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Hiring Foreign Employees-02-1

 

Work Visas 101

All you need to know about hiring foreign employees in Singapore

(10 min read)

There are many reasons why you’d want to hire foreign talents. Given the size of Singapore’s talent pool, looking abroad appears to be the easy fix. But only at first glance. In this comprehensive guide, we’ll cover Singapore’s foreign manpower policies and fair hiring guidelines.

Contents

1. Dealing with rules

  • Employment Act (EA)
  • Employment of Foreign Manpower Act
  • Fair Considerations Framework

 

2. All about Singapore employment passes and application processes

  • Overview: Types of Visas
  • Levies and quotas
  • Employment Pass (EP)
  • Entre-pass
  • S-pass
  • Dependant’s Pass
  • Long Term Visit Pass

 

3. Liaising with agencies

  • Ministry of Manpower (MOM)
  • Immigration and Checkpoint Authority (ICA)

4. Employer responsibilities

  • The employment contract
    • Key Employment Terms
  • Salary
  • Taxation
  • Dependents
  • As an employer, there’s a lot to consider...
  • Health screening


5. General recruitment guidelines

  • Typical compensation packages
    • Central Provident Fund (CPF)

Navigation-05

 

Many foreigners have unique talents, knowledge, and skills that would be useful for a growing business—especially in Singapore, where businesses are expected to face a 1.09 million labour deficit by 2030. 

According to the Singapore Business Review, the size of Singapore’s financial and business services sector could reach US$29.2 billion by 2030. But that talent crunch could cause up to 25% of this potential to remain unrealised. Finding the right talent is going to be a challenge for many companies in the upcoming years.

Many Singaporean companies are looking outside of the country to find the talent they need. But the Singaporean government wants to support its own citizens. To that end, they've designed laws and regulations designed to promote local hires where possible. 

National guidelines and requirements, like those found in the Fair Considerations Framework, are crucial to protect the livelihoods of Singapore’s diverse workforce. But they also make it a tad more difficult for Singaporean companies to hire foreigners. Let’s look at how employers can stay compliant while building vibrant teams.

 

1. Dealing with rules

Dealing with Rules-12All foreign workers are governed by both the Employment Act (EA) and the Employment of Foreign Manpower Act (EFMA). These acts sound similar and have complementary purposes, but companies who only hire locally won’t need to pay too much attention to the EFMA.

However, if you’re hiring an expatriate or foreigner, it’s a different story.

 

Employment Act (EA)

The Employment Act is Singapore’s main labour law. It covers all employees under a contract of service with an employer, with just a few exceptions:

  • Manager or executive with a monthly basic salary of more than S$4,500
  • Seafarer
  • Domestic worker
  • Statutory board employee or civil servant

Note: Contracts of service are salary-based employment. Contracts for service, which are one-off engagements, aren’t covered by the EA.

The EA defines terms and conditions for safe, fair, and legal work for all local and foreign employees under its jurisdiction. It also outlines the fines and punishments that you’ll have to pay if you break its rules. You can find it on the Singapore Statutes Online site.

 

Employment of Foreign Manpower Act (EFMA) 

The EFMA regulates the employment of foreigners. Here you’ll find specific responsibilities, processes, and penalties that apply if you’re making a foreign hire. It protects any and all employees who have been issued work passes. 

For the most part, foreign employees are governed by the contracts they’ve signed with their employers. But because of various clauses in the EFMA and EA, some of Singapore’s employment laws—such as those governing work-related injury compensation, maternity benefits, and childcare leave—will supersede what’s on the contract.

To ensure that your contract is up to par, it’s best to ask an HR expert for answers to specific questions about the EA and EFMA.

 

FCF-08

Fair Considerations Framework (FCF)

The Fair Considerations Framework was introduced in August 2014 after Singaporeans voiced frustration that high-paying professional, managerial, and executive (PME) jobs were being taken by foreigners. 

Take the FCF seriously—firms that are found to discriminate against locals will be placed on an MOM watchlist. Their employment pass applications are scrutinized more closely, and they may even incur fines. Over the past few years, about 600 firms have been placed on the watchlist, and a total of 23,000 EP applications rejected for violating the FCF.

 

2. All about Singapore employment passes and application processes

Online employment pass applications typically take about three weeks. Apply manually and the employment pass procedures will stretch to around eight weeks. On rare occasions, it can reach three months. You can apply for visas and check the employment pass status manually or via MOM’s website.

Most stay permits in Singapore are valid for one to two years, and you can renew them for an additional two to three years.

Types of passes-06

 

Types of Singapore Work Visas

The Singaporean government offers several types of work visas and stay permits to foreigners. White-collar executives and professionals will typically need an Employment Pass (EP). A potential foreign hire and their family may need to apply for a/an:

  • Employment Pass (EP)
  • Entre-pass 
  • S-pass 
  • Dependents Pass (DP)
  • Long Term Visit Pass (LTVP)

Levies and quotas

Depending on the pass you apply for, you may have to pay additional taxes, levies, or fees. For example, S Pass holders incur a monthly foreign worker levy that ranges from S$330 to S$650 per month.

Employment Pass (EP)

The Employment Pass allows foreign professionals, managers and executives to work in Singapore. 

For a job listing to be eligible for an EP, it has to offer at least S$3,600 (to local and foreign candidates). Before you even start looking at potential candidates, you have to list the job on MyCareersFuture.sg for at least 14 working days. This is to prove that you've fairly considered Singaporeans for the position.

Some more requirements:

  • Avoid any discriminatory words or phrases.
  • Offer a clear, specific, and consistent salary. The salary range advertised:
    • Must be visible to all candidates and cannot be hidden.
    • Cannot be too broad, i.e. the maximum salary cannot exceed two times the minimum salary.
    • Must actually contain the salary being offered
  • If you change any advertisement details (e.g. job title, salary or number of vacancies), you must keep it open for at least another 14 days before you can submit the EP application.

You won’t have to list the vacancy on MyCareersFuture.sg if:

  • Your company has fewer than 10 employees.
  • The fixed monthly salary for the vacancy is S$15,000 and above.
  • The vacancy is to be filled by an intra-corporate transferee as defined by the World Trade Organization’s General Agreement on Trade in Services.
  • The vacancy is short-term, i.e. not more than 1 month.

Entre-pass 

You should apply for the Entre-pass instead, if you’re a founder, venture capital (VC) firm employee, or investor. However, you’ll have to prove that you can contribute significantly to Singapore’s business ecosystem.

For an example, if you’re a founder, you must have started, or intend to start, a private limited company registered with ACRA. (Already registered? The company must be less than 6 months old on the date of your application).

There are other unique requirements for innovators and investors, which you can read on MOM’s website. Keep in mind that founders of certain businesses (coffee shops, massage parlours, and more) are ineligible for the Entre-pass.

S-pass 

S-passes are designed for younger foreign workers with strong technical skills who wish to learn and grow in Singapore. Strict quotas apply to the S-pass—no more than 20% of a company’s workforce can be S-Pass holders; 15% if you are in the service industry.

S-pass candidates need to earn at least S$2,400 a month and have relevant qualifications and work experience. 

Dependents-07Dependant’s Pass

An EP holder may apply for Dependant's Passes for their spouse and unmarried or legally adopted children under 21 years of age. To be eligible to apply for Dependents’ Passes, employees must earn at least S$6,000 monthly.

Long Term Visit Pass (LTVP)

The LTVP is for common-law spouses, unmarried handicapped children above 21, unmarried step-children under 21, and parents of foreign employees (with either EP or S passes). Expatriate workers who wish to obtain LTVPs for their parents must earn at least S$12,000 per month.

3. Liaising with agencies

Hiring in Singapore will put you in contact with multiple agencies, each with their own rules and provisions. Keep records of your communication with each agency for each employee you hire. There’ll be a lot of paperwork to track.


MOM & ICA-11-1

Ministry of Manpower (MOM)

In Singapore, visas and work permits are governed by the MOM. MOM is responsible for the formulation and implementation of workforce policies. It’s also directly in charge of protecting workers’ rights in Singapore.

Within MOM are numerous other divisions and statutory boards. Each one manages a specific aspect of human capital and labour in the country. You can find answers to most of your general hiring questions on the MOM website.

Immigration and Checkpoints Authority (ICA)

Singapore’s border control agency, the ICA, is a department within the Ministry of Home Affairs. If your potential employee wishes to bring their family to Singapore, you’ll need to file applications for Dependent Passes (DP) and/or Long Term Visit Passes (LTVP) from the ICA.

Both the ICA and MOM are responsible for ensuring that foreign workers and their families are legally entering, leaving, and living within Singapore.

For example, if a Singapore work visa holder gives birth in Singapore, they will receive a Notification of Live Birth and Advisory Note from the ICA, which can then be used to apply for a birth certificate. And if a foreigner living in Singapore fails to produce a valid work permit, the ICA is allowed to deport them.

 

4. Employer responsibilities

As the employer, you’re in charge of paying levies, staying within quotas, sorting out work permits, and more. As your team grows, so will your paperwork!

We can help with that, but here are some of the biggest responsibilities you’ll have.

The employment contract

A contract is designed to protect you as much as it helps employees. If you’re taking the leap and hiring internationally, contact a lawyer or HR consultant to ensure that it’s fair for all parties.

Key employment terms

Key employment terms (KETs) have been mandatory since 1 April 2016. These KETs must be issued as a soft, hard, or handwritten copy to all employees covered under the Employment Act. (If this information is already in an employee handbook or guide, you don’t need to issue additional KETs).

Employees should always have access to your company’s handbook, website or similar platforms so that they can read, understand, and know their rights.

  1. Full name of employer.

  2. Full name of employee.

  3. Job title, main duties and responsibilities.

  4. Start date of employment.

  5. Duration of employment (if employee is on fixed-term contract).

  6. Working arrangements, such as:

    • Daily working hours (e.g. 8.30am – 6pm).

    • Number of working days per week (e.g. six).

    • Rest day (e.g. Saturday).

  7. Salary period.

  8. Basic salary.

    • For hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay (e.g. S$X per hour, day or piece).

  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 components, such as:

    • Bonuses

    • Incentives

  14. Type of leave, such as:

    • Annual leave

    • Outpatient sick leave

    • Hospitalisation leave

    • Maternity leave

    • Childcare leave

  15. Other medical benefits, such as:

    • Insurance

    • Medical benefits

    • Dental benefits

  16. Probation period.

  17. Notice period.

  18. (Optional) Place of work.

    • Used if the work location is different from the employer's address.

    • Although optional, you are strongly encouraged to include this info


Salary

As an employer, you have to pay workers the same fixed monthly salary amount that was declared in their Work Permit Application. According to the MOM, this ensures “that employers only bring in foreign workers when there is work, and that the welfare of workers is not compromised during periods of little or no work.”

Want to change an employee’s salary? Make sure you have a written agreement and inform MOM about the adjustment. Salaries must be paid monthly, within seven days from the end of the month. Records should always be kept for auditing purposes. 

You can pay a worker’s salary in cash or via direct debit to their bank account. The bank account book should stay with the employee; if not, the worker must have access to their book anytime, to ensure that they’re receiving their rightful salary.

Taxation

Taxation-09Foreign hires come from all over the world, so you’ll need to do some research about the reporting requirements of their specific countries of origin. 

Within Singapore, short-term employment of non-residents lasting less than 60 days is tax-exempt. For stays between 60 and 183 days, non-resident employment income will be taxed at 15%. 

Note that the length of stay only consists of days when non-residents are physically present or working in Singapore. Also, under the Singapore Income Tax Act, Singaporean employers must prepare tax forms for all their employees.

Dependents

When making a foreign hire, employee dependents are an oft-forgotten consideration for companies. Many talented individuals already have spouses, elderly family members, and/or children. Their acceptance of the contract may hinge upon whether or not you can support their dependents, too.

You will be in charge of handling each dependent’s stay permit application and ensuring that they are legally allowed to live in Singapore. 

As an employer, there’s a lot to consider...

...and a lot of boxes to tick. The tedious, complex administrative work of payroll and HR management may be better left in the hands of a reliable corporate secretary. To start the Employment Pass application process, gather these three documents:

  • Personal Particulars Page of the applicant’s Passport
  • Your company’s ACRA Bizfile (if your company is already registered)
  • Your applicant’s educational certifications
    • For Entre-pass applications, you will need resumes, testimonials, and a 10-page business plan too

Then get in touch with us!

Health screening

X-rayAll foreign workers must pass a medical examination by a Singapore-registered doctor within two weeks of their arrival in the country. The examination screens for four types of infectious diseases: tuberculosis, HIV, syphilis, and malaria. 

Without a completed medical form, you can’t get approval for a work visa. Anyone who fails to pass the exam or produce the form in time will be sent home.

5. General Recruitment Guidelines

Singapore’s workforce is highly diverse, and employers should seek to be progressive, fair, and transparent—including in their hiring.

When creating a job listing, avoid listing requirements pertaining to age, gender, marital status, race, and religion. Even language requirements should be avoided, unless there are strong, justifiable reasons. This is a sure way to attract suspicion and risk the rejection of your work permit applications.

Other guidelines that you should follow:

  • Prioritize skills and abilities rather than personal attributes
  • Clearly state the honest salary you are offering
  • Only request information that is directly applicable to the job
  • Avoid asking personal questions in the application or interview

Typical compensation packages

To justify your employment of a foreigner, you have to prove that they are skilled and can contribute to the economy. One way to do this is by offering a fair salary. In some cases, your employment pass application can be automatically denied if the salary you offer is not high enough.

Typically, Singaporeans will also be compensated through regular contributions to the CPF. But this isn’t the case for foreign employees. Instead, you can consider covering insurance and medical costs, offering reimbursements, and providing accommodation. 

Additionally, while allowances, bonuses, and incentives are not legally required, they certainly help with employee retention. Less energy spent on hiring is more resources to spend on building an effective team.

Central Provident Fund (CPF)

CPF-10The CPF is a mandatory savings plan for working Singaporeans and PRs. Both employers and employees must contribute a specific amount to the Fund, which covers employees’ retirement, healthcare, and housing needs. When the CPF was first founded in 1955, the rate of contribution was set to 5%. 

Over the past few decades, this percentage has been adjusted multiple times in response to changing economic trends and major political events. After being set at 10% for workers and employees in 1998, it has steadily increased. 

Right now, in 2020, employer’s CPF contribution rate is 17%, for Singaporean employees up to 55 years old. This is based on the first $6,000 of the employee’s basic salary, and paid directly to the CPF board.

As the employer, you don’t need to make Central Provident Fund (CPF) contributions for your foreign and Non-PR employees. People who do receive permanent resident status will pay a reduced CPF contribution rate for two years, then pay the normal CPF rate afterwards. 

 

Contact us

Contact Lanturn to handle the process for you

Hiring and relocating a foreign employee takes time and effort. For many companies, it may make more sense to contact an experienced corporate service consultant that can speed up and simplify the process.

Lanturn is a digital corporate service provider that can help you manage your corporate secretary and accounting needs, along with work visa applications.

See our pricing for work visa services.

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