An Employment Contract is an agreement between an employee and employer that specifies the terms and conditions of employment. It can also be called an Employment Agreement, Appointment Letter, Offer Letter, etc. Most employment contracts contain several important clauses such as:
- Appointment position
- Renumeration Package
- Employee Benefits
- Probation Clause (if applicable)
- Date of employment commencement
- Duration of employment contract
- Hours of work
- Code of conduct
There is no minimum salary requirement in Singapore. Salary is negotiable between the employer and employee. The salary must be paid at least once a month within 7 days after the end of the salary period. If applicable, overtime pay must be paid within 14 days of the salary period. Bonus payments are not a requirement under the Employment Act of Singapore. Salary paid to an employee depends on the position and skills required. Commonly known as the 13th month payment, an annual bonus is the equivalent to at least one month’s salary. Details of an annual bonus will normally be specified in the employment contract.
HOURS OF WORK AND OVERTIME
Employees covered by the Employment Act are entitled to work no more than 44 hours per week or 8 hours daily. Inclusive of overtime work, employees may not work more than 12 hours per day except under circumstances that include work limited to an actual or threatened accident, work that is essential to national defence or security, or circumstances that may interrupt work. Shift workers are not allowed to work more than 12 hours under any circumstances. Employees are entitled to one rest day per week and it is an unpaid day. As a general rule, office employees work Monday – Friday, from 9am to 6pm or 7pm, depending on the industry and company policies. It is not uncommon for Singapore employees to work 9-10 hours during the weekdays and a half day on Saturdays.
Considering Singapore’s multicultural diversity, public holidays are designed to accommodate many ethic communities. These include:
- New Year’s Day
- Chinese New Year
- Good Friday
- Labour Day
- Vesak Day
- National Day
- Hari Raya Puasa
- Hari Raya Haji
- Christmas Day
To qualify for annual leave, the employee must have served at least 3 months with the employer. The amount of annual leave is dependent on the contractual agreement between the employee and employer. As a common practice in Singapore, all employees are given an annual leave around 14 days per year, well above the 7 days minimum required under the Singapore Employment Act.
- If the employee has worked for at least 6 months for the company: The employee is entitled to 14 days of sick leave per year, and 60 days of hospitalization leave (inclusive of the 14 days).
- If the employee has worked for at least 5 months but less than 6 months for the company: The employee is entitled to 11 days of sick leave per year, and 45 days of hospitalization leave (inclusive of the 11 days).
- If the employee has worked for at least 4 months but less than 5 months for the company: The employee is entitled to 8 days of sick leave per year, and 30 days of hospitalization leave (inclusive of the 8 days).
- If the employee has worked for at least 3 months but less than 4 months for the company: The employee is entitled to 5 days of sick leave per year, and 15 days of hospitalization leave (inclusive of the 5 days).
There is no requirement to provide private health insurance benefits to employees in Singapore under the Employment Act. Working professionals who are Singapore Citizens or Permanent Residents are automatically provided with a low-cost medical insurance called Medishield – a basic tier of insurance protection for all Singaporeans. As part of making contributions to the employee’s retirement fund called CPF, a certain portion of the contribution is automatically allocated to the employer’s Medisave account. Medishield insurance scheme helps Medisave account holders and their dependents meet the cost of treatment during old-age or serious illnesses. Medishield premiums are deducted from the Medisave accounts.
When it comes to healthcare insurance benefits, it really depends on the employer. In Singapore, most large companies offer additional private medical insurance benefits to their employees; and conversely, the smaller companies do not offer such benefits . To provide a higher level of healthcare benefits than what is provided under the basic Medshield scheme, as well as to provide medical insurance benefits to Employment Pass holders (i.e. foreign employees), employers may wish to offer private healthcare insurance benefits through any one of the numerous private insurance companies in Singapore.
MATERNITY AND CHILD CARE LEAVE
Female employees employed for more than 3 months may be eligible for paid maternity leave benefits for a total of 16 weeks paid leave. Employers are prohibited from dismissing any employees on maternity leave and required to pay maternity leave in full. Besides maternity leave, the eligible female employees are entitled to 6 days childcare leave per year if they have worked for the employer longer than 3 months and are the parent of a child below 7 years of age.
The Employment Act does not have any clauses pertaining to the probation period for employees. Employees are asked to serve a probation period of 3-6 months.
Either party may terminate an employment contract by giving written notice or by paying salary in lieu of notice to the other party. There is no requirement on the number of days for the notice period. The employee may use accrued leave to offset the notice period. The employment contract can be terminated by either party without notice if the other party is in willful breach of contract.
It is common practice to provide 2 weeks’ notice period during the probationary period, and 1 month’s notice period following the confirmation of employment. Employees cannot terminate a contract by giving his salary in lieu of notice because of the practical difficulties faced by the employer in such a situation.
Retrenchment benefits in Singapore depends on the size and financial position of the company. A small company might not be able to offer anything beyond what is required as per the statutory requirements. To avoid conflicts and confusion, it is best to stipulate the specifics of retrenchment benefits in the employment contract.
CENTRAL PROVIDENT FUND (CPF) CONTRIBUTIONS
CPF is a mandatory retirement savings scheme for Singapore citizens and Permanent Residents. Employers are required to make contributions to the CPF fund. Monthly contributions are made by both employer and employee. The employee’s contribution is deducted from each month’s salary. The maximum CPF contribution rate for employer and employee is 17% an 20% respectively and can be lower depending on age, permanent residence status, etc. There is no CPF contribution for foreign employees holding an Employment Pass or Work Permit in Singapore.
EDUCATION AND TRAINING
Employers are encouraged by the Ministry of Manpower to provide their employees with opportunities for training and development, to improve competency and possible career advancement. However, there is no requirement for the employer to do so. Training and skills upgrade benefits usually depends on company size, employee category, and the nature of the business.