This comprehensive guide will give you all the information you need to make an informed decision. From understanding what an EOR is and how it can benefit your business to hiring employees in Singapore, we've got you covered.
Whether you're new to using an EOR or need some clarity on the process, this guide is a must-read for anyone considering expanding their business into Singapore. So, let's dive in and explore the world of Employer of Record Singapore!
What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party company that assumes the role of an employer for the employees hired by another company. This means that the EOR becomes responsible for all aspects related to employment, including managing payrolls, taxes, benefits, and compliance with labour laws.
Legal employer responsibilities related to hiring, onboarding, and managing employees are all handled by the EOR, freeing up the company's time and resources. This helps businesses save money and allows them to focus on their core activities while still having access to a global talent pool.
Some of the standard services offered by an EOR include:
- Payroll management
- Benefits administration
- Tax compliance
- Onboarding and offboarding of employees
- Risk management and legal compliance
- Employment contracts
- Statutory benefits
Hiring an EOR in Singapore can be an excellent decision for businesses expanding into the country. It allows companies to hire employees without the hassle of setting up a legal entity in Singapore, which can be time-consuming and expensive.
The Role of Employer of Record in Singapore
Singapore is a popular destination for businesses looking to expand their global presence. The country offers a stable economy, favourable tax policies, and a highly skilled workforce. However, navigating Singapore's complex labour laws and regulations can be challenging for businesses unfamiliar with the local market.
Much of Singapore’s employment law is governed by a range of legislation, including:
- The Employment Act
- The Child Development Co-Savings Act
- The Employment of Foreign Manpower Act
- Work Injury Compensation Act, and
- The Workplace Safety and Health Act
Navigating these laws can be overwhelming, especially for foreign companies. An employer of record Singapore can help businesses overcome this challenge by ensuring compliance with all applicable laws and regulations.
Another significant responsibility of businesses in Singapore is taxes. Companies must comply with the Inland Revenue Authority of Singapore (IRAS) and submit tax returns on time. The employer of record takes care of payroll and tax compliance, ensuring that companies fulfill their obligations to the IRAS.
Moreover, an EOR also handles employee benefits such as insurance, retirement plans, and healthcare benefits, making it an attractive option for businesses looking to attract and retain top talent in Singapore.
Steps to Hiring Through an EOR in Singapore
Getting the best talent for your business in Singapore is crucial to its success. Hiring through an EOR streamlines the process, making it easier for businesses to access a global talent pool. Here are the steps involved in hiring employees through an EOR in Singapore:
Partner with an EOR
The first step is to find and partner with a reputable employer of record in Singapore. Make sure to choose a company that has experience working with businesses in your industry and understands the local labour laws.
Every EOR has its specific employment contract, so reviewing the terms and conditions carefully before signing is essential. The contract will cover employee benefits, termination clauses, and confidentiality agreements.
Tips for choosing the right EOR include:
- Research the company's reputation and read reviews from past clients.
- Ask for references from other businesses that have used their services.
- Inquire about their experience working with businesses in your industry.
- Inquire about their experience managing payrolls, taxes, and compliance in Singapore.
Identify your hiring needs
The next step is identifying your business's hiring needs and requirements. The EOR will work with you to understand the roles and responsibilities of the employees you are looking to hire, along with any necessary qualifications or skills.
Making a list of the job descriptions and requirements will help the EOR find the best candidates for your business.
Tips for identifying hiring needs include:
- Identify the skills and qualifications you need for each role.
- Determine the salary range based on industry standards and local market rates.
- Consider cultural fit when hiring employees in Singapore.
Start the recruitment process
Once you have identified your hiring needs, the EOR will begin the recruitment process to find suitable candidates for your business. They will handle job postings, resume screening, and interviews on your behalf.
The EOR will also ensure the candidates are legally eligible to work in Singapore and comply with all necessary visa requirements.
Tips for the recruitment process include:
- Clearly define your expectations and requirements for each role.
- Work closely with the EOR to provide feedback on candidates and make final hiring decisions.
- Consider cultural sensitivity when assessing candidates.
Apply for the Right Type of Visa
Applying for the correct work visa is critical for employees planning to work in Singapore during a company's expansion. Singapore offers a variety of work visas, each tailored to different professional levels and types of employment, including professionals, skilled workers, trainees, and students.
Understanding the requirements and eligibility criteria for each visa category, such as the Employment Pass, S Pass, and EntrePass, is essential to ensure legal compliance and a smooth transition into the Singaporean work environment.
Tips for applying for the right type of visa include:
- Determine the appropriate visa category based on the employee's role, skill level, and type of employment. Professional workers often require an Employment Pass, while skilled and semi-skilled workers may need an S Pass.
- Ensure compliance with minimum salary requirements and qualifications for the selected visa category. Each work pass in Singapore has its specific salary thresholds and qualification criteria.
- Check for additional requirements, such as Covid-19 vaccination; these requirements can change quickly and over time.
- Prepare necessary documentation for the visa application process, including proof of qualifications, employment contracts, and sponsorship by a Singapore-based company.
- Understand the process for family visas, as family members of employees may be eligible for a Dependent's Pass or Long-Term Visit Pass.
Onboarding and managing employees
Once you have selected the candidates, the EOR will handle all aspects related to onboarding and managing employees. This includes drafting employment contracts, providing employee benefits, and ensuring compliance with local labour laws.
Having an EOR handle these responsibilities allows businesses to focus on their core activities and save time and resources that would otherwise be spent on administrative tasks.
Tips for effective employee management include:
- Clearly define roles, responsibilities, and expectations from the start.
- Communicate regularly with employees to ensure job satisfaction and promptly address issues.
- Stay up-to-date with changes in labour laws and regulations to ensure compliance.
Work with your EOR to create a fair and equitable compensation package
One of the most significant advantages of working with an EOR in Singapore is access to local market knowledge. They can help businesses create fair and competitive employee compensation packages based on industry standards and local market rates.
This is particularly important when hiring top talent in Singapore, as it ensures businesses remain attractive to potential employees and retain current ones.
Tips for creating a competitive compensation package include:
- Research industry standards and local market rates to create a fair salary range.
- Offer additional benefits, such as healthcare plans and retirement benefits, to attract top talent.
- Regularly review and adjust compensation packages to ensure they remain competitive.
Employment Laws and Regulations in Singapore
The Employment Act in Singapore provides all employees with basic terms and conditions, including working hours, rest days, annual leave, and salary payments. It also sets out the rights and responsibilities of employers and employees in various aspects of employment.
Other relevant laws that businesses must comply with include the Central Provident Fund (CPF) Act, which requires employers to contribute to their employees' retirement savings, and the Work Injury Compensation Act (WICA), which provides compensation for work-related injuries or illnesses. Employers must also provide healthcare to Work Permit and S Pass holder employees.
Statutory working hours in Singapore are not more than 44 hours per week or nine hours per day. Overtime pay must be given for work performed beyond these hours. Employers not complying with these regulations may face penalties and legal consequences.
When terminating employees, mandatory rest periods, annual leave, and public holidays must also be adhered to. With an EOR, businesses can ensure they comply with these regulations while minimising the risk of legal disputes.
Terminating an employee's contract can be challenging, but working with an EOR can help ensure that businesses comply with all legal requirements. In Singapore, employers must give notice or salary instead of notice to terminate an employee's contract.
The notice period varies based on the employee's length of service, and employers must provide a valid reason for termination. An EOR can guide businesses through the process, ensuring that all necessary steps are taken in compliance with local laws.
Employee Benefits and Entitlements
Discuss statutory and common supplemental employee benefits in Singapore.
In addition to the basic employment terms and conditions outlined in the Employment Act, businesses must provide various employee benefits and entitlements to their employees in Singapore. These include statutory benefits such as paid annual leave, sick leave, maternity leave, and public holidays.
Under the Employment Act, employees are entitled to a minimum of 7 days of paid annual leave (plus bank holidays) for the first year of service, increasing to a maximum of 14 days after eight years of service. Employees are also entitled to paid sick and maternity leave for working mothers.
Maternity leave is 16 weeks, and Paternity leave is two weeks. Paid sick leave can only be taken for a maximum of 60 days per year and ranges from 5-60 days depending on the length of service and the need for hospitalisation.
In addition to these statutory benefits, businesses may offer supplemental benefits such as health insurance, retirement plans, and bonuses to attract and retain top talent in Singapore. These additional benefits are not required by law but can be a valuable incentive for employees.
Termination and Notice Period Guidelines
Singapore is moving away from the at-will employment concept, and employers must provide a valid reason for termination. The notice period varies based on the employee's length of service, and payment of notice may be provided instead.
The Employment Act outlines the minimum notice periods below
If the employee's termination is due to misconduct, there must be an inquiry before taking action. Employees also have the right to file a claim with the Ministry of Manpower if they believe their termination was without cause.
Foreign employees who are terminated may also have to leave Singapore within a specified period, depending on their work permit type.
Benefits and Challenges of Using an EOR in Singapore
Working with an EOR in Singapore offer numerous benefits to businesses, including:
- Access to local market knowledge and expertise in employment laws and regulations.
- Streamlined onboarding process for employees, reducing the administrative burden for businesses.
- Compliance with all legal requirements when hiring and terminating employees.
However, there are also challenges to consider when using an EOR in Singapore, such as:
- There is an additional cost of using an EOR service.
- Potential differences in cultural and business practices may require additional communication and collaboration efforts.
- Limited control over employee management, as the EOR is responsible for HR functions.
Before choosing an employer of record in Singapore, businesses should carefully weigh these benefits and challenges and determine what fits their needs and goals best.
Choosing the Right EOR Service in Singapore
Selecting the right employer of record is crucial for businesses looking to expand their operations there. Some key factors to consider when choosing an EOR service include:
- Experience and expertise in local employment laws and regulations - Ensure the EOR is familiar with all relevant laws and can provide guidance and support.
- Range of services offered - Look for an EOR service that offers comprehensive solutions, including payroll, benefits administration, and compliance support.
- Reputation and client reviews - Research the EOR's reputation and read reviews from other clients to gauge their level of satisfaction.
- Cost and flexibility - Consider the cost of the EOR service and their flexibility in customising services to fit your specific needs and budget.
- Support for future growth - Choose an EOR to support your business's expansion plans in Singapore and other countries.
- Reputation and track record with previous clients - Request references and speak with other businesses that have used the EOR's services to understand their capabilities better.
It is also essential to thoroughly review the contract and terms of service before committing to an EOR. This can help businesses avoid any unforeseen costs or conflicts in the future.
Employment Statistics and Market Overview in Singapore
Understanding Singapore's current employment landscape and market trends can also help businesses make informed decisions when using an EOR. Here are some key statistics and facts about employment in Singapore:
- As of 2021, the unemployment rate in Singapore was at 2.76%
- There is no minimum wage in Singapore, except for workers in the cleaning and security guard industries
- Singapore's top job growth industries include technology, healthcare, and finance.
- The Singapore government has implemented various initiatives and programs to support businesses and create job opportunities, such as the SGUnited Jobs and Skills Package.
- The workforce in Singapore is highly diverse, with a mix of local and foreign employees from various cultures and backgrounds.
By understanding the current job market in Singapore, businesses can better gauge their hiring needs and decide if using an EOR is the most suitable option for their expansion plans.
Employer and Employee Taxes in Singapore
In Singapore, employers and employees must pay taxes per the country's tax laws. For employers, there are various taxes to be aware of, including:
- Corporate Income Tax: Businesses in Singapore are subject to a flat corporate income tax rate of 17% on their chargeable income.
- Goods and Services Tax (GST): Most goods and services in Singapore are subject to a 7% GST, which businesses must collect and remit to the Inland Revenue Authority of Singapore (IRAS).
- Foreign Worker Levy: Employers hiring foreign employees must pay a monthly levy based on their nationalities and skill levels.
For employees, income tax rates in Singapore range from 0% to 22%, depending on their taxable income. There is also a social security contribution of 12.5% to 37 % of the employee's gross salary, with the employer and employee sharing the cost.
Understanding these taxes is crucial for businesses and employees to ensure compliance and proper budgeting. An EOR can also assist with tax-related matters, smoothing the business process.
Employee Rights and Protections in Singapore
Singapore has robust employee rights and protections outlined in the Employment Act. These include:
- The maximum working hours are 9 hours per day or 44 hours per week.
- A probation period with no statutory requirement on length.
- Minimum annual leave entitlement based on months of service.
- Statutory public holidays and rest days.
- Mandatory contributions to the Central Provident Fund (CPF) for retirement savings.
- Maternity and paternity leave.
- Written employment contracts with terms and conditions clearly stated.
- Protection against unfair dismissal and discrimination.
Employers must adhere to these rights and protections when hiring and managing employees. Using an EOR in Singapore can help ensure compliance with these regulations, reducing the risk of any legal issues or disputes.
Reasons to Use an EOR
Employers considering whether to use an employer of record service in Singapore should consider these critical reasons:
- Compliance with all legal requirements, reducing the risk of penalties or disputes.
- Streamlined and efficient hiring and onboarding process, saving business time and resources.
- Access to local market knowledge and expertise, helping businesses navigate any cultural or regulatory differences.
- Cost-effectiveness compared to setting up a business entity in Singapore, especially for businesses looking to hire a few employees.
- The flexibility in services offered allows businesses to customise their needs and budget.
- Risk reduction in the event of employee termination or resignation.
Using an EOR can also benefit companies looking to test the market in Singapore before committing to establishing a permanent presence. It allows them to start operations quickly and efficiently without the added costs and complexities of setting up a new entity.
Knit offers a comprehensive employer of record services in Singapore, tailored to meet businesses' unique needs and goals. Our expertise and experience in local employment regulations can help streamline the hiring process for companies seeking to expand their Singapore operations.
Contact us today to learn more about our services and how we can assist your business's growth plans.
The Wrap Up
Using an employer of record service in Singapore can provide numerous benefits for businesses looking to expand their operations.
From ensuring compliance with local laws and regulations to streamlining the hiring process, an EOR can be valuable for companies seeking growth opportunities in this dynamic market.
Consider partnering with Knit for reliable and efficient EOR services in Singapore and take your business to new heights.
The Employer of Record is responsible for:
- Facilitate payroll and tax compliance
- Manage employee benefits
- Handle HR administration
- Provide legal compliance
- Assist with work permits and immigration
- Offer risk management
- Support employee relations
- Maintain confidentiality
- Stay updated on employment regulations