A Glance at PEO in Singapore
Social Insurances
All employees are required to contribute to the Central Provident Fund (CPF), a savings scheme for employees to accrue money for access to healthcare and housing. Depending on the type of employment, the age of the employee, current on-going plans initiated by the government, and even the industry, the amount of CPF that an employee must contribute or not is a puzzle to solve every time it’s payroll day. With PEO services, these fiddlesome calculation need not be a trouble, and you can just sit back and relax before receiving an accurate invoice from us.
Work Passes
Unlike many countries, Singapore offers a large variety of work passes if a foreign employee wish to work in Singapore. Employers would have to determine what specific category will their employee fall under, and apply for a visa accordingly, while bearing the risk that application may not be successful as Singapore limits the number of foreign employees present per work place. With our PEO services, you can trust us to help you hire foreign employees with the right application and paperwork, all while staying fully compliant with local legislations.
Types of Employments
In Singapore, part-timers and contract workers enjoy almost the same protection as permanent full-time employees. However, it is generally assumed that these employees do not necessarily get to enjoy the full range of benefits such as health insurance and mobile contract plans offered to permanent full-time employees, and it is up to each employer to decide. Firms can also hire local students as any type of employee. An internship would be special, however, as employers are not required to contribute CPF for one. We can draft up appropriate employment contracts most suited to your company’s and the employee’s needs, and offer just the right amount of flexibility and benefits. With Link Compliance, both employer and employee will be left satisfied.
Healthcare Benefits
Employee benefits are a major consideration for an employee to join your team. Singaporean employees may have their healthcare partially covered by the public healthcare system which subsidizes visits to government healthcare providers, but prices for private clinics may remain costly. Employers offering attractive benefits packages, such as one that provides discounts for health check-ups, dental care and private medical care providers, are more likely to attract top quality candidates. We can help you process the claims for all of these benefits accurately and efficiently, ensuring higher levels of satisfaction for both employers and employees.
Tax Filings
An employer is required by law to prepare Form IR8A and Appendix 8A, Appendix 8B or Form IR8S (where applicable) for employees who are employed in Singapore by 1 March each year, and employers with more than 5 employees will have to submit these forms electronically by default, as per the Auto Inclusion Scheme. For employers with less than 5 employees, they will be required to provide the hardcopy of the forms to the employees in order to facilitate the employees carrying out their individual income tax assessment individually. In Link Compliance, we can ensure that these forms are filled accurately and punctually, as per our PEO services.
Termination
In Singapore, employers are only required to give an advanced warning to the employee before termination. There is no rule set in stone for this, but each company usually has its own notice period. As for foreign employees, termination procedures are a little more complicated; in order to facilitate tax clearance before the foreign employee leaves Singapore, a company is required to withhold all monies due to the employee and inform the Inland Revenue Authority of Singapore (IRAS) via Form IR21 at least 30 days before the date of cessation of employment. Link Compliance will ensure that all relevant steps are taken to ensure the smooth transition of employees in and out of the company.
Employment Laws and Regulations
Employment Act CoverageSocial Security FundsForeign EmploymentPayrollingPersonal Data Protection Act (PDPA)
Workman and non-workman are covered differently under the employment act.
Employees covered under employment act are further divided into those who earn above SGD2000/month and under, with those earning under SGD2000/month receiving more coverage/protection comparatively; they can work a maximum of 6 days in a week, an overtime of a maximum 72hours per month, and they are to be paid 1.5x of their regular wages.
Meanwhile, workers occupying managerial & executive positions are not covered under part IV of the Employment Act, which protects workman and non-workman earning less than SGD2600/month. This means that regulations governing maximum overtime hours and pay do not apply for higher-level positions, as well as civil servants and professionals like doctors and lawyers.
Social security in Singapore is operated through the country’s Central Provident Fund (CPF). Employers and employees must both make monthly contributions, rates varying depending on the employee’s age and if they are still in their first two years as a Permanent Resident of Singapore. The typical contribution rates, for an established resident aged 55 or under, are 20% from the employee and a further 17% from the employer.
Employers must also contribute (on behalf of their employees) to the Skills Development Fund (SDF) at a levy rate of 0.25% up to the first SGD4,500 of gross monthly remuneration. The SDF provides grants to employers who send their employees for training.
Types of Work Passes
Singapore has a wide variety of work passes for foreign employees, specifically tailored for certain employee types. This can be broken down into two major categories: professionals, and skilled/semi-skilled workers.
Foreign professionals, managers and executives would largely fall under “employment pass”. There is a minimum salary requirement of more than SGD5,000/month and the person must possess acceptable qualifications. Other types of professional passes include entrepreneur passes and personalized employment pass, which has other requirements.
Passes for skilled and semi-skilled workers are more sector/occupation-specific, or in the case of S-Passes, a requisite of a fixed income of at least SGD3,000/month for mid-level skilled staff. Work passes such as Work Permit for Foreign Workers are given to the semi-skilled workers entering the construction/manufacturing sector etc.
Foreign Talent Quota
The foreign worker quota for a company is determined from the CPF account of the company. The employer’s CPF contribution will indicate the number of local workforce hired. Every local staff working as full-time staff for a calendar month (or two part-time local workers) constitutes one headcount.
Singaporean Citizen or Permanent Resident employee hired under a contract of service (including the company’s director) is counted as:
- 1 local employee if their Local Qualifying Salary(LQS) is at least $1,300 per month.
- 0.5 local employee if their LQS is at least $650 to below $1,300 per month.
The formula for the maximum number of foreign workers a company is allowed to employ is as follows: (DRC* % x local manpower) / (100% – DRC%)
*Dependency Ratio Ceiling (DRC): refers to the maximum permitted ratio of foreign workers to the total workforce that a company is permitted to employ)
All employers must issue itemized payslips (either soft or hard copy) to their employees covered by the Employment Act. It must include the following details:
- Date of payment
- Basic salary and allowances
- Overtime pay
- Salary period
- Deductions made
Failure to do so will result in a fine. Employers are also required to maintain detailed employment records of employees covered by the Employment Act in soft or hard copy, including handwritten records. Records must be retained for the past two years for current employees and the last two years (including one year after leaving employment) for ex-employees.
Salary must be pro-rated if the employee works for an incomplete month.
Employers hiring foreigners with Work Permits of S Passes will have to pay monthly levies for each worker.
Singapore has put in place the Personal Data Protection Act (PDPA), which regulates requirements governing the collection, use, disclosure and care of personal data in Singapore. This affects how employers and organisations will have to handle (potential) employee data, and failure to comply can result in fines.
Here are some guidelines employers will have to follow to ensure that PDPA is upheld:
- An individual’s NRIC (National Registration Identification Card) number should only be required in the final part of recruitment process; i.e., when they accept the position.
- Resumés belonging to rejected applicants can only be retained for a short period of time, and will have to be disposed in a secure manner that ensures no leakage of data.
- The individual’s consent must be required in case of transferring the individual’s resumés to other departments for consideration of alternative positions. Employers can state on job listings that their organisation will be considering the applicant for alternative positions in order to acquire consent in advance.
Singapore’s Statutory Holidays
| Public Holidays | Date (2024) |
|---|---|
| New Year’s Day | 1 Jan |
| Chinese New Year | 10-12 Feb |
| Good Friday | 29 Mac |
| Hari Raya Puasa | 10 Apr |
| Labor day | 1 May |
| Vesak Day | 22 May |
| Hari Raya Haji | 17 Jun |
| National Day | 9 Aug |
| Deepavali | 31 Oct |
| Christmas Day | 25 Dec |