Quick Guide to Employment  Contracts in Singapore

Quick Guide to Employment Contracts in Singapore

Written By
Joy Cunanan
Updated on
May 6, 2024
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Singapore's labor market formerly exhibited a fair amount of stability. However, over the past two years, employee protection in Singapore has improved. In general, employees (regardless of nationality) who are under a contract of service with an employer and who are not seamen, domestic workers, government employees, or anyone in a managerial or executive position earning more than SGD 4,500 per month are covered by Singapore's Employment Act (Cap. 91). (EA Employees). Employees who are not covered by the Act (Non-EA Employees) are given some limited safeguards under other laws. However, the majority of their employment contracts serve as the legal framework for their employment terms and conditions.

This article will discuss an overview of employment contracts in Singapore, and the challenges during hiring, employment and termination.

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Challenges in Hiring

Immigration

Before they can work in Singapore, all non-residents must have a valid work pass. Normally, only certain employers and certain occupations are allowed for the holder of a work pass. Work permits, employment passes, S passes, personalised employment passes, miscellaneous work passes, training work permits, and training employment passes are only a few of the several categories available.

Singaporean-First Preference

Before moving forward with their application, employers applying for Employment Passes must post their job openings on the Job Bank for at least 14 calendar days (the Job Bank is a public platform that enables job matching between local people and employers). The job posting must be accessible to Singaporeans and adhere to the Tripartite Guidelines on Fair Employment Practices, including not using discriminatory language.

Jobs in companies with fewer than 25 employees, positions paying a fixed salary of SGD 12,000 or more, positions filled by Intra-Corporate Transferees (managers, executives, or specialists who worked for the company outside Singapore for one year or more before being posted to the branch, affiliate, or subsidiary in Singapore), and temporary positions lasting no longer than one month are all exempt from the requirement to advertise.

Structure and Documentation of Employment

An "open-ended" contract with a notice period is the typical employment contract in Singapore (subject to the protection that the law provides on unfair dismissal). A written employment contract is not required; it might be partially oral and partially written.

The following should be included in an employment contract at a minimum:

  1. Start of employment
  2. Appointment (job title and job scope)
  3. Hours of work
  4. Any probationary period
  5. Compensation
  6. Employee benefits (such as sick leave, annual leave, and maternity leave)
  7. Termination of the contract (notice period)
  8. A code of conduct (e.g. punctuality, no fighting at work)

Workers may sign a contract that commits them to a specific task or a specified amount of time of work, with the agreement ending when the task or time period is finished. Contracts with fixed terms are not required to state why they are fixed terms.

Challenges During Employment

Compensation, Working Hours, and Vacation Time

According to the Act, minimum pay rates for young people or minors working in specific fields or occupations may be established. However, there is now no minimum rate in effect.

Only the following employees (Part IV EA Employees) are subject to the provisions of Part IV of the Act regarding rest days, hours of work, and other terms of service:

  1. Employees covered by the Act who make a basic monthly pay of SGD 2,500 or less (excluding managers and executives)
  2. Manual laborers who make a basic monthly income of SGD 4,500 or less are considered workmen

No Part IV EA Employee may be required to work more than eight hours per day or more than 44 hours per week, according to Part IV of the Act. A continuous period of 30 hours may be substituted for a rest day in the case of shift workers, however, Part IV EA Employees are still permitted one rest day per week. For workers who are not Part IV EA Employees, the contractual clauses in their employment contracts will govern issues like rest days and work hours.

According to Part IV of the Act, a Part IV EA Employee who has worked for his employer for at least three months is entitled to paid annual leave of seven days for the first year of continuous employment and one additional day for each successive year, up to a maximum of fourteen days. Other employees' contractual rights as outlined in their employment contracts will govern issues like rest days, work hours, and yearly leave.

Rights of Family

For employees who meet the requirements, Singapore offers maternity, paternity, daycare, infant care, and adoption leave. The Act itself and the Child Development Co-Savings Act are the two pertinent statutes (Cap. 38A 2002 Rev Ed).

Under the Act, there is no statutory right to a marriage or compassionate leave. The employment contract or an agreement between the employer and employee will determine whether or not the employee is entitled to such leave.

Trade Unions

According to the Trade Unions Act (Cap. 333), a trade union is an organization of employees or employers that works to control employee-employer relations. It is stated that a trade union's goals are to improve working conditions for employees, advance their economic and social status, and increase productivity for the benefit of employees, employers, and the economy. Nothing in a contract of employment may prohibit an employee's ability to join or take part in the activities of a registered trade union as long as they are over the age of 16. Industrial action is allowed, but only if the majority of the members who would be impacted by it have voted in favor of it in a secret ballot. The three vital utilities of power, gas, and water are not subject to strike restrictions. Striking is not permitted for other critical services until 14 days' notice is given. The National Trades Union Congress has always had a tight working relationship with the government and employers as the national confederation of trade unions in Singapore's industrial, service, and public sectors. Labor disputes involving companies and unions are very uncommon.

Due to changes made to the Industrial Relations Act, professionals, managers, and executives (PMEs) will have better union representation and protection starting on April 1, 2015. Since the reforms, PMEs can now be collectively represented by rank-and-file unions instead of only as individuals without the benefit of collective bargaining. As a result, unions will be allowed to negotiate collective wage agreements and represent PMEs in any reemployment concerns.

Social Insurance

For working Singaporeans and Singapore permanent residents, the Central Provident Fund (CPF) is a mandated comprehensive savings plan that helps to pay for their housing, healthcare, and retirement expenses. Every eligible worker must make a monthly CPF contribution, as must their employer. According to the employee's age, contribution rates are tier-based and fluctuate often. The rates are 17% for the employer and 20% for the employee as of January 1, 2015, with a cap of SGD 5,000 on the employee's monthly wage. Both employee contribution rates will be reduced for those over 50.

Employee Information

Employers are subject to requirements under the Personal Data Protection Act (No. 26 of 2012) regarding the gathering, using, and disclosing of workers' personal data. The Act requires employers to seek their employees' consent before collecting, using, or disclosing personal information about them.

Limiting data collection, use, and disclosure to purposes that a reasonable person would deem appropriate is one of an employer's obligations. Other obligations include granting individuals the right to access and correct their data, making a good faith effort to ensure that the data is accurate and complete, protecting the data in its possession, and not keeping the data longer than is necessary to fulfill the purpose for which it was collected or for a legal or business purpose.

However, if it's for the purposes of determining an employee's suitability or eligibility for employment, the continuation of their job, or promotion, businesses may collect, use, and disclose employee personal data without first getting consent. Employees must still be informed of the employer's right to collect, use, or disclose their personal information without their consent if it is necessary for managing or terminating the employment relationship and the collection is reasonable.

Workplace Harassment

On November 15, 2014, the Protection from Harassment Act (No. 17 of 2014) went into force. It offers a defense against teasing and rude behavior, including cyberbullying and stalking. Potential consequences for offenders include fines, incarceration, and community service. Employers should be aware that the Act does apply to acts of harassment in the workplace even though there isn't a particular offense for it.

Challenges Following Employment Termination

Transferring Business

According to the Act, Section 18A automatically novates all of the EA Employees' employment contracts to the transferee if a firm or a portion thereof is transferred from the transferor to the transferee. In the case of an asset sale, Section 18A does not apply. According to the Act, there will be an automated transfer without a break in employment continuity, and the terms and conditions of service for the transferred EA Employees will be identical to those they had before the transfer.

Employment Termination

EA Employers and employees may seek mediation or conciliation services from the Ministry of Manpower with regard to employment disputes, or they may be reported to the Commissioner of Labour. For issues involving things like wage payments, non-EA employees can still bring a case before the Commissioner of Labour. Employees who belong to unions can ask their unions for help in resolving conflicts. In the event of a conflict, the Ministry of Manpower may attempt to mediate it or the Industrial Arbitration Court may be consulted, which does not often happen.

According to the Act, only Part IV EA Employees who have worked for an employer continuously for at least two years are eligible for retrenchment/redundancy benefits. Retrenchment/redundancy benefits for Non-EA Employees shall be determined by the terms of their employment contracts.

Employers are obligated to provide eligible workers who turn 62 re-employment opportunities up to the age of 65 or, if no suitable positions are available, a one-time Employment Assistance Payment (suggested to be at least three months' basic salary with a maximum of SGD 10,000). An employment contract that does not specify a retirement age should require the employer to provide the employee advance notice of retirement. Unless otherwise specified in the employment contract, a company is not obligated to pay retirement benefits to an employee.

Employee Discrimination

Discrimination against Singaporeans on the basis of their ethnicity, religion, or place of birth is outlawed by the country's constitution.

Pregnancy and age-based discrimination are expressly prohibited by law. However, there is no legal protection against discrimination based on sex, disability, or sexual orientation. Non-discrimination in the workplace is promoted by a tripartite alliance for fair employment practices, however, these are only guidelines and not legally enforced.

Although discrimination against expatriates and foreign nationals is not explicitly prohibited by law, it might be argued that it violates public policy. These cases aren't typically recorded in Singapore, though.

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Quick Guide to Employment  Contracts in Singapore
Author
Joy Cunanan
Joy is the Digital Transformation Manager at Lexagle. As a marketing professional in the Tech and B2B industry for over seven years, she is always on the lookout for the next best solution in the ever-changing online world. With a passion for helping businesses thrive and optimize operations, she shares her expertise in the power of contract lifecycle management and its capacity of easing the contracting process for busy organizations worldwide.

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