Looking for a PEO in Singapore? Here’s what you need to know

How and why to partner with a PEO in Singapore.

Image of Singapore city and the words "PEO in Singapore"

The island nation of Singapore is increasingly attractive to employers worldwide looking for top talent. As the most globalized economy in the world, with an educated and talented workforce known for its cross-cultural communication and collaboration skills, Singapore offers a wide range of opportunities for companies in virtually any industry.

Hiring internationally from another country presents a unique set of challenges. It’s critical to understand and comply with that country’s employment laws to avoid problems that may bring serious financial, legal, and reputational consequences. Unless you have specialized knowledge or experience in handling Singaporean employment regulations, for instance, it’s best to enlist expert help.

One way to do so is to engage the services of a professional employer organization (PEO). As a co-employer of your staff, a PEO partner will handle HR functions, including onboarding, payroll, benefits administration, and taxes, while you and your new team member focus on achieving your business goals. 

Let’s take a closer look at what’s involved when hiring talent in Singapore, and how a PEO can help.

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Employment law in Singapore

As in most countries, employment law in Singapore is complex, so you need to be aware of potential pitfalls. In fact, more than 30% of small businesses in Singapore face fines every year for payroll mistakes. Employee misclassification, or classifying workers as contractors when they should be employees, is another common issue. Sometimes foreign businesses try this approach to bringing talent from Singapore on board, only to discover that they are out of compliance with local laws. 

The Ministry of Manpower (MOM), the government body overseeing employment practices in Singapore, prioritizes employee rights and penalizes companies that don’t comply with employment laws. In addition to fines and potential jail time, the Ministry maintains a public record of employers who violate the Employment Act. This record includes offenses like unpaid wages, forced overtime, or denial of earned time off.

Working with a PEO in Singapore can help protect your business against the costs and embarrassment of employment law violations. They can handle the intricacies of managing employees and keeping you compliant with applicable laws such as the following:

Working hours and time off 

Singapore follows a five-day, 44-hour workweek. Overtime pay eligibility depends on whether employees are covered under the Employment Act and earn a monthly basic salary not exceeding SGD 2,600 or an hourly basic rate of pay not exceeding SGD 13.60. Overtime is calculated at 1.5 times the hourly rate, with a maximum of 72 overtime hours allowed per month unless exempted by the Ministry of Manpower (MOM). Certain categories, such as managers and executives, may have different regulations.

In addition to the 10 standard holidays per year, employees get at least seven days of paid time off. Most employers offer between 14 and 22 days off per year. Employees can also take up to 14 days of sick leave (60 days for a hospitalization), up to 16 weeks of maternity leave, and up to two weeks of paternity leave. Singapore provides reimbursement for maternity leave via Government-Paid Maternity Leave. 

Employment contracts

Although Singapore doesn’t require written employment contracts, the Ministry of Manpower strongly recommends written contracts for all employees. Contracts should include the employment date and expected duration (for contract positions) and details about the probationary period, which is typically three to six months. 

Minimum wage 

Singapore does not have a minimum wage, but hourly employees who work outside of regular working hours or more than 44 hours are to be paid 1.5 times their regular wage for overtime hours. Employees must be paid at least monthly within seven days of the end of the pay period.

It’s important to note that non-workmen earning more than SGD 2,600 per month and workmen earning more than SGD 4,500 per month can’t claim overtime pay. 

Contributions to the Central Provident Fund (CPF)

Employees in Singapore must contribute to a Central Provident Fund, a savings plan designed to cover housing and healthcare costs in retirement. Employers must set up these accounts for workers and calculate contributions to withhold automatically. The calculations aren’t necessarily straightforward, as the individual’s earnings, age, current government plans, and industry rules all factor into the contribution. Employers also need to contribute to these accounts.

Skills Development Fund

Employers must contribute to Singapore’s Skills Development Fund on behalf of each employee, including foreign employees and those employed on casual, part-time, or temporary basis This is a fund that issues grants to employers who send their workers for training. The Skills Development Levy (SDL) is set at 0.25% of each employee's monthly remuneration. For employees earning below SGD 800 per month, the SDL contribution is a minimum of SGD 2. For higher earners, the maximum SDL contribution is capped at SGD 11.25 monthly for those earning more than SGD 4,500.

Tax filings 

Singapore tax law requires employers to prepare and submit multiple tax forms for each employee by March 1 each year and provide copies to employees so they can submit their own income tax filing. 

These are just some of the provisions of the Employment Act designed to protect employees. To learn more, check out our comprehensive guide to hiring and paying employees in Singapore. You can also use Oyster’s free cost calculator to get a detailed breakdown of the cost of hiring in Singapore.

Benefits of using a PEO in Singapore

Singapore is one of the most business-friendly countries in the world, so it’s a great place to set up an entity and recruit talent. But handling all the compliance, admin, and logistics in-house can become burdensome. This is where a PEO can help.

When you work with a PEO, the PEO becomes the co-employer of your staff and handles all your HR functions. You still manage the day-to-day activities of your employees, but the PEO takes care of payroll, benefits, and other routine functions. This arrangement offers many benefits, not the least of which is the opportunity to offer a more attractive benefits package to overseas employees, thanks to the existing relationships provided by the PEO.

Contracting with a Singapore PEO also provides: 

  • Streamlined onboarding: A PEO with experience in Singapore makes it easy to get new employees up and running quickly. They can easily prepare contracts and new hire paperwork that adheres to local laws and get your workers set up for payroll in the local currency. The process is faster and more organized, getting your new team member off on the right foot. 
  • Compliance with the Employment Act: PEOs take their responsibility to maintain compliance seriously, which means they stay abreast of all the latest developments in local employment laws to ensure their clients stay on the right side of the law. From the rules about contracts and terminations to correctly calculating social contributions, the PEO knows what has to be done and when, so you don’t make mistakes that hurt your company’s reputation or bottom line. 
  • Cost savings: It might seem counterintuitive to pay for a service to perform functions that your in-house HR department typically handles, but in the long term, a PEO can save your company money. For instance, they might be able to negotiate better rates when it comes to local benefits, and help you avoid compliance mistakes that might lead to costly fines. 

Working with a PEO to manage HR for overseas employees also saves time. Instead of devoting their time and skills to research and paperwork, your HR team can focus on more strategic priorities that help your company reach its goals. 

A PEO alternative: Oyster’s global employment platform

A PEO isn’t the right option for everyone. For one thing, the co-employment model means that you need to have an entity in the country and you share liability for employing workers. Another option is to work with an EOR in Singapore that would act as a sole legal employer on your behalf, which would also relieve you from spending thousands of dollars on establishing an entity in Singapore. However, if you decide to hire across multiple countries, you might have to find local EOR partners in each location, which can soon become a hassle.

A better alternative is to use a global employment platform like Oyster. Our automated platform offers an affordable, compliant, and streamlined way to hire, pay, and manage an international workforce in over 180 countries. 

Oyster is ideal when you want to hire internationally from multiple countries, including Singapore. Instead of working with multiple PEOs or EORs around the world, our platform makes it possible to keep track of everyone and comply with local laws in one place. From payroll and benefits to workplace culture, Oyster makes it simple for your company to go global with just a few clicks. 

Learn more about how Oyster can help you scale your team in Singapore and beyond.

About Oyster

Oyster is a global employment platform designed to enable visionary HR leaders to find, engage, pay, manage, develop, and take care of a thriving distributed workforce. We let growing companies give valued international team members the experience they deserve, without the usual headaches and expense of hiring abroad.

Oyster enables hiring anywhere in the world—with reliable, compliant payroll and great local benefits and perks.

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