Global Hiring Guide: Singapore

With its robust economy and business-friendly environment, Singapore is a great choice for organizations seeking to go global. Hiring foreigners in Singapore can be a strategic move for your organization if you wish to access specialized skills, and tap into new markets. 

However, it’s important to hire the right talent to ensure business success. According to a recent survey, 75% of employers admitted to hiring the wrong person, costing them nearly $17,000 on average. These bad hires failed to deliver quality work, had a negative attitude, or misrepresented their abilities. Additionally, there are costly penalties for violating employment laws and regulations, many of which are not commonly known.

Hiring in Singapore comes with many rules and regulations, especially if you are hiring foreigners in Singapore. This guide equips you with essential information to navigate the process effectively, from understanding the Singaporean labor market to complying with work permit and employment regulations. By familiarizing yourself with these guidelines, you can ensure a successful Singapore employment process.

1. Understanding the Singaporean Labor Market

Before we move on to what you need to know when hiring foreigners in Singapore, let’s lay the groundwork covering the legal frameworks, minimum wage, working hours, and mandatory social contributions.

Understanding the legal frameworks

Here are certain legal frameworks you need to keep in mind when hiring foreigners in Singapore to ensure compliance and avoid penalties. 

Employment Act

The Employment Act is Singapore’s main labor law, outlining the terms and conditions for all employees. By familiarizing themselves with this act, employers can understand their obligations, ensuring compliance and avoiding legal issues when hiring in Singapore.

The act covers minimum wages, working hours, annual leave entitlements, and termination procedures. It also outlines specific responsibilities towards employees, including maintaining a safe working environment, upholding fair employment practices, and ensuring timely salary disbursements. Adhering to these regulations will keep your employees engaged and your organization safe from legal issues.

Foreign Manpower Act

For businesses hiring foreigners in Singapore, understanding the Foreign Manpower Act is crucial. This law outlines the responsibilities, offenses, and penalties related to hiring in Singapore.

For example, foreign employees are required to have an employment pass. Hiring without one can result in fines from S$5,000 to S$30,000 or up to one year of imprisonment.

The Act also covers salary, working hours, public holidays, and leave for foreign employees. Therefore, it’s crucial to review the Act thoroughly before hiring foreign workers to comply with regulations.

Personal Data Protection Act (PDPA)

Singapore’s Personal Data Protection Act (PDPA) sets rules for how personal information can be collected, used, and shared. Organizations must ask for permission before gathering or using personal details, which should be used for specific, valid purposes with consent.

Employees have the right to know why their data is used, access their information, and request corrections. Organizations are responsible for safeguarding data from unauthorized access or misuse. Non-compliance can lead to fines up to S$1 million.

Relevant read: 5 Ways Employee Database Software Elevates Your Business

Work Injury Compensation Act (WICA)

The Work Injury Compensation Act (WICA) in Singapore establishes a framework for compensating employees for work-related injuries or illnesses, regardless of fault.

Under the act’s provisions, employers are mandated to compensate affected employees to cover medical expenses, loss of earnings, and permanent incapacity arising from work-related incidents. Employers must notify the Ministry of Manpower (MOM) and their insurer of accidents resulting in more than three days of medical leave, hospitalization, serious injury, or death.

As for compensation, employees can file claims with their employer or the employer’s insurer. Employers are responsible for processing these claims and providing compensation per the WICA.

Minimum wage

Although there is no minimum wage in Singapore, the government has implemented the Progressive Wage Model (PWM) as a voluntary guideline to encourage employers to pay employees fairly and progressively.

The PWM covers all employees working full-time or part-time and sets wage benchmarks for different sectors and encourages employers to pay their workers higher wages as they gain experience and skills. In essence, the model aims to increase wages through upgrading skills, increasing efficiency and productivity.

While not legally binding, the PWM has become a benchmark for many employers hiring in Singapore, and is generally expected that companies will pay at or above the PWM levels.

Working hours

The standard workweek in Singapore employment is 44 hours. However, this can vary due to the industry, company policies, and employment contracts. In addition to standard workweek, there are also specific regulations for overtime work, rest days, and public holidays that you need to consider when hiring foreigners in Singapore.

Social security

Unlike other countries, Singapore does not have a traditional social security system. Instead, it has a comprehensive social safety net that includes various programs to support its citizens. Some examples include:

• Central Provident Fund (CPF): A mandatory social security savings scheme funded by contributions from both employers and employees. It is a key pillar of Singapore’s social security system that serves to meet retirement, housing, and healthcare needs.
• MediShield Life: A basic health insurance plan, administered by the CPF board, which helps to pay for large hospital bills and selected costly outpatient treatments, such as dialysis and chemotherapy for cancer.
• Comcare: A government scheme that provides compensation to employees who suffer work-related injuries or diseases.

Process for Hiring in Singapore 

Job description

To kickstart your process of hiring foreigners in Singapore, it’s important to create a clear job description. This serves as a roadmap for both employers and potential candidates, outlining expectations, job scope, and requirements for the position.

Key elements to include in your job description when hiring foreigners in Singapore include: 

• Job Title: A clear and concise title that reflects the nature of the position.
• Summary: A brief overview of the role and its key responsibilities.
• Duties and Responsibilities: A detailed list of the tasks and responsibilities the employee will be expected to perform.
• Qualifications: The minimum educational and experience requirements for the position.
• Skills and Abilities: The specific skills and abilities required to succeed in the role.
• Salary and Benefits: A clear indication of the compensation package, including salary, bonuses, and benefits.

Recruitment channels

Singapore offers a variety of recruitment channels to help you reach a diverse talent pool in your Singapore employment process:

• Online Job Boards: Popular job boards like JobStreet, Indeed, and LinkedIn are widely used by job seekers in Singapore.
• Employee Referrals: Encourage your existing employees to refer qualified candidates. This can be a great source of high-quality applicants.
• Recruitment Agencies: Partner with reputable recruitment agencies to source and screen potential candidates.
• Campus Recruitment: If you’re looking for fresh graduates, consider partnering with universities and colleges to conduct campus recruitment drives.

Screening and selection

During a screening interview when hiring in Singapore, HR will review candidates’ resumes and prepare questions tailored to the role’s requirements. Instead of asking typical questions, consider posing situational inquiries that prompt examples of problem-solving, teamwork, and leadership qualities.

For instance, you can ask them these questions: 

• Tell me about a time when you had to make a difficult decision under pressure. How did you weigh the options and arrive at a solution?
• Can you share an example of a conflict you encountered while working in a team? How did you handle it, and what was the outcome?
• Have you ever taken on a leadership role in a project or team? Can you describe the situation, your approach to leadership, and the results achieved?
• What aspects of our company culture resonate most with you, and why? How do you envision contributing to and thriving within our culture?
• In your opinion, what are the most important cultural aspects of a workplace? How do you ensure cultural alignment and harmony within a team or organization?

Your questions should motivate candidates to share stories that demonstrate the skills you are seeking. Candidates should not only match the skill-based aspects of the job but also align with the company’s values, culture, and work environment.

Read next: Build Impactful Teams: 10 Google Interview Questions to Inspire Your Hiring Process

Job offers

When hiring foreigners in Singapore, it is important to draft a comprehensive offer letter outlining the job title, salary, benefits, start date, and any contingencies. Include clear instructions for accepting the offer. 

Have legal counsel review the materials to ensure compliance with relevant regulations and mitigate legal risks. 

Once everything looks good, communicate offer details clearly and promptly, allowing room for negotiation within reasonable boundaries. Maintain transparency throughout the process to build trust with the candidate.

Onboarding and Compliance for Hiring Foreigners in Singapore

Compliance

HR professionals in Singapore must comply with the Employment Act as mentioned previously. They also need to ensure compliance with Singapore’s work permit and visa requirements for foreign hires. Different types of work passes, such as EP and S Passes, have specific eligibility criteria and application processes.

Employee benefits, such as healthcare coverage, CPF contributions, and statutory leave, should comply with Singaporean regulations. It’s important to keep up with these laws as they are regularly updated.

Fair employment practices must be followed to prevent discrimination based on race, gender, religion, or nationality. Additionally, maintaining accurate records of all hiring-related documents, including job descriptions, resumes, interview notes, and employment contracts, is essential for showcasing compliance with legal requirements and facilitating audits if necessary.

Employment contracts

Craft an employment contract that complies with Singaporean laws and reflects the agreed-upon terms, covering probationary periods, notice periods, termination conditions, and confidentiality agreements.

Read next: What to Include in an Employment Contract

Employment pass system

The Employment Pass (EP) system is a work visa scheme designed to smoothen the process for organizations in Singapore hiring foreigners. It’s designed for foreign professionals including managers, executives, and specialists. It allows them to live and work in Singapore for a set period, typically one to two years, with the option to renew.

• Eligibility: Candidates must meet a two-stage eligibility framework to qualify for EP applications. They need to earn an EP-qualifying salary, which is $S5,600 for most sectors and S$6,200 for the financial services sector. Additionally, they must pass the complementarity assessment framework (COMPASS) and score at least 40 points based on salary, qualifications, diversity, and support for local employment.
• Minimum salary requirements: The Singaporean government sets minimum salary thresholds for different Employment Pass categories. These thresholds are regularly reviewed to ensure competitive salaries based on skills and experience.
• Validity period: Employment Passes are typically issued for one to two years, depending on qualifications, job role, and employer’s track record. Renewal is subject to continued employment and meeting eligibility criteria.
• Employer sponsorship: An Employment Pass application must be sponsored by a registered Singaporean employer. Employers are responsible for submitting EP applications and ensuring compliance with immigration regulations.

Induction training

When it comes to how to welcome new employees, it’s all about making them feel like part of the family from the get-go by delivering the best onboarding experience. Start by introducing them to the company culture, values, and key team members. Provide thorough training on essential tools, systems, and processes relevant to their role to ensure they can contribute effectively from the start.

To prevent new employees from feeling left out or isolated, pairing them with a mentor or buddy can facilitate integration into the team and provide ongoing support. Encourage open communication and feedback to address any questions or concerns they may have. Celebrate their successes and milestones to foster a sense of belonging within the organization.

Additional resource: Download our free Onboarding Kit!

Managing Your Employment in Singapore

When it comes to Singapore employment management, you need to ensure compliance with local labor laws, maintain a positive workplace environment, and optimize productivity. HEre are some key areas to focus on: 

Payroll and benefits

• Compliance with regulations: Ensure that payroll processes comply with Singapore’s employment laws and relevant regulations.
• Accurate wage calculations: It’s important to calculate wages, allowances, and deductions correctly, considering factors mentioned above like overtime, public holidays, and CPF contributions.
• Benefit administration: Effectively manage various benefits such as medical insurance, CPF, and any other fringe benefits offered.
• Tax compliance: Ensure that all necessary tax deductions and filings are made in accordance with Singapore tax laws.

Leave management

• Leave entitlements: Understand and implement leave policies, including annual leave, sick leave, maternity leave and paternity leave.
• Leave tracking: Maintain accurate records of employee leave to ensure compliance and prevent misuse.
• Leave approval process: Establish clear procedures for requesting and approving leave, considering factors like workload and operational requirements.

Performance management

• Performance reviews: Conduct regular performance reviews to assess employee performance, identify areas of improvement, and reward achievements.
• Performance improvement plans: Implement performance improvement plans for employees who require additional support or training.
• Regular feedback: Provide constructive feedback and coaching to help employees develop and improve performance.

Employee relations

• Cultural sensitivity: When hiring foreigners in Singapore, it’s important to recognize and respect cultural differences to create an inclusive and welcoming workplace environment.
• Employee engagement: Implement initiatives to enhance employee engagement, satisfaction, and loyalty.
• Conflict resolution: Develop effective strategies for resolving workplace disputes and conflicts.

Ongoing Compliance

Maintaining compliance post-hiring in Singapore requires staying updated with labor laws and regulations. Start by establishing clear policies and procedures that align with local legislation, covering areas like employee contracts, working hours, leave entitlements, and workplace safety. Regular audits and reviews of these policies help identify any gaps or updates needed. 

Providing continuous training and education on compliance for employees and managers is also critical to maintaining adherence to regulations. Staying connected with legal experts or consultants who specialize in Singaporean labor laws can provide additional support in navigating any compliance challenges that may arise. 

For a detailed guide on compliance areas to monitor, refer to our 2024 HR compliance checklist!

Taxes and Contributions

Employer obligations

Central Provident Fund (CPF)

Employers are obligated to contribute a portion of their employees’ salaries to the CPF. The contribution rates vary depending on the age of the employee. 

Here’s a breakdown of the CPF contribution rates for 2023: 

It’s important to note that contribution rates may be adjusted periodically based on economic conditions. Employers are also responsible for submitting monthly CPF contributions reports to the CPF board.

Foreign Worker Levy

Employers are required to pay a levy for each foreign worker they employ, based on the worker’s nationality and occupation. Employers must also ensure that they are paying the correct levy and that their foreign workers have valid work permits.

MediShield Life

Employers must ensure that all employees are covered by MediShield Life. Employers may also be required to contribute to their employees’ MediShield Life premiums, depending on the company’s size and the employees’ income. Last but not least, employers must ensure that employees are enrolled in MediShield Life and required contributions are made in a timely manner.

SkillsFuture Credit

Employers can choose to support their employees’ skills development by contributing to their SkillsFuture Credit through the Top-Up scheme.

Employee obligations

Income Tax

Singapore adopts a progressive income tax system and employees are required to file income tax returns every year. 

Here’s the income tax rates for the year of assessment 2023/2024: 

Read next: Employer’s Manual for Taxation in Singapore

Central Provident Fund (CPF)

Employees must contribute a portion of their salary to the CPF as per regulations.

Rates may vary depending on age as per below: 

MediShield Life

Employees are automatically enrolled in MediShield Life but may need to pay premiums, depending on their income. 

Employees may also consider purchasing supplementary insurance to enhance their healthcare coverage beyond MediShield Life.

Optimize Your Singapore Hiring Strategy Today

Navigating 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 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 a demo with our team today to learn more about how Omni can help revolutionize your Singapore hiring process.