Singapore Legislation

Singapore Legislation

SG01-1-106118-edited

Singapore has several very attractive international business opportunities. The dynamic business and international environment of Singapore makes it a great place for business expansions. SME's make up 99% of Singapore's enterprise making it a choice destination for international companies to venture into.

Singapore's bilingual education system, with English being one of the official languages is another factor that makes this place a more accessible option for business ventures. To help companies prepare themselves for business, Links created a legislative page of the main employment laws and best practices in Singapore. Please note that all the information listed below are to be used as a general guideline, for more detailed accounts of laws and regulations, please visit the official governmental websites.

Want more HR support? Get in touch with one of our representatives to see how we can help you elevate your HR function today.

 



 

Company Setup


Company Registration

In Singapore, anyone above the age the 18 can be a director of a company. For a foreigner to set up his own company in Singapore, They are required to appoint at least one director who is ordinarily resident in Singapore.

It is compulsory for any entity conducting business in Singapore to register with the Inland Revenue Authority of Singapore (IRAS) when:

a) Your taxable turnover for the past three quarters and at the end of the calendar quarter (3 months ending March, June, September, or December) prior to 2019 exceeds $1 million.

Businesses are accountable for monitoring at the end of every calendar quarter. If their taxable turnover for the past 12 months exceeds $1 million, they have to register for GST.

b) Starting on 1 January 2019, taxable turnover is computed on a calendar year basis. Under the new legislation, if the businesses taxable turnover at the end of any calendar year on or after the 1 January 2019 exceeds $1 million they will have to register for GST

https://www.iras.gov.sg/IRASHome/GST/Non-GST-registered-businesses/Registering-for-GST/Do-I-Need-to-Register-for-GST/


Bank Account set-up

It is mandatory that employers pay Central Provident Fund (CPF) contributions to employees who are permanent residents in Singapore. For workers overseas, they are required to pay a monthly Foreign Workers Levy (FWL), and in some cases, a Skills Development Levy (SDL).

Social Security & Mandatory Pension Schemes

It is mandatory that employers pay Central Provident Fund (CPF) contributions to employees who are permanent residents in Singapore. For workers overseas, they are required to pay a monthly Foreign Workers Levy (FWL), and in some cases, a Skills Development Levy (SDL).

https://www.cpf.gov.sg/Employers/EmployerGuides/employer-guides/hiring-employees/skills-development-levy-(sdl)
 

 
Only Singapore Citizen and Permanent Residents are covered by the Central Provident Fund. To help a new Singapore Permanent Resident employee adjust to the lower take-home pay, both the employer and employee will contribute CPF at graduated rates for the first two years. 
 
 

 
CPF contributions reported monthly and necessary deductions made at source.
 
 

Employees’ & Employers’ Contributions

The monthly CPF contribution payment is mandatory, both employers and employees share needs to be paid. Th contributions should be paid based on the employee's actual wagaes earned for the month.

For employers there's a grace period of 14 days to make payment of CPF contributions after the end of the month for which CPF contributions are due. If the due date falls on Sunday or Public Holiday, CPF contributions must be paid by the next working day. Payments should be paid electronically.

https://www.cpf.gov.sg/employers/employerguides/employer-guides/paying-cpf-contributions/cpf-contribution-and-allocation-rates
 



 

Employment Law


Employees’ Compensation

Employers are required to pay their Work Permit holders at least the fixed monthly salary declared in the WP application form, or in the subsequent revision. Pay is mandatory even if you do not have work for them. Only if a Work Permit holder is on no-pay leave outside of Singapore may the payment be exempted. 

https://www.mom.gov.sg/faq/work-permit-for-foreign-worker/whats-the-minimum-i-need-to-pay-work-permit-holder-do-i-need-to-continue-paying-if-they-have-no-work

 

Work Permits

For foreigners to work in Singapore, they must hold a valid pass (work visa) which has to be obtained before they start working. Various passes are available, it is the employer's responsibility to ensure that the foreign workers they engage with hold the valid pass.

 

Type of Pass Eligibility
E Pass For foreign professionals, managers and executives.
S Pass For mid-level skilled staff. Candidates need to earn at least $2,200 a month and meet the assessment criteria.
 Work Permit For semi-skilled foreign workers in the construction, manufacturing, marine shipyard, process or services sector. Also for foreign domestic workers (FDWs) to work in Singapore.

 

 

 

 

 

 

 

 

http://www.mom.gov.sg/passes-and-permits 

 

Maximum Working Hours

The maximum required work hours per week are 44 hours.

Overtime can be claim if you are:

  • A non-workman earning up to $2,500.
  • A workman earning up to $4,500

https://www.mom.gov.sg/passes-and-permits

 

Paid Annual Leave

Under Singapore law, one's annual leave entitlement is dependent on how many years of service the employee has with their employer. Year 1 begins from the first day or work.

Year of Service Days of Leave
1st 7
2nd 8
3rd 9
4th 10
5th 11
6th 12
7th 13
8th & thereafter 14

 

 

 

 

 

 

 

 

https://www.mom.gov.sg/employment-practices/leave/annual-leave/eligibility-and-entitlement

 

Rest Day

Employees must be provided 1 rest day per week. Rest days should be 1 whole day, it is not a paid day.

In the case of shift workers, the rest day can be a continuous period of 30 hours. In Singapore, the week is counted from Monday running into Sunday. A 30-hour rest period that starts before 6pm on a Sunday is considered as 1 rest day within the week, even if it extends into the Monday of the following week.

Unless there is any exception, employers are not allowed to compel their workers to work on a rest day.

https://www.mom.gov.sg/employment-practices/hours-of-work-overtime-and-rest-days

 

Termination

Both employer and employee has the power to terminate a contract of service. The termination can take place due to:
- employee resignation
- employer dismissal
- contract expiration (such as when a project or contract period has been completed)

Both parties must follow the terms and conditions for termination as stated in the contract of service.

https://www.mom.gov.sg/employment-practices/termination-of-employment/what-is-termination


Severance Payment & Long Service Payment

Employees who serving the company for at least 2 years are eligible for retrenchment benefits. Those with less than 2 years’ service could be granted an ex-gratia payment out of goodwill. 

The amount of retrenchment benefit will depend on the employment contract or collective agreement (for unionised companies). If there is no provision, it will have to be negotiated between the employees (or their union) and the employer.

The prevailing norm in Singapore is to pay a retrenchment benefit of between 2 weeks to 1 month salary per year of service, depending on the company’s financials.

• If the retrenchment comes shortly after a salary cut, the salary before the cut should be used to determine the amount of compensation.
• Both employee and employer don’t have to pay CPF contributions for retrenchment benefits.

http://www.mom.gov.sg/employment-practices/retrenchment/responsible-retrenchment 

 

 

 
 



 

Employees


Benefits In Kind

As of YA 2008, certain benefits-in-kind are no longer taxable. The threshold for some benefits-in-kind have also been revised.

https://www.iras.gov.sg/irashome/Businesses/Employers/Tax-Treatment-of-Employee-Remuneration/Changes-to-Tax-Treatment-of-Benefits-in-Kind-Effective-Year-of-Assessment--YA--2008/ 

 

Share Options

Gains and profits arising from Employee Share Options (ESOP) and other forms of Employee Share Ownership (ESOW) are subject to tax.

i. Employee Share Option (ESOP)
ESOP plans give the employee the rights to purchase shares in the company at a specific predetermined price within a time frame.
An employee who is granted share options by an employer will be taxed on any gains or profits arising from the exercise of the share option.

ii. Other Forms of Employee Share Ownership (ESOW)
ESOW plans allow an employee of a company to own or purchase shares in the company or in its parent company. They include share awards and other similar forms of employee share purchase plans (excluding phantom shares and share appreciation rights).
An employee who is granted ESOW by the employer is subject to tax on any gains or profits when the ESOW plan vests on the employee.

https://www.iras.gov.sg/IRASHome/Individuals/Foreigners/Working-out-your-taxes/What-is-Taxable-What-is-Not/Stock-Options/
 
New Employees
 
For every new employee, the employer is required to complete the New Employee Contribution Form if submitting the CPF contribution details via hardcopy Payment
Advice. For non-residents, employers are responsible to apply for the Employment Pass. 
 
 

Statutory Benefits


Maternity Leave

Working mothers in Singapore are entitled to paid maternity leave after child birth. Depending on whether the child born is a Singapore citizen and other criteria, the employee is entitled to either 16 weeks of Government-Paid Maternity Leave or 12 weeks of maternity leave.

https://www.mom.gov.sg/employment-practices/leave/maternity-leave

 

Paternity Leave

As of the 1 January 2017, eligible working fathers, including those who are self-employed, are entitled to 2 weeks of paid paternity leave funded by the Government.

https://www.mom.gov.sg/employment-practices/leave/paternity-leave

 

Share Parental Leave

In Singapore, there is the option to share parental leave. Working fathers can apply to share up to 4 weeks of their wife's Government-Paid Maternity Leave upon their partner's agreement.

https://www.mom.gov.sg/employment-practices/leave/shared-parental-leave

 

Child Care

6 days of paid childcare leave per year is made available to eligible working parents of Singapore citizen. For parents of non-citizens, they are eligible to get 2 days of chilcare leave a year.

https://www.mom.gov.sg/employment-practices/leave/childcare-leave/eligibility-and-entitlement

 

Sickness

Employees are entitled to both paid sick leave and paid hospitalisation leave after working for their employee for at least 3 months. If the employer has worked for over 6 months, they are entitled to up to 14 days of paid sick leave and 60 days of paid hospitalisation leave. The 60 days of hospitalisation leave includes the 14 days sick leave entitlement.

For new employees, the sick leave is pro-rated according to their length of service. Their pro-rated entitlement is calculated as follows:

Number of months of service completed Paid outpatient non-hospitalisation leave (days) Paid hospitalisation leave (days)
3 5 15
4 8 30
5 11 45
6 and thereafter 14 60

Tax


Financial Filing

The financial filing is counted from January to December.

 

Tax Payment to Authority

Tax payments should be processed electronically.  

Annual Employer Returns

IR8A/IR8E, Appendix 8A and 8B annually (also IR8S if applicable).




 


Payments


Bank Accounts and Paying Salaries

Payments can be made electronically via giro through employee bank accounts by producing a file and sending it to the bank. A local in-country bank account is required.
Businesses can pay on a weekly, fortnightly or monthly basis, all salaries must be paid by the 7th day the payment is due.

 

13th Month and Bonus Payments

Bonuses and commissions are regarded as 'Additional Wages'. The Government recommends that he Annual Variable Component to be 20% of the annual wages or 1-3 month's salary. 

 

Timetable

Employers need to complete and provide their employees with the IR8A/IR8E form and Appendix 8A, Appendix 8B or Form IR8S (where applicable) by 1st March each year. Employees are to then file returns by 15th April each year.

 

Submission Methods

Payroll Forms – IR8A form (IR8S is optional).
Submission Methods – can be submitted electronically or by post.

 





Local Information


Public Holidays 2018

Dates of the 11 gazetted public holidays for 2018 

New Year’s Day 1 Jan 2018
Chinese New Year 16-17 Feb 2018
Good Friday 30 Mar 2018
Labour Day 1 May 2018
Vesak Day 29 May 2018
Hari Raya Puasa 15 Jun 2018
National Day 9 Aug 2018
Hari Raya Haji 22 Aug 2018
Deepavali 6 Nov 2018
Christmas Day 25 Dec 2018

https://www.mom.gov.sg/newsroom/press-releases/2017/0405-singapore-public-holidays-2018

Summer / Winter Working

Most businesses are closed for 2 days during Chinese New Year and on Christmas Day.

Local office working hours and Time Zone

Working Hours: 09:00-18:00
Standard time zone: UTC/GMT +8 hours
 
 
 
 
 
 
 
 

Links International is a leading payroll outsourcing provider across Asia Pacific and supports payroll in over 15 countries. If you’re interested to explore the idea of payroll outsourcingEOR, or Visa application please do not hesitate to contact us.
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