Employment Contracts in Singapore

A Comprehensive Guide to Employment Contracts in Singapore
Singapore’s employment framework is governed by the Employment Act, which outlines the requirements for contracts. Whether hiring directly or through an Employer of Record in Singapore, it is crucial to ensure contracts are legally sound. Here’s what you need to know:

1. When Does the Employment Contract Start?
The employment contract becomes effective when the employee accepts the offer and signs the agreement. It sets the terms of employment, specifying the rights and responsibilities of both parties.
💡 Pro Tip: Include all agreed terms in writing to avoid potential disputes and to comply with the Employment Act.

2. Key Components of a Singapore Employment Contract
To comply with Singapore’s legal framework, an employment contract should include:
Job Title and Description: Clearly outline the role, responsibilities, and expectations to avoid ambiguity.
Workplace Location: State whether the role is office-based, remote, or hybrid.
Type of Employment: Employment can be full-time, part-time, or on a contract basis. Specify the nature and duration of the engagement.
Compensation and Benefits: Include salary details, overtime pay, and statutory contributions such as the Central Provident Fund (CPF) for eligible employees.
Working Hours: The standard workweek is 44 hours, with overtime capped at 72 hours per month, as per the Employment Act.
Leave Entitlements: Cover statutory benefits such as:
Annual Leave: A minimum of 7 days for the first year, increasing with tenure.
Sick Leave: Up to 14 days outpatient leave and 60 days hospitalization leave annually.
Maternity/Paternity Leave: As per the Child Development Co-Savings Act.
Termination and Notice Period: Include conditions for termination and required notice periods, which typically range from 1 week to 1 month, depending on the length of service.
💡 Why This Matters: A well-defined contract ensures compliance with Singapore’s labor laws and minimizes the risk of disputes.

3. Salary Structure: Breaking Down Compensation in Singapore
Compensation in Singapore generally includes:
Base Salary: The main taxable income.
Allowances: Transportation, meal, and other allowances if applicable.
Bonuses: Performance or annual bonuses based on company policy.
Benefits: CPF contributions, healthcare, and leave entitlements.
💡 Key Takeaway: Structuring a clear and compliant salary package is critical for employee satisfaction and legal compliance.

4. Legal Considerations: Protecting Your Business
a. Non-Compete and Confidentiality Clauses
These clauses are enforceable but must be reasonable in terms of duration, geography, and scope.
b. Statutory Obligations
Employers must comply with obligations such as:
CPF Contributions: Mandatory for Singapore citizens and permanent residents.
Fair Consideration Framework (FCF): Ensuring fair hiring practices and prioritizing local talent.
💡 Tip: Non-compliance with these obligations can result in severe penalties.

5. Background Checks and Employee Protections
Employers can conduct background checks but must comply with the Personal Data Protection Act (PDPA). Written consent is required from candidates before performing checks.

6. The Importance of Written Contracts
Written contracts are essential in Singapore to ensure clarity and legal protection. A well-drafted contract protects both employer and employee by clearly defining expectations, roles, and terms of employment.

7. Why Partner with GlobainePEO?
Expanding in Singapore requires navigating a complex legal framework. Partnering with GlobainePEO provides:
Expertise in drafting and managing compliant employment contracts.
Assistance with payroll, CPF contributions, and statutory requirements.
A seamless hiring process, enabling you to focus on business growth.

💡 GlobainePEO Advantage: As your trusted Employer of Record in Singapore, we handle all administrative, legal, and compliance aspects, ensuring smooth and compliant business operations.

Drafting robust employment contracts in Singapore is crucial for legal compliance and effective workforce management. By partnering with Singapore EOR, like GlobainePEO, you can simplify the complexities of employment and concentrate on achieving your business goals.