Singapore at a Glance

A contract of service defines the employer-employee relationship, including the terms and conditions of employment. The contract must include certain terms and essential clauses, such as hours of work and job scope.

The contract of service specifies the agreed upon terms and conditions of employment between the employer and employee. The contract includes both explicit and implied terms. Please note that if your employee is covered under the Act, the contract terms should abide by the minimum requirements under the Employment Act. Employment contracts can be oral or written. If contracts are in the written form, it is mandatory for all employers to provide employees with a copy of the written employment contract. In addition, employers must obtain their employee’s consent before making any subsequent changes to the terms of the employment contract. It is not mandatory to have a written contract. Verbal contract would still refer to the Act; hence, workers are protected.

Employment contract contains the Key Employment Terms, such as 1) full name of employer, 2) full name of employee, 3) job title, main duties and responsibilities, 4) start date of employment, 5) duration of employment (if employee is on fixed-term contract), 6) working arrangements (daily working hours, number of working days/week, rest day), 7) salary period, 8) basic salary, 9) fixed allowances, 10) fixed deduction, 11) overtime payment period, 12) overtime rate of pay, 13) other salary-related components, such as bonus or incentives, 14) type of leaves, 15) other medical benefits, 16) probation period, 17) notice period, and 18) place of work.

Employers usually have basic terms and conditions in the contracts. Any changes to the contract terms need employee’s consent.

Most employees commence their employment on a probationary period (usually 3-6 months). During probation period, shorter termination notice period is usually applied (commonly 7 days’ notice).

Common practice is 40 to 44 hours/week, 5 days/week. Before the contract begins, employers and employees agree on the working hours. The working hour is one of the Key Employment Terms.

• If an employee works for 5 days or less per week, contractual work hours are up to 9 hours per day or 44 hours per week.
• If an employee work for more than 5 days a week, contractual work hours are up to 8 hours per day or 44 hours per week.

Overtime work is all work in excess of the normal hours of work (excluding breaks). An employee is eligible for overtime payment if he/she is:

• A non-workman earning up to S$2,600.
• A workman earning up to S$4,500.

For overtime work, employers must pay employee at least 1.5 times the hourly basic rate of pay. Payment must be made within 14 days after the last day of the salary period.

Overtime hours cannot exceed 72 hours per month. If employers require employees to work more than 12 hours/day or 72 overtime hours/month, they must apply for an overtime exemption.

If one party wants to terminate the employment contract, one must give notice to the other party in a written form of termination or resignation letter.

• A termination letter is mandatory. Any notice of termination, either by an employer or an employee, must be in writing.
• If a termination letter is provided, the employee is still considered as an employee of the company.
• An employee either encashes or clear his/her annual leave if his/her employment was terminated.
• If the unused leave is encashed, it should be calculated at the gross rate of pay based on his/her last drawn salary.
• However, if an employee is terminated for misconduct, any unused leave will be forfeited.

Employers with at least 10 employees are required to notify the Ministry of Manpower on retrenchments, regardless of the number of employees affected. The notification must be

• The notice period must be the same for the employer and employee. The length of the notice period should be according to the written contract, or verbal agreement, if there is no written contract.
• Common practice is 1-month notice (maybe longer for higher level positions).
• Both parties may also agree to waive the notice period by mutual consent. Such a waiver should be done in writing.

Singapore citizens and Singapore permanent residents may work at will. Foreign workers and expatriates must possess valid visas, work passes, and employment passes prior to commencing work.

Foreigners and expatriates who wish to work in Singapore are required to possess permitted passes from the Ministry of Manpower (MOM). The work permit passes are varied based on the worker’s situation. Standard passes include Work Permit, S Pass, Employment Pass, and Personalized Employment Pass. The type of pass granted is based on the candidate’s salary range, their skills, academic and related work knowledge. Pass holders may apply for permanent resident status if they decide to make Singapore their permanent home.

Singapore’s income tax is a progressive tax rate system. The tax rates range from 0-24%. Income tax filing is simple, automated, and web-based. There is no income tax deducted from an employee’s monthly salary payments. Employees pay their own income taxes.

Employers have the obligation to prepare an annual wage report Form IR8A and Appendix 8A, Appendix 8B, or Form IR8S (where applicable) for their employees. The documents must be passed to the employees by the 1st of March in the year following the employment year (Jan 1st – Dec 31st). Employees use these reports to prepare and file their income tax returns.

The Central Provident Fund (CPF) is a comprehensive social security savings plan that provides working Singaporeans with a sense of security and confidence in their older age. The scope and benefits of CPF covers:

• Retirement
• Healthcare
• Home Ownership
• Family Protection
• Asset Enhancement

Singaporean and permanent residents (SPR) are eligible to participate in CPF. Foreigners are not eligible. Permanent residents and their employers will make contributions to CPF on a monthly basis. The deposits go into 3 accounts:

• Ordinary Account: Funds to buy home, CPF insurance, and investment
• Special Account: For older age and retirement investment
• Medisave Account: Hospitalization and approved medical insurance

The contributions payable are based on the employee’s actual wages earned for the month. The employee’s share will be deducted from the employee’s salary. The rates for the CPF fall into three categories:

• Full employer and employee contribution: Singapore citizen and permanent resident more than three years
• Graduated employer and employee contribution: 1st and 2nd year permanent resident
• Full employer and graduated employee contribution: 1st and 2nd year permanent resident with MOM approval

CPF contributions are based on several factors including age, residency status, and type of earnings. The contribution rates are subject to change.

The below table represents contribution rates for employees earning SGD 750 per month and above (up to a ceiling of SGD 8,000) and who are Singaporeans or Singapore Permanent Residents of 3 years or more.

Employers are required to contribute the Skills Development Levy (SDL) for all employees. The SDL collected is sent to the Skills Development Fund (SDF), which utilizes it to support workforce upgrading programs and provide training grants to employers through the National Continuing Education and Training system. The levy payable for each employee is at 0.25% of their monthly total wages. The minimum payable is SGD 2 for an employee earning less than SGD 800 a month, and the maximum is SGD 11.25 for an employee earning more than SGD 4,500 a month.

It is mandatory for employers to provide work injury compensation for all employees in Singapore doing manual work, and all employees doing non-manual work earning SGD 2,600 or less a month. For other employees, it is the employer’s decision if to provide the work injury insurance. However, should there be a valid claim, the employer is liable to compensate the employee regardless of whether they are insured.

The only government mandated pension system in Singapore is the Central Provident Fund (CPF) system. It is a defined contribution system consisting of funds contributed by the employee, the employer, and the interest accumulated on the contributions.

Employees belonging to the Indian community including Bangladeshis, Bengalis, Parsees, Sikhs, Sinhalese, Telegus, Pakistanis, Sri Lankans, Goanese, Malayalees, Punjabis, Tamils, and people originating from the Indian sub-continent but excluding workers on foreign levy scheme and those who opt out.

Employees belonging to the Chinese Community (Singapore citizens and Singapore permanent residents) may contribute based on the below wage scale unless they choose to opt out.

Employees belonging to the Eurasian community who are of both European and Asian ancestry and would be defined as “Eurasian” in their identity card may contribute based on the below wage scale unless they choose to opt out.

Annual Wage Supplement (AWS) is also called the 13th month payment. It is a single annual payment on top of an employee’s total annual wage. AWS cannot exceed one month’s salary.

• AWS is not compulsory, but in common practice, it is paid in December.
• Annual bonus is paid usually after the company’s financial year close when the performance of the company can be qualified.

• Employees who have served the company for at least 2 years are eligible for severance payment (retrenchment benefits). Those with less than 2 years’ service could be granted an ex-gratia payment out of goodwill.
• The amount of severance payment depends on what is provided for in the employment contract or collective agreement (for unionized companies). If there is no provision, it will have to be negotiated between the employees (or their union) and the employer. The prevailing norm is to pay a retrenchment benefit of between 2 weeks to 1-month salary per year of service, depending on the company’s financial position and the industry.
• In unionized companies where the amount of retrenchment benefit is stated in the collective agreement, the norm is 1 month’s salary for each year of service.

Payment via bank transfer is the most common and the mandatory payment mode for foreigners.

Employers must issue itemized payslips to all employees covered by the Employment Act, as per the following guidelines:

• Payslips must be provided to the employee at the point of salary payment. If this is not possible, it must be given to the employees within three working days of salary payment.
• In the case of termination or dismissal, payslips must be provided together with the final salary.

Payslips can be issued in either digital or in hard copy formats.

• Employees are entitled to paid annual leave if they work for more than three months.
• Minimum annual leave is 7 days for the 1st year and additional one day for each additional year of service capped at 14 days.
• Employers have the discretion to offer more than statutory annual leave.

The number of days of paid sick leave is dependent on the employee’s service period.

* An employee is deemed to be hospitalized if he/she is certified by a doctor to need hospitalization. He/she does not necessarily have to be warded in a hospital.

** The 60 days hospitalisation leave entitlement includes 14 days sick leave.

Mothers are eligible for 16 weeks of paid maternity leave if the following requirements are met:

The child is a Singapore citizen,

The mother has served her employer for at least three months before the birth of the child, and

The mother has given her employer at least one week’s notice before going on maternity leave.

The employer will pay the usual monthly salary during the leave period and claim reimbursement from the Government in accordance with the Government-Paid Maternity Leave (GPML) scheme. For the 1st and 2nd child, the 1st 8 weeks will be paid for by the employer, and the last 8 weeks by the Government. For the 3rd and subsequent births, all 16 weeks are paid for by the Government.

For a female employee who does not qualify for Child Development Co-Savings Act Scheme, she may be entitled to 12 weeks maternity leave if she fulfills necessary criteria. The employer is required to pay monthly salary for the first eight weeks of maternity leave. Whether the employer is required to pay salary during the last four weeks of maternity leave depends ultimately on the terms of the employment contract between the employer and employee.

Where there is a mutual agreement with her employer, an employee can take the last eight weeks (9th to 16th week) of maternity leave flexibly over a 12-month period from the child’s birth. The number of days of maternity leave that can be taken flexibly is equivalent to 8 weeks’ worth of working days, up to a maximum of 48 days.

Employers will pay usual monthly salaries during the leave period. They can then claim reimbursement from the Government in accordance with the Government-Paid Maternity Leave (GPML) scheme: 50% for the first two children and 100% thereafter.

Effective 1 April 2025, eligible working fathers, including those who are self-employed, are entitled to four weeks of paid paternity leave funded by the Government, subject to the agreement of the mother and meeting the following criteria under CDCA:

• The child is a Singapore citizen born on or after 1 April 2025.
• The father is or had been lawfully married to the child’s mother between conception and birth.
• The father has served his employer for a continuous period of at least three months before the birth of the child.

Effective 1 April 2025, eligible working parents in Singapore can share 6 weeks of paid Shared Parental Leave (SPL), to be used within 12 months of their child’s birth or adoption. Eligibility depends on citizenship, employment duration, and marital status. SPL increases to 10 weeks from 1 April 2026. Leave must be planned with 4 weeks’ notice and can be taken flexibly with employer agreement.

Childcare Leave under Child Development Co-Savings Act, eligible working parents of Singapore citizen children are entitled to 6 days of paid childcare leave per year and need to meet the following criteria to be eligible:

• The child is a Singapore citizen,
• The youngest child is below 7 years old.
• The parent has served the employer for at least three months continuously.

Parents of non-citizens can get 2 days of childcare leave a year in accordance with the Employment Act.

Extended Childcare Leave under Child Development Co-Savings Act, eligible working parents of Singapore citizen children are entitled to 2 days of paid extended childcare leave per year and need to meet the following criteria to be eligible:

The child is a Singapore citizen,

The youngest child is between 7 and 12 years old (inclusive).

The parent has served the employer for at least three months continuously.

For parents with children in both age groups (i.e., below 7 years as well as between 7 and 12 years), the total paid childcare leave for each parent is a maximum of 6 days per year.

There are eleven public holidays in Singapore. Each major local race and religion have two holidays each in addition to the secular holidays of New Year’s Day, Labour Day and National Day.