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For several years, international businesses have relied on an employer of record (EOR) to navigate the complexities of global expansion. They help companies hire, pay, and manage international employees and achieve compliance with local labor laws without setting up a local entity.

Before July 2024, both Singaporean-based and overseas businesses are able to partner with an EOR to hire and manage Singapore foreign talent compliantly without establishing a local presence. However, the Ministry of Manpower (MoM) has now banned non-Singaporean entities from using an EOR to sponsor work permits for foreign employees. Now, EORs can only apply for work passes for foreigners to work for Singapore-based companies.

As companies adjust to these changes, it's vital to explore other options for maintaining a workforce in Singapore while complying with employment regulations. In this guide, we explain what the Singapore EOR ban means for your business, covering more details about the MoM new rules for work permit and offering alternatives to EOR services in Singapore.

Understanding the Singapore EOR Ban

Recent updates to Singapore’s labor regulations have altered how businesses hire foreign talent in Singapore. The MoM latest news for foreign workers highlights that EORs are no longer able to sponsor work passes for Singapore foreign talent. Under this new policy, all work passes for foreign employees, including the Employment Pass, S Pass, and work permits, must be tied to a Singapore-based company. Here’s what you need to know regarding the Singapore EOR ban:

EORs can no longer sponsor work permits for foreign workers.

The new MoM regulation prohibits EORs from sponsoring work passes for individuals working for non-Singapore entities. EORs can only hire local employees, and a foreigner who intends to work in Singapore must be directly employed by a local business that adheres to the country’s employment law.

According to the MoM, sponsoring work permits for expatriates who are not Singaporean citizens or permanent residents is a violation. It can lead to fines, imprisonment, bans from hiring, and reputational damage.

Foreign businesses must establish a local presence.

Per the Singapore EOR ban, only locally registered businesses can sponsor employment passes. So, any overseas company looking to hire foreign talent in Singapore must establish a local presence there. This can be through:

Setting up a Representative Office (RO): An RO is a short-term, temporary solution suitable for foreign businesses assessing the Singaporean markets before starting permanent operations. It is established for a maximum of three years. Once the time limit is up, Enterprise Singapore, the government agency under the Ministry of Trade and Industry, will evaluate the RO status before it can be further renewed annually.

Establishing a private company limited by shares: A private limited company offers more independence and operational flexibility for small and medium-sized (SME) foreign companies. Such companies benefit from tax incentives, and unlike ROs, private companies can sign employment contracts, generate revenue, and fully participate in the labor market. To set up a private company, businesses must incorporate with the Accounting and Corporate Regulatory Authority (ACRA).

Apply for a Short-Term Visit Pass (STVP): Companies can use an STVP for temporary business needs, such as attending business meetings or conferences. It allows expatriates to stay in Singapore for up to 90 days for specific corporate activities. However, it doesn’t permit long-term employment.

Work pass requirements remain unchanged.

The Singapore EOR ban doesn’t change the requirements for work passes. Candidates still need to meet the qualifying salaries and pass the necessary assessments to secure a work pass, in addition to working for locally established businesses.

For example, the qualifying salary for an S pass remains at least S$3,150 (S$3,300 for applications after 1 September 2025), while an EP is at least S$5,600 starting from 1 January 2025.

The Impact of Singapore EOR Ban on Foreign Talent in Singapore

Here’s how the Singapore EOR ban affects foreign talent working or planning to work in the country:

Limited options for short-term assignments

EORs offer a cost-effective solution for short-term assignments by eliminating the need for full-scale local operations. However, businesses may incur higher costs from establishing a representative office, obtaining licenses, or incorporating a company, making short-term assignments financially impracticable.

Furthermore, companies will no longer have access to a global talent pool for short-term projects due to the Singapore EOR ban. Their options will only be limited to Singaporean workers unless they establish a local business presence. Since setting up a local entity is expensive and time-consuming, overseas businesses will have no option but to prioritize local hires, reducing opportunities for foreign talent in Singapore.

Increase complexity for employers

Hiring workers will become complex for employers as they are now required to first establish a local entity, which is costly and tedious. This complexity will also create delays in the recruitment process and operational inefficiencies when onboarding foreign workers. For example, without an EOR, disputes over contracts, benefits, or terminations might increase, especially when companies aren’t thoroughly familiar with local labor regulations.

Relevant reading: HR's Guide to Managing Singapore Employment

Why the EOR Ban Matters for Your Business

MoM's new rules for work permit present challenges and benefits for businesses. Below, we explore both:

Challenges

1. Increased complexity and costs

Besides the high cost of establishing local entities, the Singapore EOR ban also poses more complexities for businesses. For example, companies without local presence might find it harder to sponsor visas and work passes for foreign employees.

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Similarly, workers whose contracts were interrupted by the Singapore EOR ban may face challenges renewing or retaining valid work passes. Additionally, navigating Singapore's employment regulations regarding CPF contributions, taxation, and termination procedures can be a burden without the support of an EOR.

2. Disruption to existing operations

MoM latest news for foreign workers can disrupt smooth operations and increase administrative costs for companies new to the Singaporean labor market. For instance, it can slow down local entity setups, talent acquisition, and work pass applications for foreign employees.

Companies already in operation are also impacted by the Singapore EOR ban. Transitioning employees from EOR arrangements to direct employment or alternative structures can strain HR teams, consume more financial resources, and disrupt day-to-day operations. Ultimately, it hinders efficiency and negatively affects employee morale.

3. Risk of non-compliance

Although setting up a legal entity is straightforward in Singapore, certain compliance requirements complicate the process. These include statutory employee benefits, corporate tax registration, and annual filing obligations. EOR services in Singapore efficiently manage these delicate terrains, including payroll processing and employee data management.

However, with the Singapore EOR ban, foreign companies are left with no other option than to handle work pass applications for foreign workers themselves. Since they’re not well-versed in the regulatory environment, they risk being non-compliant, resulting in fines, debarment, legal action from aggrieved employees, and reputational damage.

4. Limited flexibility

EORs are viable for businesses testing the market and managing short-term projects. They provide a flexible solution for hiring and managing staff while the client company retains total autonomy over their staff.

Once they’re out of the picture for overseas companies looking to penetrate the Singaporean market, such companies lose the ability to scale their workforce up or down when needed. This loss of flexibility affects a company’s operational agility and competitive advantage, as businesses may struggle to meet project deadlines or perform better in the face of competition.

5. Impact on global expansion strategies

By simplifying payroll, taxation, and regulatory compliance, EORs allow companies to focus on more strategic activities. However, due to the Singapore EOR ban, startups may not consider expanding there, especially due to the increased cost and administrative burden.

Businesses may also find it difficult to navigate Singapore’s employment regulations, and this inefficiency can delay international market entry, interrupting global expansion activities.

Benefits

1. Deeper market penetration by establishing local entities and strengthening company presence

MoM new rules for work permit encourage foreign businesses to establish branch offices or subsidiaries. This grants them complete access to the perks of a local entity, including tax incentives, independent operations, partnerships, market dominance, and access to profitable or community initiatives.

2. Enhanced brand reputation due to direct hiring and local presence

Establishing a representative office or a fully fledged subsidiary is a long-term investment in Singapore’s economy. This commitment fosters trust among employees, customers, and regulatory authorities, demonstrating compliance with employment laws and improving your company’s reputation as an ethical employer.

3. Build strong relationships with local partners and employees to foster long-term growth and success.

The Singapore EOR ban helps foreign companies build stronger relationships with their workforce by promoting direct hiring. Employees can communicate directly with their actual employers rather than through an EOR. Additionally, a solid local presence presents businesses as part of the Singapore business landscape, opening doors for local partnerships and community engagement.

Learn more: Global Hiring Guide: Singapore

Alternatives to EoR Services in Singapore

Though EOR services in Singapore can no longer apply for work passes, they can still offer other crucial services, including payroll processing, HR management, and compliance maintenance. However, such businesses must directly manage their employment processes for non-local workers.

While non-Singaporean companies can no longer depend on EORs to hire foreign workers due to the Singapore EOR ban, here are other alternatives that you can consider:

1. Obtain employer-sponsored work passes via your own entity in Singapore.

Set up a legal entity in Singapore, directly hire expatriates, and apply for work visas yourself. Consult the MoM website for guidance on various work passes, including eligibility criteria, application steps, and any applicable foreign worker quotas.

Furthermore, check the applicant’s qualifications, verify their documents, and ensure they’re from an approved home country for the specific work permit category.

2. Support relocations and visas to alternative countries.

If the Singapore EOR ban doesn’t support your company’s operational goals, encourage employees to relocate to countries with favorable work visa processes that align with the employee’s role and business needs. Work with immigration specialists or law firms to compliantly navigate complex visa requirements.

Also, provide employees with vital sponsorship documents, such as job offer letters and proof of employment, to support them throughout the process.

3. Support foreign talent in becoming permanent residents or citizens of Singapore.

Encourage foreign employees to apply for Singapore’s Overseas Networks & Expertise (ONE) Pass. This employment permit is a flexible alternative as it isn’t tied to the employer but to the employee. It allows high earners and global talent to live in Singapore without first securing employment. Additionally, ONE pass holders can work for multiple employers, start businesses, or take on advisory roles.

Applicants for the Overseas Networks & Expertise Pass must earn at least S$30,000 per month or demonstrate outstanding achievements in research, technology, sports, arts, and culture. Applicants with no recent work history in Singapore must present proof of employment with a company valued at at least US$500 million or an annual revenue of at least US$200 million.

Navigate the New Landscape With Omni

Navigating the Singapore EOR ban and the complexities of hiring foreigners in Singapore requires a thorough understanding of the country’s labor laws and regulations. By following best practices and staying updated with legal requirements, HR professionals can ensure a smooth and compliant hiring process.

Omni helps you streamline and automate your process of hiring foreign talent in Singapore, enabling you to attract, screen, and hire the best talent. Our platform allows you to sync all candidate applications in one place and easily collaborate with hiring managers to schedule interviews, send impactful communications, and analyze interview feedback.

With Omni’s recruitment workflows, you can send offers or rejections with just a few clicks, coordinate candidate interviews, share candidate feedback among management, and swiftly transition successful candidates into the onboarding process to ensure top performance and engagement.

Omni manages and automates time-consuming manual tasks to allow you and your recruitment team to focus on what’s really important: crafting impactful interview questions, establishing parameters to interpret responses, and ultimately hiring award-winning candidates.

‍Book your product tour with our team today to learn more about how Omni can simplify your Singapore hiring process.

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