Singapore Employment Act – What You Need To Know

Creating opportunities for employment provides employees with benefits that include a pay check, an environment within which they can utilize and develop their skills and talents and, access a variety of opportunities for growth. In addition to these direct and personal benefits to the employee, the employer is required by law to maintain certain standards that ensure the working conditions are favourable.

The intricacies of any law in general may appear intimidating because of the lengthy reading required, the jargon used and finer details that require attention. Even so, a basic understanding of the Labour Law is the first step to for any employer to be able to recognise when they are violating the rights of their employees in any way.

1.    Understand The Basics Of The Employment Act

For a person to be covered by the Singapore Employment act, they must be employed under a contract of service which is an agreement between an employer and an employee that outlines the terms of employment. As an employer or employee, it is imperative that one understands that a contract of service varies from a contract for service.

Locals and foreigners employed on full time, part time, temporary or contract basis and are paid hourly, daily, monthly or piece –rated are covered by the Singapore Employment Act.

When assigning job titles, it is helpful to know that employees whose job description states that they are a manager or executive and their monthly earnings exceed $4500, or if they happen to be a seafarer, domestic worker, Statutory Board employee or civil servant, the terms and conditions of the Singapore Employment Act do not apply to them.

One also needs to be conversant with Part IV of the Employment act which outlines the conditions of service such as annual leave, rest days, and hours of work for workmen who earn a salary of $4,500 and below and the employee covered by the Employment act who earns $2,500 an below but is not a workman. 

There is a distinct difference between an employee, a manager or executive, and a workman, as is outlined in the general terms and definitions below.

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2.    Learn The General Terms And Definitions

Understanding the general terms and definitions makes it easier for both employer and employee to know exactly what they are agreeing to when signing an employment contract. Did you know that according to the Singapore Employment Act;

  • Basic rate of pay does not include overtime, bonuses, reimbursements or allowances?
  • A contract of service can be written or oral?
  • Day means a period of 24 hours starting at midnight?
  • Gross rate of pay does not include overtime, bonuses, incentive payments, or travel, food or housing allowances?
  • Wages means salary?

However, when referring to the Singapore Employment Act, there are commonly used terms that one should be familiar with and this will assist in the identification of employee’s status and what laws apply to them as per the employment act:

An employee: is defined as a person who works under controlled working hours, is entitled to leave and overtime, and receives a monthly salary.

A manager or executive: is defined as an employee with decision-making and supervisory functions such as creating and articulating strategies and policies for the business and managing and running the business. Lawyers, accountants, dentists, doctors, and other professionals with tertiary education or specialized knowledge and skills whose terms of employment are similar to those of a manger fall under this category.

The First Schedule of the Employment Act  defines a workman as a person whose work includes manual labour and has their job classified as that of cleaner, construction worker, labourer, machine operator or assembler,  metal and machinery worker, train, bus, lorry and van driver, workman employed at piece-rates. 

3.    Familiarize Yourself With The Various Labour Laws And Regulations

As an employer in Singapore, it is advisable to be aware of the main labour laws that govern the functions and activities of employees with regard to their general rights. An employer unfamiliar with the laws may find that an unscrupulous employee may try to take advantage of them and try to extend the statutory maternity leave period, or work past the legal retirement age to further their own personal interests.

However, in this area the most common Labour Laws are those that relate to compensation in the event of a work-related accident. The Workman’s Compensation Act which covers any manual labourer or employee whose average earnings amount up to $1,600, allowing them to claim medical expenses, paid medical leave, paid hospitalisation leave, and compensation for death or permanent disability in the event of a work related accident. This act was replaced by the Work Injury Compensation Act (WICA) which protects all employees under a contract of service regardless of their remuneration, including those employed overseas. It covers work-related accidents including contracting occupational diseases. It is important to note that the failure of the employer to report a work related accident, or pay compensation is an offence punishable with a fine or jail term.


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4.    Know The Legal Obligations Of Employers

It is every employees hope that they have been contracted by an employer who has integrity and operates within the laws. However it is not uncommon to find the employer who neglects to implement some of the requirements obligated by the law.

Employment Contract:

Every employee should have an employment contract that outlines their job title, job description, working hours, salary, requirements, and so on. The employment contract should be in writing and comes into effect when the employee shows up for work on the agreed date. Without this contract, it is very easy for an employer to take advantage of an unsuspecting employee and vice versa especially when it comes to breech or termination of the contract.

Contributions, taxes and levies:

There are certain contributions, taxes and levies that are required of employees that benefit both the employee and the government. Central Provident Fund contributions, when made ensure that employees have a retirement fund. This contribution is in the best interest of the employee, and should be made on time; Employee tax forms need to filled and submitted by the employee by the 1st of March annually; and employers must pay Skills Development Levy (SDL) for each of their full time, casual, part-time, temporary and foreign employees working in Singapore by the 14th of every month for the previous month.

Health and Safety:

The health and safety of the employee is also a major concern and the Workplace Safety and Health Act covers that area adequately. Apart from outlining the safety and health requirements, it places responsibility on the stakeholders who include the employer, the employee, the occupier and so on; facilitates enforcement of the requirements; and can penalise defaulters.

The employer must ensure that the work environment is safe by conducting regular risk assessments and facilitating the training and supervision of employees to ensure they can work safely. The employee has to follow the health and safety regulations provided by the employer so as not to endanger themselves or those around them.

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