Singapore’s employment law framework is structured, enforceable, and heavily guided by statutory obligations. For business owners and HR managers, staying compliant is crucial for maintaining sustainability, mitigating risk, and fostering employee retention. This guide walks you through the essentials of employment law in Singapore, from hiring to termination, and everything in between.
What is the Employment Act?
The Employment Act is Singapore’s main labour law. It covers both local and foreign employees under a contract of service, with specific exclusions (e.g., domestic workers, seafarers, and civil servants). Managers and executives earning below $4,600/month are partially covered. Key areas governed include contracts, working hours, leave, salary, and termination.
Ministry of Manpower (MOM) Singapore
The MOM enforces employment laws through inspections, penalties, and audits. Non-compliance can result in fines, imprisonment, or bans on hiring foreign workers. Regular HR audits, documentation, and staying updated with MOM circulars are key.
1. Mandatory Employment Terms and Contracts
Clear and lawful employment contracts form the backbone of compliance. Every employer must issue contracts that meet legal requirements and reflect key terms of employment.
Issuing Written Contracts & Key Employment Terms (KETs)
You must issue written employment contracts with KETs within 14 days of starting employment. These should cover job scope, salary, hours, leave, benefits, and termination terms. Omitting them increases the risk of disputes.
Common Contract Clauses
Standard clauses typically include probation duration, notice period, confidentiality, non-compete provisions, and grounds for summary dismissal. Contracts must comply with the Employment Act, but can include terms above the legal minimum.
2. Working Hours, Overtime & Rest Days
Managing working time fairly and within legal boundaries is crucial for avoiding disputes and burnout. Singapore’s employment laws set clear rules on maximum hours, rest days, and overtime compensation, especially for employees protected under Part IV of the Employment Act.
Working Hours and Rest Entitlements
For employees covered under Part IV of the EA (generally non-managerial staff earning under a specified threshold), the standard legal work week is capped at 44 hours. This is commonly structured as 8 hours per day across 5.5 days. One rest day per week, typically Sunday, is compulsory and must be granted without salary deduction. Employers must avoid rostering practices that result in excessive or consecutive working days without adequate rest.
Overtime Rules
Employees eligible for overtime (i.e., those under Part IV) must be paid at least 1.5 times their hourly basic rate for any work beyond 44 hours a week. Overtime is capped at 72 hours per month, unless the employer has applied for and received an exemption from the Ministry of Manpower (MOM). Employers must accurately calculate overtime pay and issue detailed payslips that reflect these payments.
3. Leave Entitlements Under the Law
Leave entitlements are a legal obligation under the Employment Act and are designed to protect workers’ health, family responsibilities, and work-life balance. Employers must understand and administer leave accurately to avoid penalties and foster employee trust.
Annual, Sick, and Hospitalisation Leave
Employees (after 3 months service) get at least 7 days of paid annual leave and 14 days of sick leave (60 if hospitalised). Leave must be prorated and granted without discrimination. Ensure proper documentation for sick leave, including medical certificates.
Maternity, Paternity, and Parental Leave
From April 2025, fathers get 4 weeks of GPPL. Maternity leave is 16 weeks for eligible mothers. Shared parental leave rises to 6 weeks. Employers must apply for government reimbursements and update internal policies to reflect these entitlements.
Childcare Leave and Extended Leave
Eligible parents get 6 days of paid childcare leave annually for children under 7. For children aged 7–12, extended childcare leave of 2 days is provided. These leaves are statutory and must be recorded and applied uniformly across the workforce.
4. Payroll, CPF and Tax Obligations
Accurate payroll processing and statutory contributions are non-negotiable in Singapore. Employers must meet legal requirements around CPF payments, payslips, and tax clearance to avoid financial penalties and reputational damage.
CPF Contributions
CPF is mandatory for citizens and PRs. Employers contribute up to 17%, and employees up to 20%, depending on age. Contributions must be timely. Late CPF attracts 1.5% monthly interest and potential prosecution. It’s essential to keep payroll systems updated with the latest CPF contribution rates and wage ceilings. Errors can result in audits, back payments, and fines.
Payslip and Payroll Compliance
You must issue itemised payslips at each pay cycle. Include salary, CPF, deductions, overtime, and net pay. Failure to comply results in fines. Payslips must be accessible to employees and align with MOM’s template. Automating payroll helps ensure accuracy and supports compliance with record-keeping obligations.
Tax Clearance and SDL
IR21 must be filed before foreign employees cease employment or leave Singapore. The employer must withhold the final payment until tax clearance is granted. SDL (0.25% of monthly wage) is compulsory and funds national training programmes under SkillsFuture. Employers must budget for SDL alongside CPF and levies for comprehensive compliance.
5. Foreign Employment & Work Passes
Hiring foreign talent in Singapore involves navigating strict legal and administrative protocols. Employers must comply with work pass eligibility, quota controls, and onboarding responsibilities to avoid penalties or debarment.
Hiring Foreigners: Legal Process
Employers must apply for valid work passes based on the employee’s role and qualifications. Common types include the Employment Pass (EP) for professionals, the S Pass for mid-skilled staff, and the Work Permit for semi-skilled workers in labour-intensive industries. From January 2025, EP applicants must meet updated salary thresholds: $5,600 for most sectors and $6,200 for finance. The COMPASS framework evaluates candidates based on salary, qualifications, diversity, and skills relevance, making documentation and planning critical.
Employer Duties Under Work Passes
Once issued, employers have legal responsibilities under each work pass type. These include:
- Ensuring proper housing and medical insurance for Work Permit and S Pass holders.
- Paying the Foreign Worker Levy and maintaining compliance with quota ratios.
- Providing mandatory safety training for higher-risk industries.
- Avoiding unauthorised deployment or “leasing” of foreign workers to third parties.
MOM regularly audits employers, and violations can lead to financial penalties, suspension, or debarment from employing foreign workers. Staying compliant protects your workforce pipeline and business continuity.
6. Workplace Safety & Fair Employment
Ensuring a safe, inclusive, and fair work environment is a legal requirement in Singapore. This section outlines your obligations under workplace safety legislation and the growing mandate for fair employment practices.
Workplace Safety and Health (WSH)
WSH laws require employers to conduct regular risk assessments, provide personal protective equipment (PPE), and ensure that all employees are adequately trained for their roles. Incidents such as major injuries or fatalities must be promptly reported to MOM. Employers must also purchase work injury compensation insurance for eligible workers. In high-risk industries like construction, additional safety measures and certifications are mandatory. Failure to meet WSH standards can lead to Stop-Work Orders, substantial fines, and even imprisonment for company directors in severe cases.
Fair Employment Practices (TAFEP & FCF)
TAFEP guidelines and the Fair Consideration Framework aim to eliminate discriminatory hiring. Employers must consider local candidates fairly before hiring foreigners and refrain from using discriminatory language in job ads. From 2025, the Workplace Fairness Act will legally prohibit employment decisions based on age, gender, race, nationality, and other protected characteristics. Employers will also be required to implement internal grievance mechanisms and may face legal claims if they fail to comply. Preparing now by training staff and updating policies is essential for future-proofing your organisation.
7. Industry-Specific Regulations and Considerations
Certain industries in Singapore have additional employment regulations or guidelines. SMEs should be mindful of any sector-specific rules that apply to them:
- Construction & Engineering: Subject to sector-specific work permit quotas, safety training requirements, and foreign worker levies. Core trade certification and Fall Prevention Plans are compulsory. MOM conducts regular audits.
- Healthcare & Hospitals: Staff working hours and licensing are regulated. Follow MOH guidelines on hours and infection control. Ensure valid professional registrations and staff ratios.
- Financial Services: MAS guidelines impact HR policies. Mandatory block leave, background checks, and AML training are often expected. HR compliance aligns with regulatory obligations.
- Food & Beverage / Retail: Must follow Progressive Wage Model salary floors. Shift planning must comply with the EA rest and meal break rules. Be mindful of child labour regulations.
- Marine, Process and Others: Subject to quotas, safety requirements, and sometimes union agreements. Review sectoral MOM guidelines and collective agreements where applicable.
8. Managing Misconduct and Termination
Addressing misconduct and managing exits fairly are critical to protecting your business from wrongful dismissal claims and regulatory scrutiny. Employers must follow due process, document decisions, and respect notice requirements.
Disciplinary Process
Investigate misconduct in a prompt and impartial manner. Employers may suspend employees with pay during investigations. If serious misconduct is proven (e.g. theft, harassment), summary dismissal without notice is permitted. Still, you should give the employee a chance to explain their side. Keep written records of all steps taken — including warnings, interviews, and final decisions — to demonstrate procedural fairness.
Retrenchment, Resignations and Exit Procedures
When an employee resigns or is terminated, observe the contract’s notice period or compensate accordingly. Final salary, CPF contributions, and leave encashment must be processed promptly, usually by the last day of employment. In retrenchment cases, notify affected employees early and report large-scale retrenchments to MOM as required. Documentation is vital: record resignation letters, exit interviews, and reasons for dismissal. Clear records reduce your legal exposure in case of disputes.
9. HR Documentation
Accurate records and responsible data handling aren’t just administrative tasks; they’re legal requirements in Singapore. Employers must retain specific HR documents and ensure compliance with the Personal Data Protection Act (PDPA).
Must-Have Documents for Compliance
Maintain a complete set of employment-related documents, including:
- Signed employment contracts and Key Employment Terms (KETs)
- Payslips, payroll records, CPF submissions
- Attendance logs and leave applications
Active employee records must be kept for the latest 2 years, while documents of former employees must be retained for at least 1 year after their departure. Digital records are acceptable, but they must be secure and retrievable.
Common Compliance Mistakes & Penalties
Even well-meaning employers can fall into compliance traps if they don’t stay updated or maintain proper HR systems. This section outlines the most common errors and their consequences so you can avoid costly missteps.
| Pitfall | Violation | Penalty | Prevention |
| CPF non-payment | Late or no CPF contributions | 1.5% monthly interest, $1,000–$5,000 per offence, up to 6 months’ jail; $2,000–$10,000 and/or 12 months’ jail for repeat offences; up to 7 years’ jail if employee CPF deducted but not remitted | Use CPF e-Submit, set calendar alerts, review payroll monthly |
| No payslips | Incomplete or missing itemised payslips | $1,000 for first offence, $2,000 for repeat offences; harsher penalties for falsification | Automate payslip generation via compliant payroll software |
| Breach of EA terms | Excessive overtime, illegal deductions, no rest days | Up to $5,000 fine and/or 6 months’ jail; doubled for repeat offences | Train supervisors, audit rosters and payslips |
| Safety violations | Non-compliance with WSH Act | Fines up to $50,000, Stop-Work Orders, director liability, jail up to 2 years | Conduct risk assessments, ensure PPE and training, review SOPs |
| Discriminatory hiring | Breach of FCF/TAFEP or Workplace Fairness Act | Work pass debarment (12–24 months), up to $20,000 fine, legal claims | Use merit-based hiring, document fair consideration, avoid biased ads |
| Wrongful dismissal | Fired without just cause or fair process | ECT orders for compensation/reinstatement (up to $30,000) | Use performance reviews, document warnings, follow due process |
| Misclassification | Treating employees as contractors | CPF arrears with penalties, fines up to $5,000 per offence | Classify roles accurately, consult MOM’s criteria |
Proactively addressing these areas will reduce legal exposure and build trust with employees and regulators alike.
Compliance Tips for SMEs
Staying compliant requires a proactive, structured approach. SMEs can strengthen their legal standing and reduce risks by embedding compliance into daily HR operations.
- Create and use an HR compliance checklist for onboarding, payroll, leave, and termination.
- Train line managers and supervisors on key MOM rules and anti-discrimination laws.
- Adopt HR/payroll software that auto-updates CPF rates and generates itemised payslips.
- Conduct quarterly or annual internal audits to identify gaps in documentation or procedures.
- Review employee contracts and handbooks annually to ensure alignment with legal updates.
- Set up a compliance calendar for CPF submissions, tax deadlines, and work pass renewals.
- Keep up with MOM circulars and TAFEP advisories by subscribing to updates. The TAFEP website has sample HR policies and a helpline for advice on fair employment practices.
- Encourage employee feedback to detect issues early and resolve them internally.
Starting a Business and Understanding Employment Law
When starting a business in Singapore, it is important to consider employment regulations early in the planning process. Hiring employees requires a clear understanding of legal requirements, including contracts, CPF contributions, and leave entitlements. If you are in the early stages of setting up your business, read our guide to starting a business in Singapore to ensure your company is legally prepared from the beginning.
Build a Legally Sound and People-Centric Workplace
Compliance is about creating a workplace where people are treated fairly, risks are controlled, and your business can grow without disruption. Whether you’re refining your employment contracts, managing foreign hires, or updating leave policies, the cost of getting it wrong is high, but the rewards of doing it right are even higher. Use this guide as your go-to reference, revisit your HR processes regularly, and stay ahead of updates from MOM and TAFEP.
