Employment Of Foreign Manpower Act: 7 Things You Must Know Before Hiring Foreign Worker In Singapore

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Employment Of Foreign Manpower Act: 7 Things You Must Know Before Hiring Foreign Worker In Singapore

Employing foreigners for your SME is an essential component that really adds growth to your business as well as enhance diverse skillsets needed for the economy. To employ such skilled foreign workforce, there are certain statutory requirements as an employer that you must provide in the employment contract before hiring employees in Singapore.

Employment Of Foreign Manpower Act In A Nutshell

The Employment of Foreign Manpower Act covers the responsibilities of employers who hire foreign workers and regulates the employment of foreign employees and protects their welfare in Singapore. You may also want to read about possible offences and infringements under the Act in full here.

Any foreign workers who have been granted a permit from MOM (Ministry of Manpower), including the Employment Pass, S Pass, and Work Permit.

INTERESTING FACT: Over 1.2 million foreign workers were employed in Singapore as of June 2020.

In this article, we will cover seven things that you must be solidly made aware of as a business owner to eliminate the headache caused from foreign employment issues.

Before we dig deeper, your HR department plays a vital role especially in knowing Singapore Employment Contract.

In Singapore, the relationship between an employer and an employee is defined by the employment contract. The Employment Act governs employment in Singapore.

An employment contract's terms can be discussed and agreed upon by the parties, but it must adhere to specific restrictions and be in compliance with the Employment Act. In Singapore, an employment contract generally has to contain the following:

  • details regarding the start date and remuneration
  • tasks, job description, working hours, and annual leave
  • medical provisions
  • Provisions for parental and childcare leave
  • Termination of employment and notification requirements
  • Confidentiality clauses
  • Governing law

* For domestic workers there may also be a need to have a contract of employment, however, it will not be covered by the Employment Act because it is not practical to regulate specific aspects of domestic work, such as hours of work and work on public holidays.

1. Application And Categorized Type For Work Passes

For foreign non-domestic workers who want to work in Singapore, they need to be at least 18 years of age. Depending on the foreign worker's level of experience, which is often categorized as such, a work pass should be applied for in one of the following categories:

  • Unskilled and semi-skilled with no management skills
  • Mid-level professionals with moderate skill levels
  • High-level professionals with management and specialised skills.

Work Permit

This is meant for unskilled and semi-skilled foreign employees. If your business is in one of the following sectors, it will be applicable for you: construction, manufacturing, marine, process, or services sector.

Furthermore, the foreign worker must be from one of the MOC’s specified country groups, which differ by industry. Additional information on approved sources and specific country requirements for each industry may be found here.

Depending on the length of employment, the security bond, and the worker's passport, this Work Pass allows the worker to work in the country for up to two years. During that period, the worker may only work for the specific company and in the specified profession.

S Pass

The S Pass is meant for mid-level skilled professionals with specialised roles. Employee must get an earning of at least $3,000 as the minimum qualifying salary for the non-financial sector (and increases progressively with age up to $4,500).

Starting from 1 September 2022, if your business hires new foreign professionals, Foreign Worker Levy (FWL) with two Tiers (Tier 1 for business with S Passes up to 10% of their total manpower and Tier 2 for those with S Passes up to 18% of total workforce) will be applied $450 and $650, respectively.

Intially, this Work Pass is the same in duration as that of Work Permit, and is also renewable. Once renewed, S Pass will be valid up to 3 years, subject to foreign employee's passport validity. Here you will find how to renew it.

Employment Pass

This is the most desired work visa type among the foreign employees with very high professionalism and proficient work experience in specific industury.

The EP enables employers to hire foreign professionals, senior management and executives from outside Singapore. Applicants must be able to demonstrate their competence in English language skills and relevant professional experience. Additionally, from 1 September 2023 onwards, EP applicants must pass Complementarity Assessment Framework (COMPASS) meeting the minimum qualifications set by the Ministry of Manpower. They must also qualify minimum salary of at least $5,000 and increase progressively with age for those working in non-financial sector.

Unlike S Pass, to engage a foreigner under the EP, no foreign worker levy or quota is necessary. Each EP application will cost $105; initial applicants will receive a valid work pass for up to 2 years; renewals will be valid for up to 3 years.

2. Importance Of Security Bond For Your Foreign Employees

When hiring foreigners apart from Malaysian migrant workers, security bond worth of $5,000 is required from the employers to have a binding commitment between the government and the parties involved. You have to purchase the security bond from any bank or insurance company in order to protect employment disputes, Work Permit conditions, or security bond conditions.

You have to buy the bond prior to your employee arriving to Singapore since it takes up to three working days to send the details of the security bond to MOM. Otherwise, your migrant worker will be denied entry access into Singapore. Once the employee leaves Singapore after contract of service ends, the security bond will usually be automatically released within seven days if no rule violations occurred during their employment here.

3. Fair Employment Practices And Guidelines: Salary Payment On Time

Singapore currently does not prohibit discrimination. However, under the Guidelines, employers are encouraged to hire people on the basis of their merits and regardless of their age, gender, ethnicity, religious beliefs, disabilities, marital status, sexual orientation etc. Employers must also treat their workers fairly and respect them. They must also provide opportunities for their workers to develop themselves and receive fair rewards for their abilities and achievements. If an employer fails to comply with these guidelines, they may face penalties including suspension of their work passes.

When you hire a foreign worker, you must declare the fixed monthly salary to MOM when you apply for their S Pass or W Pass. The basic income plus the set monthly allowances make up the fixed monthly salary, however, it excludes variable amounts such as overtime, in-kind, reimbursement, and production incentives.

You're not legally obligated to make CPF contributions to your migrant workers but you must make sure they get paid before the seventh day of the following month.

If your migrant workers don't live in dorms, you can pay them in cash, but if they do, you must credit their salaries straight into their bank accounts (meaning they have to pay living expenses via online). Whatever the case, you are required to keep a record of your monthly salary and be able to provide it upon request.

4. Tax Clearance For Foreign Employees

It is mandatory for employers to ensure that upon leaving their position with their company in Singapore or if they intend to leave the country for a period longer than three months, every non-citizen foreign employee pays all taxes that are owed. Before a non-citizen employee leaves their job, the employer must notify the Inland Revenue Authority of Singapore (IRAS) and get tax clearance from the Authority at least one month in advance.

5. Medical Insurance is a Must for Foreign Workers

If you're hiring migrant employees in Singapore, you need to ensure they have adequate health insurance coverage. Both basic and secondary healthcare costs are included in this.

Note: It is only needed for S Pass and WP holders.

The current coverage is set at a minimum of $15,000 per annum depending on the type of health plan chosen. However, the mandatory medical insurance covers inpatient care and day surgeries. In addition, the coverage should also cover outpatient procedures like dental checkups, eye examinations, immunisations and routine blood tests.

Furthermore, there is no upper cap on how much one can spend on medical expenses. In fact, employers can even charge no more than 10% of the worker’s monthly salary as a co-payment. However, the employer cannot make the employee pay for any part of the cost of the medical treatment. Instead, the employer can choose to either contribute towards the cost or reimburse the employee directly.

6. Foreign Worker Levy Payment for S Pass & Work Permit Holders

As discussed prior in this article, you are required to promptly and fully pay a monthly foreign worker charge. You can either take out GIRO on the 17th of each and every monthly cycle, or PayNow QR on the 14th of each and every month for levy fees.

Easily check out latest levy bill on the 6th of every month online.

7. Always Remember To Cancel Work Permit Within A Week Of Employment End

The migrant worker's work visa must be terminated within a week of the last day of employment, upon receiving notice that the worker's employment with you is ending, or upon the worker's departure.

By that time, you ought to have resolved any unresolved employment-related concerns, including salary payment. You must pay for the cost of repatriation, including the price of an airfare with checked baggage.

Frequently Asked Questions

How do I hire employees in Singapore?

If you are unfamiliar with Singaporean recruiting procedures, this guide will help you understand the main labor rules and how to do it the Singaporean way.

What is the Employment Act in Singapore?

The basic laws governing the Human Resource procedures like hiring, employing, etc. in Singapore is provided by the Employment Act, which is Singapore's main labor law.

What are the legal requirements for employment contracts?

As a general rule, an employee’s contractual rights under the EA and the common law are not affected by any term included in the agreement between the parties.

Read also: Singapore Businesses’ Guide to Hiring Interns + Grants For Interns 2022
Read also: New Update: What You Need to Know About the Senior Worker Support Package 2022: Up to S$250,000 Grants for Companies

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UPDATED AS OF 24 Jul 2024
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