change any terms in the employment contract unless the employee agrees to it in writing.

The Employment Contract is not a Contract for Services. A Contract for Services (CfS) is an agreement between an independent contractor and a client (company). No employer-employee relationship is established in this case.

The basic features of an Employment Contract are:

1. Job title and job scope
2. Employee’s commencement date and employment period
3. Hours of work
4. Probation period
5. Salary
6. Employee benefits
7. Code of conduct
8. Termination and retrenchment

Job title and scope of work

The Employment Contract must clearly state the designation of the employee. It must also clearly define the job scope to be fulfilled by the employee.

Commencement date and employment period

The Employment Act does not apply if a new recruit does not turn up for work after signing the Employment Contract. This is because the employer-employee relationship has not begun.

Hours of Work and Overtime

An Employment Contract must clearly state:

• the daily working hours,
• number of working days in a week as well as
• number of rest days in a week.

An employee covered under Part IV of the Employment Act is not required under his/her contract of service to work more than 8 hours in a day or 44 hours in a week.

Employers that require their staff to work over 12 hours per day are required to apply for overtime exemption from the Ministry of Manpower, according to Section 40 of the Employment Act.

For information on overtime salary payment, please see the Salary section below.

Probation period

The Employment Act of Singapore does not have any clauses that specifies the probation period for employees. However, the standard practice in Singapore is to have a probation (assessment) period ranging between 3 and 6 months, to gauge the performance of the new employee.

Salary

Singapore does not implement a minimum wage.

Salary earned by an employee shall be paid before the expiry of the 7th day after the last day of the salary period.

Additional payments for overtime work shall be paid no later than 14 days after the last day of the salary period during which the overtime work was performed.

Even though the salary threshold of non-workmen will be increased to $2,500, the overtime rate payable will be capped at $2,250 to help employers manage costs.

In addition, currently, employers cannot deduct more than 25% of the employee’s salary for accommodation, amenities and services expenditure.

Penalties

Failure to pay an employee’s salary in accordance with the EA is considered an offence. Employees who are not paid for work done can report employers to MOM for investigation.

In addition, employment inspectors will be granted the power to enter any workplace to conduct checks and arrest any person whom he reasonably believes is guilty of the failure to pay salary.

In general, the person accountable for this and other EA offences will be either the directors or partners of the company. This is because they have failed to exercise reasonable oversight, and presumed to be negligent. They will then have to show evidence of having exercised reasonable supervision.

If found guilty, employers face a fine of S$3,000 – S$15,000 and/or 6 months’ jail for a first-time offence. A subsequent offence will be liable to a fine of S$6,000 – S$30,000 and/or 12 months’ prison time.

Currently, the maximum composition fine is S$5000, up from S$1000.

Payslips

In H1 2014, Tripartite Guidelines and tools will be issued to encourage companies to provide itemized payslips and maintain employment records of employees.

Employee benefits

In Singapore, employee benefits include annual leave, medical leave, pension fund contributions, staff incentives and bonuses as well as related family (maternity, paternity and childcare) benefits.

Annual leave

In accordance with the EA, employees must have served at least 3 months with their employer to be entitled to paid annual leave. An employee is entitled to at least 7 days of paid annual leave in the first year of service. However, the standard practice in Singapore is at least 14 days of paid annual leave per annum.

Sick leave

An employee covered by the Employment Act is entitled to paid sick leave if he has fulfilled the following:

• He has served the employer for at least 3 months;
• He has informed the employer of his absence within 48 hours;
• His medical leave is proven by a doctor, general practitioner or dentist via the medical certificate, commonly known as MC in Singapore.

The number of sick and hospitalization leave days an employee is entitled to depends on the duration of his service. Employees who have worked for three months are entitled to at least 5 days of sick leave and 15 days of hospitalization leave. The maximum number of sick and hospitalization leave days an employee is entitled to are 14 and 60 days respectively.

Currently, sick leave no longer falls under Part IV of the EA, but under Part X. PMEs earning $4,500 or less will now be entitled to sick and hospitalization leave.</em

Maternity leave

Under the Child Development Co-Savings Act, a female employee is entitled to 16 weeks of paid maternity leave if:

• she is lawfully married to the father of the child;
• the child is a Singapore Citizen;
• she has served her employer for at least 90 days before the child’s birth or
• she has been continuously self-employed for at least 90 days before the child’s birth and has not lost her source of income during her maternity leave period.

In the case where the mother is single, the child is not Singaporean or the parents are foreigners working in Singapore, whether full time or on a contractual basis, women covered by the Employment Act are still entitled to 12 weeks of maternity leave.

Paternity and shared parental leave

Working fathers, including self-employed ones, are entitled to 1 week of government-paid paternity leave as well as share 1 week of the spouse’s 16-week maternity leave if:

• he is lawfully married to the mother of the child;
• the child is born on or after 1 May 2013 and is a Singapore citizen
• he has served her employer for at least 90 days before the child’s birth or
• he has been continuously self-employed for at least 90 days before the child’s birth and has not lost his source of income during the paternity leave period.

Childcare and infant care leave

Under the Child Development Co-Savings Act, an employee is entitled to 6 days of unpaid infant care leave and 6 days of paid childcare leave per annum (regardless of the number of children) if he or she fulfils all of the following conditions:

• For childcare leave: The child is no older than 7 years old;
• For infant care leave: The child is under 2 years old;
• The employee has worked with the employer for at least 3 months;
• The child is a Singapore Citizen; and
• The child’s parents are/were lawfully married

If the parent is self-employed, he/she must be engaged in business for at least 3 months and must not have lost his/her source of income during the childcare or infant care period.

The first three days of childcare leave will be covered by the employer and the last three days will be borne by the Government (capped at $500 per day, including CPF).

Marriage and parenthood-related amendments will be announced in due course.

Retirement fund contributions

The EA does not require an employer to pay retirement benefits to an employee, unless it is stated in the employment contract.

However, an employer in Singapore must make monthly CPF (Central Provident Fund) contributions for all Singaporean and Singapore Permanent Resident staff earning more than S$50 per month. This, along with the submission of the employee’s contributions, must be done within 14 days from the end of a month and at the rates set out by the CPF Act.

Workers holding the S Pass, Employment Pass, EntrePass, PEP and temporary work permits do not require CPF contributions.

Overseas Singaporeans and self-employed Singaporeans can make voluntary contributions to their CPF accounts.

Staff incentives and bonuses

Though not explicit in the EA, many Singapore companies offer staff incentives in terms of monetary bonuses and variable payouts to motivate employees to give their best as well as to retain and attract talent.

There are three types of staff incentives in Singapore namely, the AWS, the bonus and variable payment.

The AWS stands for Annual Wage Supplement. It is commonly known as the 13th month “bonus” paid by the company to supplement the annual wage.

The variable payment, like the bonus, is a reward for the employee’s contributions or increased productivity.

Employers are under contractual obligation to pay any of these incentives if they are stated clearly in the contract.

Code of conduct

An employer may not change the terms and conditions of an Employment Contract without the employee’s written agreement to those changes. If either party does not agree to the changes, both parties must negotiate for more acceptable terms.

Termination and retrenchment

The employer and employee can terminate an Employment Contract. Either party must give each other a written notice of the termination according to the notice period in the contract. If there is no notice period, the length of notice will be determined by the EA and may be from 1 day up to 4 weeks, depending on the length of service.

If either party wishes to terminate the employment before the notice period, either must pay the other a sum equal to the salary earned during that period.

Any party may terminate the employment contract if either of them has breached the terms of the contract or misconduct.

The employer cannot reject an employee’s resignation. This is an offence punishable by a fine of up to S$5,000 and/or imprisonment of up to 6 months, or both.

Presently, the non-eligibility period for retrenchment benefits will be reduced from 3 years to 2 years, as employment tenures have become shorter.

PMEs earning up to $4,500 must have served with the same employer for at least 12 months to seek redress against unfair dismissal with notice. This will provide employers time to assess suitability of the staff for their jobs.

Public Holidays

All employees covered by the Employment Act are entitled to 11 paid public holidays in a year.

The 11 gazetted public holidays are:

• New Year’s Day
• Chinese New Year (two days)
• Hari Raya Puasa
• Hari Raya Haji
• Good Friday
• Labour Day
• Vesak Day
• National Day
• Deepavali
• Christmas Day

Employers will be allowed to grant time-off in-lieu to PMEs who are required to work on public holidays. In the absence of mutual agreement, at least half a day off in-lieu must be granted.

All other employees covered under the EA are entitled to an extra day’s salary at the basic rate of pay, on top of the gross rate of pay for working on a public holiday.

Where a public holiday falls on a rest day, the employee is entitled to an additional day’s salary, or a day off in lieu (which can be added to his annual leave.)

Age Considerations

The legal age to work in Singapore is 13 years old. Children aged 13 – 15 years are only eligible to conduct light or casual work. A child of this age cannot work in industrial sectors unless he/she is under the personal charge of a parent.

Youth aged at least 16 years old may engage in industrial work upon fulfilling medical requirements and notifying the Commissioner for Labor.

According to the Retirement Age Act (RAA), the retirement age in Singapore is 62 years. However, employers must offer re-employment to eligible employees up to the age of 65. In the 2014 Budget statement, it was announced that the government is looking into raising this limit to 67 years.

Hiring Foreign Employees

Under the Employment of Foreign Manpower Act (EFMA), all foreign workers must have a valid Singapore work visa in order to legally work in Singapore. Failure to do so will result in prosecution under the EFMA and up to S$30,000 fine and 2 years jail per infringement.

The foreign workforce in Singapore is classified into three main groups:

• Professionals
• Mid-skilled workers
• Skilled and semi-skilled workers

If you wish to hire a foreign professional, you will have to apply for a Singapore Employment Pass or S Pass on his/her behalf before commencing employment with you.