Deciphering Labour Laws: Navigating Employment Regulations in Singapore

Labour laws across countries aim towards striking a balance between the interests of both employers and the employees, ensuring fair employment practices and by providing scope for business growth. In this blog we will navigate through the key compliance requirements under the various labour laws that an employer in Singapore (“You”) should comply with. In the ESG driven global environment, the various stakeholders are focusing on the extent to which employers adhere to their legal obligations especially on the “Social” and “Governance” front. Prior to investing in your company in any manner (financially/taking up a job offer), the stakeholders would do their due diligence on the compliance score of the company. To provide clarity on this topic,  we have structured the discussion in line with the life cycle of a business from (a) start of operations and (b) ongoing obligations.

Compliance requirements – Start of Operations

Our exploration of this topic starts with the hiring process. Each person employed represents the fundamental unit through which benefits of labour law are provided and in return these benefits are transformed into productive work hours. Beginning with establishing the terms of service in the engagement contract, to determining work period for salary payments, setting weekly rest days, to hiring foreigners only if they possess valid work pass there are legal obligations to identify and comply with under various legislations.  Further to ensure transparency, clear key employment terms have to be provided within the first two weeks of employment and an itemised salary slip has to be issued for each salary period.

It is therefore essential for employers in Singapore to be aware of the key employment -related laws which includes the Employment Act, Central Provident Fund Act, Employment of Foreign Manpower Act, Workplace Safety Health Act, the Work Injury Compensation Act, etc. as essential compliances have to be adhered to before and after hiring.

Compliance requirements – Business Continuity

Once you have started your operations, there are certain ongoing activities you are required to adhere to which help you to maintain a stable and healthy work environment.

Payment Obligations – At the core of these ongoing activities lies payment obligations towards your employees, such as paying monthly salary within7 days after the end of the salary period, timely payment of overtime wages and compensation for their work injuries. Your payment obligations do not end here. Being an employer, you have to ensure that the set rates of provident fund are contributed to the Central Provident Fund as well. Central Provident Fund is a mandatory social security savings scheme applicable to all Singapore citizens or Singapore Permanent Residents. It is your responsibility as an employer to make the contributions (comprising of employers and employees share) to the CPF fund. You can deduct the employees share of CPF contribution from their salary.

Complying with the payment obligations set out in the various laws in a timely and fair manner is not only a legal obligation but also contributes to employee satisfaction by addressing their financial needs. This in turn can boost their morale and motivation, leading to greater job satisfaction and productivity.

Working Hours and Leave Policy – Maintaining a  work-life balance is key to mental health and well-being of both the employer and employee. In order to achieve this, the laws in Singapore have laid down limits on permissible maximum working hours and the leave policy that each employer has to mandatorily frame. To start with, ensure that no employee covered under Part IV of the Employment Act in your company works more than8 or 9 hours in a day, depending on whether the workweek is 5 days or longer, or exceeds  44 hours per week.  Overtime must be limited to a maximum of 72 hours per month.

A leave policy should be drafted to ensure compliance with regulations. This includes providing paid public holidays, ensuring all employees receives their full gross rate of pay. Additionally, for employees with three months or more of service, provide 7 days of annual leave in their first year, adding an extra day for each subsequent year, up to a maximum of 14 days. Further, provide sick leave and hospitalization leave based on the length of the employee’s service.

Restrictions on employment of children – Children aged 13 to 15 years may be employed only for light duties in non-industrial settings but are not allowed to be employed in an industrial setting unless they are working with family members. Young persons between the age of 15 to 16 work in both non-industrial and industrial settings; however, the type of work they can do is governed by Part VIII of the Employment act and corresponding regulations.

Provide maternity benefits – The law also provides for maternity, paternity, and other related benefits to employees. Depending on the eligibility criteria, maternity benefits like 12-16 weeks of paid maternity leave, 12 weeks of adoption leave is provided to female employees. Likewise, paternity leave is granted based on eligibility.

Workplace Safety and Health – Provide a safe and secure work environment for your employees to protect them from workplace hazards and promote a culture of safety. This can be achieved by identifying and complying with your obligations under the Workplace Safety and Health Act which includes undertaking risk assessments, being prepared for emergencies with a plan, providing comprehensive safety training, implementing measures such as hazard identification, safety audits.

Safe work environment – As an employer, ensuring a non-toxic work environment is crucial, necessitating compliance with the provisions of the Protection from Harassment Act of 2014. Harassment can be verbal, physical, or psychological abuse and you as an employer will be required to develop and maintain robust harassment prevention policies, training, and redressal mechanisms. Furthermore, Singapore is set to pass the Workplace Fairness legislation in the second half of 2024, aimed at promoting non-discriminatory practices in the workplace. To comply with this new legislation, companies will need to review and update their existing policies, particularly those related to recruitment and grievance handling procedures.

Abiding by the labour laws and adhering to the compliance standards in a timely manner reduces the risk of legal disputes, fines, or penalties. It also enhances your reputation as a responsible and reliable organization/employer. This in turn can attract top talent and positively influence the company’s brand image.

We, at Lexplosion, help organisations navigate and track their compliance on a timely basis with our compliance management tool “Komrisk” which bifurcates compliances into distinct types of compliances on the basis of timeline, type of law, category (registration, filing, etc.). Our tool allows granular bifurcation of compliance responsibilities across organizations including advanced features for monitoring performance and escalating potential misses. The mobile application doubles up the advantage of Komrisk allowing managers to keep an eye on compliance performance and stakeholders to complete tasks on the go! Please write to us at inquiries@lexplosion.in or getintouch@lexplosion.in to know more.

Written by: Pragya Saraf

Co-authored by: Zaheer Tarafdar