Although economic growth in Singapore slowed down a little in 2016, the country’s openness to global trade and investment continues to prove as a solid soil for international investment. Singapore’s economic dynamism, transparent regulatory environment, and commercial security attracts most of the regional investment.
The Index of Economic Freedom for 2016 has cataloged Singapore’s regulatory environment as one of the world’s most efficient. Launching a business takes only three days with minimum capital investment; there is no statutory minimum wage, but wage adjustments are guided by the National Wage Council and employment is ruled by the Employment Act as Singapore’s main Labor Law. If you are planning on expanding your business, Singapore is an attractive destination in South East Asia. Take a look at these employment regulations and let us know how we can help your international expansion:
Employment contracts and employment relationships:
To understand the employment legislation in Singapore, one must start by acknowledging that contract law in Singapore is largely based on the British common law of contract. Hence, the rules developed in the Singapore courts do bear a very close resemblance to those developed under English common law and much of the law of contract in Singapore remains in the form of judge-made rules. This can be considered as an advantage as the understanding of local legislation can have similarities with the American legal system.
According to the Ministry of Manpower in Singapore, a contract of service defines the employer-employee relationship, including the terms and conditions of employment. To be completed, a contract must include all the essential clauses determining scope of the assignment, job description, remuneration, hours of work, etc. To minimize disputes the agreement should be in writing and come in the form of a letter of appointment; however, it can be verbal, expressed or implied.
As of April 2016, all employers are obliged to issue Key Employment Terms to the employees. These KETs include personal information for the employee, job title, main duties and responsibilities, working agreements, salary period, basic salary, allowances, deductions, overtime, type of leave, medical benefits, probationary period, and notice period.
It is important to note, that unlike in the U.S., an employment relationship is confirmed when the employee shows up for work on the appointed start date. If the employee fails to report to the office the employment is considered not valid and the employment relationship is not initiated. In this case, the Employment Act will not be applicable to the employee and neither the employer nor the employee can claim notice pay or compensation for services.
An employee is not required under his/her contract of service to work more than 8 hours in a day or 44 hours in a week. The limit of 8 hours per day may be exceeded when an employee is not required to work more than 5 days a week. However, he/she is not required to work for more than 9 hours per day or 44 hours in a week.
If the number of hours worked is less than 44 hours every alternate week, the limit of 44 hours a week may be exceeded in the other week. However, this must be stated in the contract of service and is subject to a maximum of 48 hours in one week or 88 hours in any continuous 2 week period.
The rate of payment for overtime work beyond the normal working hours on a public holiday is at least 1.5 times the employee’s hourly basic rate of pay.
13th month or The Annual Wage Supplement (AWS)
This is a single annual payment on top of an employee’s total annual wage. AWS is not compulsory. Payment depends on what is in your employment contract or collective agreement.
Holidays and PTO:
An employee who has worked for at least three months with an employer is entitled to paid annual leave of seven days for the first 12 months of continuous service and an additional day for every subsequent 12 months, subject to a maximum of 14 days.
If you have any questions regarding employment in Singapore or international expansion in general, please give us a call today, we’d love to help!