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Hiring Employees in Singapore: A Definitive Guide

By November 16, 2022No Comments
Singapore Skyline and view of Marina Bay at twilight

Singapore is a top country for growing tech companies and one of the easiest markets to do business in. However, hiring employees in Singapore can be difficult for global employers who must navigate challenges like complicated tax laws and strict immigration policies.

This guide outlines everything employers should know as they prepare to expand into Singapore.

Why Employ Foreign Workers in Singapore?

Singapore is technologically advanced with incredible growth potential. The country’s acute English proficiency, highly educated workforce, and stable economy remain the top reasons why companies choose to employ foreign workers in Singapore.

Explore more reasons global companies engage talent in Singapore below.

Singapore's economy is one of the most stable. Singapore was marked #1 in 2020 for growing tech companies. In 2019, Singapore was ranked #2 for ease of doing business. Singapore is one of the world’s 15 largest exporters of products and services.  Singaporeans’ English-speaking proficiency levels surpass all other Asian markets.

While Singapore is an excellent country in which to grow your team, the hiring laws can be complicated. As you plan your expansion, it’s important that you understand how to hire compliantly to avoid legal consequences.

How to Hire Employees in Singapore: 3 Ways

Companies can hire employees in Singapore using one of three methods: Set up a legal entity, partner with an employer of record (EoR), or engage contractors. Let’s examine each option.

1. Set Up an Entity in Singapore

A traditional route to hiring employees in Singapore is setting up a legal entity. Entity establishment allows you to employ staff directly and maintain all HR functions internally. This route provides more control and oversight of your employment relationships.

However, creating a foreign subsidiary requires substantial time and cost commitments. Businesses should expect to spend up to tens of thousands over the course of several months to set up a legal entity. Along with establishing a physical headquarters, businesses must hire a resident director and pay ongoing administrative fees.

Setting up an entity is a consuming, complex, and costly commitment, which is why many companies partner with an EoR instead.

2. Partner With an Employer of Record in Singapore

A straightforward route to hiring employees in Singapore is partnering with an employer of record. An EoR makes it fast and easy to hire overseas, helping companies with the following:

  • Onboarding tasks such as drafting employment contracts
  • Payroll processing and tax withholdings
  • Comprehensive and statutory benefits
  • Ongoing support with local labor laws and regulations

For example, if a British tech company wanted to hire Singaporean software engineers, they could partner with an EoR to onboard, employ, and pay their talent. The relationship between the EoR, supported employee in Singapore, and the British company would look like the following:

Relationship between EoR, your company, and employee. EoR is the legal employer of the supported employee while your company manages the worker.

Learn more about what an employer of record is and how it works.

3. Engage Contractors in Singapore

Some companies may choose to engage contractors rather than onboard employees. While this may seem like a simpler route to hiring Singaporean talent, it involves complex labor codes and international payment considerations.

Here are common difficulties when hiring contractors in Singapore:

  • Misclassification. Most countries, including Singapore, set strict guidelines delineating contractors and employees. If local labor officials view your contractor as an employee, you could face legal consequences and fines.
  • International payments. Paying contractors overseas is not as simple as setting up a PayPal account. Companies must find a solution such as contractor payments to ensure timely and secure payments.

Read more about contractor risks in Singapore.

What to Know Before Hiring Employees in Singapore

Whether you hire talent through entity establishment, an employer of record, or contractor engagements, it’s critical to understand Singapore’s employment laws and statutory requirements.

Let’s look at what you need to know about Singaporean employment law and immigration regulations.

Singapore Employment Law

Local employment law in Singapore varies greatly from other regions. Here’s what you should know before expanding into Singapore:

  • Compensation. Unlike many countries, there is no minimum wage in Singapore, and bonuses are not required. However, 13-month bonuses are common.
  • Annual leave. Employees are entitled to a minimum of seven days if they are covered by Singapore’s Employment Act and have completed at least three months of service.
  • Parental leave. Singaporean employees are guaranteed 16 weeks of parental leave if the child is a Singaporean citizen.
  • Sick leave. The amount of sick leave is dependent upon the months of service an employee has completed. For example, after three months, an employee is eligible for five days of sick leave. After five months, they are entitled to 11 days.
  • Benefits. Singaporean employees are covered by the Central Provident Fund (CPF). The CPF is a social security savings scheme funded by employers and employees that maintains retirement pensions, housing, and healthcare.

Find out more about Singapore’s employment law here.

Immigration: Singapore Employment Pass vs. Permanent Residence

Singapore has strict immigration laws for foreign talent. Employers looking to relocate a non-Singaporean citizen to work in Singapore have two visas to consider: Employment Pass and Permanent Residence.

Many transplants choose the Singapore Employment Pass, which is the most common work visa for professionals, managers, and executives. The Employment Pass allows the holder to compliantly work in Singapore and open a bank account or rent property.

Singapore Employment Pass eligibility hinges on the following:

  • Job offer in Singapore
  • Position in a managerial, executive, or specialized job
  • Salary of at least $3,600 per month
  • Degree from a reputable university, professional qualifications, or specialist skills

Permanent Residence is another avenue for foreign workers to live, work, bank, and travel in Singapore.

There are three ways to pursue Permanent Residence in Singapore:

  • Professional/Technical Personnel and Skilled Workers Scheme (PTS). This is the most common and competitive scheme.
  • Global Investor Program (GIP). While only available to high-net-worth individuals, this is the most commonly approved scheme.
  • Foreign Artistic Talent Scheme. This scheme is not very common and only available to famous or significant foreign artists.

With varying visa and permit requirements, relocating an employee to Singapore sometimes leads to time delays and unexpected costs. Using an employer of record sheds that burden and ensures compliance for your international team.

Read more about the differences between the Employment Pass and Permanent Residence in Singapore.

Start Hiring Employees in Singapore Today

As you expand into Singapore, simplify the process with Velocity Global’s Employer of Record solution. We take on the heavy lifting of international expansion by onboarding, paying, and providing benefits so you can focus on growing your team.

Take the easier route to hiring employees in Singapore. Partner with Velocity Global.