Singapore, widely known as the Silicon Valley of Asia, boasts a highly skilled and extremely diverse talent pool. Its quality workforce, among other reasons, makes the city-state a top destination for global hiring.
How Does an Employer of Record Help with Remote Work?
Without permanent establishment status in Singapore, a company cannot legally hire employees. An employer of record (EOR) is a foreign company’s legal employer.
The Benefits of Hiring Remote Workers in Singapore
Singapore is home to English, Malay, Mandarin, and Tamil, one of the world’s most ethnically diverse nations and the world’s most religiously diverse country. Singapore's multicultural and multilingual society means that remote workers from Singapore can speak multiple languages fluently, making it easier for businesses to reach out to a broader audience.
In 2020, 24.4% of adults aged 25 to 34 held a university education out of a total population of 5.6 million. This cemented its status as the most highly educated country in the world in 2021. In the same year, it also produced the highest proportion of graduates in information and technologies.
Singapore is made up of highly qualified candidates whose remarkably versatile skills are employable across a wide range of sectors. Talent is spread across pharmaceuticals, biotechnology, legal and financial services, and precision engineering, among others.
Singapore has a reputation for being a highly efficient and productive country with a strong work ethic. Remote workers from Singapore are no exception and are known for their commitment to their work, attention to detail, and high standards of professionalism.
A High Return on the Cost of Hiring
Singapore regulates wage levels under the Local Qualifying Salary (LQS) for local employees and Progressive Wage Model (PWM). Local employees may not be paid less than SGD 1,400 (around USD 1,050) per month and SGD 9 (approximately USD 6.75) per hour. The PWM stipulates monthly base pay ranging from SGD 1,312 to 1,975 monthly (around USD 985 to 1437). The PWM applies to cleaning, administrative work, security, landscaping, food service, drivers, lift and escalator maintenance, and retail employees.
The corporate tax rate is a flat 17%. Regarding payroll, hiring an employee in Singapore costs about 1.5 times the base pay. Compared to North America and many parts of Europe, wage levels in Singapore are relatively affordable. Access to a highly skilled and diverse workforce further leads to a high return on the cost of hiring.
Not needing permanent establishment status to hire in Singapore results in reduced costs of global hiring. Through an EOR, a foreign employer would typically only be subject to taxes on payments such as service or commission fees. For this reason, among several, EOR is one of the most economical ways of global hiring.
Time Zone Proximity
Singapore Standard Time is Universal Coordinated Time +8. It shares the same time zone with many Asian countries and parts of Australia and Russia. Singapore’s favorable location enables easy coordination and collaboration with major and emerging economies.
Manage Employees through a Global Employer of Record
Foreign employers must comply with the following key employment areas when hiring employees in Singapore.
Employment Contracts
Known as contracts of service, employment contracts can be written or verbal contracts. Verbal contracts are legally binding and enforceable. A written record of key employment terms (KET) must be provided to all employees within 14 days after employment begins.
With seniority, crucial benefits such as annual leave and severance pay, entitled to both permanent and fixed-term employees, may increase. The implication for foreign employers is to conclude the length of contracts appropriate to the work requirements. They should also know that these contracts must protect employees' benefits and entitlements. Understanding these distinctions can also aid in estimating headcounts, budget forecasting, and document preparation for global expansion.
Guidance on benefits from an EOR like Borderless assists in creating competitive packages that meet evolving labor regulations.
Paid Leaves
Employees may request various leave entitlements after three months of employment.
Up to 14 days of sick leave with full pay can be taken. After one year of employment, employees are entitled to seven days of paid time off. It increases by one day with each year of service, up to 14 days.
An EOR like Borderless can clarify each type of leave entitlement, helping you fulfill your employer's responsibility.
Social Security Benefits
Subject to wage base limits, both employers and employees contribute to the mandatory Central Provident Fund (CPF). CPF funds retirement, healthcare, and housing benefits for employees. The rates are determined by employees' ages (five brackets) and corresponding wage levels. They are as follows:
- 7.5% - 17%: employer contribution
- 12.5% to 37%: employee contribution
An EOR like Borderless will provide the most up-to-date social security that employers will need to make.
Other Employer Responsibilities
With no statutory limits, probationary periods in Singapore are usually three to six months. Employees can only be summarily dismissed (without notice) under strict conditions regarding termination. Otherwise, termination requires notice or just cause or excuse. The required notice period is one day for employees who have worked under 26 weeks, increasing to four weeks for those employed for five years or more.
While no statutory requirements exist for severance pay, the MOM recommends retrenchment compensation. The amount is between two weeks to one month’s salary per year of service for employees employed for at least two years. An ex-gratia payment for employees who have been employed for less than two years is also recommended.
In the event of separation, an EOR like Borderless will ensure you fulfill your employer's responsibilities. Furthermore, it will advise you on the best practices for following Singaporean work norms.
Choosing the Right EOR for Your Business
There are several key considerations for employers to make the most informed decisions in choosing the best EOR for their businesses.
- Geographic coverage: Make sure your EOR can legally operate in Singapore.
- Employment services: The suite of employment services offered by a competitive EOR should cover hiring, onboarding, payroll, benefits, and HR management.
- Reputation: When selecting an EOR, get a sense of its past work and experience. Make sure that it has a great track record and the local know-how to add value.
- Cost: A high-value EOR’s pricing should be transparent and reasonable.
- Flexibility: An EOR should offer customized employment solutions to meet your needs and requirements.
Overall, foreign employers should choose an EOR that can provide cost-effective, reliable, and compliance-first employment solutions. This will enable you to navigate and expand into foreign waters with confidence, ease, and trust.
Borderless, Your Employer of Record and Partner in Global Hiring
In over 150 countries, we are ready to help you hire, onboard, manage, and pay remote employees wherever you are. Our experienced team of legal experts ensures compliance and assists employers worldwide in navigating global hiring. Whichever country you choose to do business in, book a demo today and discover what Borderless can do for you.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
