Generally speaking, Singapore is a relatively easy place to hire and fire employees.
Legislation governing labour relations and employment-related matters is generally regarded as being very pro-business and avoids placing too many burdens on employers. Generally, your Employment Agreement is the law, and there are very few restrictions to the conditions to which your may bind your employee in your Employment Agreement.
Employers’ Minimum Legal Obligations
Having said that, Singapore’s Employment Act does provide some additional protections to employees who meet certain criteria, most notably those earning a monthly basic salary of S$4,500 or below. This category of employees is fully covered by the Employment Act and hence must receive minimum (and not less favourable) conditions offered by the Employment Act, which include things like paid public holidays and overtime pay.
There are also basic underlying legal obligations that cannot be contracted out, whether or not an employee is covered by the Employment Act. These include contributions to an employee’s Central Provident Fund (CPF) (for Singaporean citizens and permanent residents) and maternity leave (the minimum length of which varies depending on whether or not the employee’s baby is a citizen of Singapore).
There are also some fairly basic administrative requirements such as maintaining a record of employees and their salaries and deductions, i.e. payroll, and reporting workplace accidents.
|Also read: Amendments to the Employment Act: What it means for your business|
As employment laws vary from country to country, it is advisable that you consult a lawyer to ensure you are compliant with local Employment Act. This can sometimes be quick and inexpensive given limited state intervention into the employer-employee relationship.
Learn more about Employment Law in Singapore:
Hiring foreigners will attract more administrative hassle than hiring Singaporeans and permanent residents. A company who wishes to hire foreign employees needs to hire a certain number of Singaporean citizens or permanent residents into the company, in any capacity. The local to foreigner employee ratio for each employer varies depending on the industry you’re in and, in some cases, the nationality of the potential foreign hire in question and these quotas are subject to change.
You should check the Ministry of Manpower’s (MOM) website to find out the prevailing quota for your industry. The type of visa required will depend mainly on your employee’s level of salary.
The Tripartite Alliance for Fair Employment Practices (TAFEP) provides guidelines for employers when advertising for jobs. In general, TAFEP discourages advertisements that indicate a preference for foreign employees over locals (although it is acceptable to express preference for a local over a foreigner is acceptable), advertisements that indicate a racial preference or advertisements that indicate a preference for a younger employee (although expressing a preference for an older employee is acceptable).
While these are guidelines are positioned as non-mandatory, the MOM has been known to refuse visa applications for companies who fail to comply.
When Things Go Wrong
Compared to many other neighbouring countries, it is relatively easy to fire employees in Singapore –there are no criteria that need to be met and no reasons that need to be given (other than if the employee is pregnant).
Practically speaking, most employees may only have recourse to informal methods of dispute resolution such as mediation at MOM or representations by their union, if any. Employees who are covered by the Employment Act may bring a complaint to the Commissioner of Labour within a certain time frame. It is even more difficult for foreign employees to successfully sue their employers as their termination also results in the cancellation of their visa; meaning that, in many cases, unless they are able to secure employment quickly, they will not be able to remain in Singapore to see through any claim against you (though it is possible to instruct for them to appoint lawyers abroad).
While employees may file a suit in court for unfair dismissal, their arguments are usually restricted by the terms of the Employment Agreement they signed. This is why it’s so important to get this right from day one, and why it is a very wise long-term investment to consult a lawyer (i) when drafting your company’s standard employment contract or (ii) to review the terms of your employment contract before you sign it (as an employee).
Nadia is a lawyer practicing at Kalco Law LLC in Singapore. Nadia has experience acting for corporate and private clients in a wide variety of litigation matters ranging from franchising disputes to employment litigation and a diverse range of breach of contract actions.