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.
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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
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)
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.
Employees’ CompensationEmployers 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.
Work PermitsFor 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.|
The maximum required work hours per week are 44 hours.
Overtime can be claim if you are:
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|
|8th & thereafter||14|
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.
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.
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.
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.
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.
Maternity LeaveWorking 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.
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.
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.
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.
|Number of months of service completed||Paid outpatient non-hospitalisation leave (days)||Paid hospitalisation leave (days)|
|6 and thereafter||14||60|
The financial filing is counted from January to December.
Tax payments should be processed electronically.
IR8A/IR8E, Appendix 8A and 8B annually (also IR8S if applicable).
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.
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.
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.
Payroll Forms – IR8A form (IR8S is optional).
Submission Methods – can be submitted electronically or by post.
|New Year’s Day||1 Jan 2019|
|Chinese New Year||5 - 6 Feb 2019|
|Good Friday||19 Apr 2019|
|Labour Day||1 May 2019|
|Vesak Day||19 May 2019*
|Hari Raya Puasa||5 Jun 2019|
|National Day||9 Aug 2019|
|Hari Raya Haji||11 Aug 2019*|
|Deepavali||27 Oct 2019*|
|Christmas Day||25 Dec 2019|
*(Public Holiday on the following Monday)https://www.mom.gov.sg/newsroom/press-releases/2018/0404-public-holidays-for-2019
Most businesses are closed for 2 days during Chinese New Year and on Christmas Day.
Local office working hours and Time Zone