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HIRING EMPLOYEES


As Singapore’s main labour legislation, the Employment Act covers the basic terms and conditions of employment as well
as the rights and obligations of employers and employees, except for managerial, executive or confidential positions, seamen
and domestic workers. The aspects of employment stipulated within are:

             1. Contract of Service

             Contracts of Service are binding agreements between employers and employees that explicitly state the length of service,
             basis of termination and all aspects of an employment term. They must conform to the standards implied by the Employment   
             Act, otherwise they are considered not effective.

             Contracts of Service essentially cover the following:

  • Commencement of employment
  • Appointment (job title and job scope)
  • Hours of work
  • Probation period (if required)
  • Remuneration
  • Employee benefits
  • Termination of contract (notice period)
  • Code of conduct (behavioural adherences, etc)


2. Wages

There are a few things to note when it comes to remuneration in Singapore.
There are no minimum wage requirements. Salaries are based on negotiation and agreement between employer and employee.
Employees must be paid at least once a month, and no later than seven days after salaries are due.

Salaries cannot be deducted under any circumstances except for authorised instances, some of which are absence from work,
damage/loss of goods, employer-supplied accommodation and salary advances and loans.

Salaries are calculated in two ways:

–  Basic Rate of Pay which is the salary of a worker including wage adjustments and increments and excluding all allowances.
It is used to calculate pay for work on a rest day or public holiday.

–  Gross Rate of Pay which is salary including allowances. It is used to calculate salary deductions for absence from work and
pay in lieu of termination.


             3. Hours of Work and Overtime, Rest Days and Public Holidays

             Hours of work are generally determined by the company and should be stated in the contract of service. But the Employment Act does
             cover regulations for employees categorised as ‘workmen’, who are, by definition,
             any person who is contracted to do manual labour, or any person whose total earnings do not exceed S$1,600.

             Generally, a workman’s working hours are 8 hours a day (excluding meal breaks) or 44 hours a week. In a day, they are allowed to work a                         maximum of 12 hours, with a break in between for meals. For overtime, they
             are only permitted to work a maximum of 72 hours in a month. Otherwise an application for overtime exemption has to be filed. Overtime
             must be at least 1.5 times the hourly rate of pay.

             All employees are accorded one unpaid rest day by the Employment Act every week, with a maximum of 12 working days between each rest                     day. If an employer requests an employee to work on a rest day, the payment
             is twice the daily rate (one day’s salary for half a day’s work and two days’ salary for more than half a day).

             All employees are entitled to the 11 gazetted public holidays, which are:

    • New Year’s Day (1 Jan)
    • Chinese New Year (2 days, Feb) 
    • Good Friday (Apr)
    • Labour Day (1 May)
    • Vesak Day 
    • National Day (9 Aug)
    • Hari Raya Puasa
    • Hari Raya Haji 
    • Christmas Day (25 Dec)
  • An employer can choose to either compensate an employee who has worked on a holiday by crediting him with a day’s salary in lieu, or substitute the day with another day off.


    4. Leave

    There are four types of leave that are governed by the Employment Act, namely annual, sick, maternity and childcare leave.

    In Singapore, annual leave is accorded to an employee based on his length of service to the company. For the first year, an employee
    is entitled to seven days of leave. Each successive year adds one day to the annual entitlement, capping at 14 for the 8th year and
    beyond. Marriage, paternity and compassionate leave are not covered and are up to the arrangement between employer and employee.

    Employees are entitled to 60 days of hospitalised and 14 days of non-hospitalised sick leave. For most medical costs in areas such as medication, treatment and hospitalisation, an agreement of medical coverage is arranged and indicated in the contract of employment. However, employers are obligated by law to reimburse medical consultation and examination fees.

    Women are entitled to four weeks of paid maternity leave immediately before delivery and eight weeks after. For one to be entitled full maternity benefits, her child must be Singaporean at birth, legitimate and is her first to fourth child. She must also have worked for her company for at least 180 days.

    Any parent who has a child under the age of seven is also accorded two days of childcare leave per year, regardless of the number of children.


              5. Retrenchment

              The Employment Act advises on the procedures, basis of benefits as well as recommended alternatives to the laying-off of workers to help                      ensure that both parties receive a fair and reasonable deal.

              Employers are required to give notice to employees affected by a company’s retrenchment exercise. Unless the notice period is covered in the                  contract of service, the following table based on the length of service should
              be used as a guide so as to give the retrenched enough time to cope with the loss of their jobs:

Length of Service

Notice Period

Less than 26 weeks

1 day

26 weeks to less than 2 years

1 week

2 years to less than 5 years

2 weeks

5 years and above

4 weeks

            An employee who has worked for more than 3 years at a company can request for retrenchment benefits.
            However, it is recommended that retrenchment should be used as a last resort and only after other alternatives 
            have been explored.


            Sources: IE Singapore and RSM Chio Lim, 2007.