The Employment Act in Singapore: What HR Need to Know

What is the Employment Act Singapore?

As Singapore's central labour law, the Employment Act establishes the fundamental legal framework for companies operating within the country, outlining the legal requirements that companies must adhere to throughout the employment lifecycle, from recruitment and onboarding to employee management and termination.

The Employment Act safeguards the rights of both employees and employers, ensuring fair treatment, transparency, and a stable work environment.

Importance of the Employment Act

Violating the labour laws can result in serious business damages such as government fines, licence revocation, and other disciplinary actions.

Therefore, it’s essential to follow the best practises and ensure the wellbeing of your company and your employees.

Who Is Covered Under Employment Act Singapore?

All local and foreign employees working in Singapore under a contract of service with an employer are protected by the Employment Act. These include full-time, part-time, temporary, and under contract workers.

For employees working less than 35 hours a week, they're considered part-time workers and they're covered by the Employment (Part-Time Employees) Regulations.

Note: As announced in Singapore Budget 2023, the Part-time Re-employment Grant will be extended until 2025 to encourage employers to offer part-time re-employment, other flexible work arrangements, and structured career planning to senior workers.

Meanwhile, seafarers, domestic workers, and statutory board employees or civil servants aren't covered by the Employment Act. Their terms and conditions of employment will be based on the specific employment contract.

Take note that term contract employees are still a significant part of an organisation’s workforce. Employers are encouraged to follow the Tripartite Advisory on Employment of Term Contract Employees.

Who Is Covered under Part IV of the Employment Act?

Part IV of the Employment Act, which provides for the rest days, work hours, and other conditions of service, is only applicable to workmen (doing manual labour) who are earning a basic monthly salary of up to $4,500 as well as non-workmen who are earning a basic monthly salary up to $2,600.

Note: The above amount excludes overtime payments, bonus payments, annual wage supplements, productivity incentive payments, and any allowance.

Managers and executives who have direct authority in business management are excluded from Part IV of the Employment Act. These also include professionals who carry out the same responsibilities as managers or executives such as lawyers, accountants, dentists, and doctors.

What Needs to Be Included in An Employment Contract?

The contract of service sets out a specified list of the terms and conditions of the working arrangement between the employee and the employers. To prevent any possible disputes, it's strongly advised to prepare a written document for the contract.

As of April 1, 2016, employers are required to issue key employment terms (KETs) in writing to all employees who meet all the following requirements:

• Enter to a contract of service on or after 1 April 2016.
• Are covered by the Employment Act.
• Are employed for 14 days or more (refers to the length of the contract, not the number of days of work)

The contract must include (KETs) and essential clauses such as:

1. Employer's Full Name
2. Employee's Full Name
3. Job title, description of the scope of duties and responsibilities
4. Start date of employment
5. Duration of employment (if an employee is on a fixed-term contract)
6. Working arrangements including daily working hours, working days per week, and rest days
7. Salary period.
8. Basic salary for hourly, daily or piece-rated workers, employers must also indicate the basic rate of pay
9. Fixed allowances
10. Fixed deductions
11. Overtime payment period (if different from item 7 salary period)
12. Overtime rate of pay.
13. Other salary-related details like bonuses and incentives
14. Type of leave, such as annual leave, outpatient sick leave, hospitalisation leave, maternity leave, and childcare leave
15. Medical benefits, such as insurance and dental benefits
16. Probation period
17. Notice period
18. Place of work (optional) (strongly encouraged to include this detail)

For professionals, managers, and executives whose overtime pay doesn't apply, there's no need to include items 11 (OT period) and 12 (OT pay).

Common KETs like leave policy and medical benefits can also be provided in employee handbooks.

Smart Tip: QuickHR can now automatically generate and store KETs, streamlining the process for HR and employees.

Work Passes and Permits

When it comes to hiring foreign employees, there are a lot of processes involved and factors to consider. It is important to make sure that they have the appropriate work visa that authorises them to work in Singapore.

The three most common visas required are the following:

• Employment Pass

  For foreign professionals, managers and executives. Candidates need to earn at least $5,000 a month.

• S Pass

  For skilled workers. Candidates need to earn at least $3,000 a month.

• Foreign Work Permit

  For semi-skilled migrant workers in the construction, manufacturing, marine shipyard, process or services sector.

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