Employer of Record in Singapore: A Complete Guide to Global Hiring

Expanding your business to Singapore? One of the most critical decisions you’ll face is how to legally and compliantly employ workers in this dynamic Southeast Asian hub. For many international companies, the answer lies in partnering with an Employer of Record (EOR) in Singapore.

This comprehensive guide walks you through everything you need to know about EOR services, their benefits, legal considerations, and how they can accelerate your global expansion strategy.

What Is an Employer of Record in Singapore?

An Employer of Record (EOR) is a strategic staffing solution that serves as the legal employer of your workers in Singapore. When you partner with an EOR, they assume all employment-related duties and liabilities on your behalf, effectively acting as the intermediary between your company and your employees.

In essence, an EOR allows you to hire employees in Singapore without establishing a local legal entity. They handle the complexity of local employment law, payroll management, tax compliance, benefits administration, and regulatory reporting. You maintain direct control over your employees’ day-to-day work, performance management, and task allocation, while the EOR manages all the administrative and compliance burden.

This arrangement creates a three-way employment relationship where the EOR is the legal employer, your company directs the work, and the employee performs their duties for your organization.

How Employer of Record Services Work

Understanding the mechanics of an EOR arrangement helps clarify the benefits and responsibilities of each party involved.

The Three-Party Structure

The Company: Your organization maintains the operational relationship with employees. You set their work tasks, manage their day-to-day performance, provide feedback, handle promotions, and make strategic decisions about their roles. Essentially, you operate as if you directly employ them—you just don’t handle the legal and administrative burden.

The EOR: Acts as the legal employer on paper. They draft and execute employment contracts, process payroll, manage tax withholdings and filings, handle statutory benefit contributions, process leave requests, and manage HR compliance matters. The EOR ensures your employment arrangements meet all Singapore regulatory requirements.

The Employee: Works under a standard employment contract with the EOR but performs work assigned by your company. They receive all statutory rights and benefits afforded to employees under Singapore law, including leave entitlements, CPF contributions, health insurance provisions, and dismissal protections.

What an EOR Handles

When you partner with an EOR in Singapore, they manage the following responsibilities:

• Employment Contracts: Creating locally compliant employment agreements that outline key terms including job title, work hours, salary, leave entitlements, and probationary periods.
• Payroll Processing: Calculating gross and net pay, making statutory deductions, processing tax withholdings, and ensuring timely salary disbursement.
• Tax Compliance: Filing all employment-related tax returns, calculating income tax obligations, and managing tax remittance to authorities.
• Statutory Benefits: Managing Central Provident Fund (CPF) contributions, Skills Development Fund contributions, and health insurance provisions for eligible employees.
• Leave Management: Tracking annual leave, sick leave, maternity leave, paternity leave, and other statutory leave entitlements.
• Regulatory Reporting: Filing all required documentation with the Ministry of Manpower and other government agencies.
• HR Documentation: Maintaining employment records, handling policy documentation, and ensuring proper record-keeping.

Legal Framework: Understanding Singapore’s Employment Laws

To appreciate why an EOR is valuable in Singapore, it helps to understand the regulatory landscape governing employment in the country.

Key Legislative Requirements

Singapore’s employment framework is governed by several critical statutes that any employer must navigate:

The Employment Act 1968: This foundational law establishes employment relationships based on a “contract of service.” It governs working hours (maximum 44 hours per week), leave entitlements, wage payment requirements, dismissal procedures, and employee protections. The Act mandates written employment contracts outlining key terms within 14 days of employment start.

The Workplace Safety and Health Act 2006 and Work Injury Compensation Act 2019: These statutes place responsibility on the legal employer to ensure workplace safety, maintain safe working conditions, provide appropriate safety equipment, and manage work-related injuries and compensation claims.

Central Provident Fund (CPF) System: Singapore requires employers to contribute to the CPF—a mandatory social security savings scheme—for all Singaporean citizens and permanent residents. The employer and employee both contribute a percentage of salary (varying based on age and salary level) into this retirement savings account.

Employment of Foreign Manpower Act 1990 (EFMA): This critical statute governs the hiring of foreign workers in Singapore. It requires valid work passes for foreign employees and restricts which types of foreign workers can be employed. The law has specific provisions regarding work pass validity, employer obligations, and penalties for violations.

Tax Law: Employers must withhold income tax from employee salaries based on progressive tax brackets and file annual tax returns. Non-residents face a flat tax rate of 24% (as of 2024), while residents enjoy progressive rates starting at 0% for income below SGD 20,000.

An EOR’s expertise in these complex regulations is invaluable for companies unfamiliar with Singapore’s employment landscape.

Recent Policy Developments: The EOR Clarification

In July 2024, Singapore’s Ministry of Manpower (MOM) issued an important policy clarification that significantly impacts EOR operations. This development warrants careful attention from any company considering EOR arrangements in Singapore.

The MOM’s Position

The Ministry stated explicitly that Employers of Record are not allowed to apply for work passes for foreign employees who are based in Singapore while working for overseas companies without local presence in Singapore. The MOM further stated that applying for such work passes would constitute an offence.

This pronouncement raised substantial concerns in the international business community because:

• Many companies use EOR arrangements specifically to employ foreign workers in Singapore for clients outside the country
• The policy created uncertainty about previously accepted business practices
• The MOM didn’t clearly identify which statutory provisions support this policy position

Legal Ambiguity and Ongoing Debate

The policy announcement created significant legal ambiguity. While MOM asserted that such arrangements constitute an offence, the Employment of Foreign Manpower Act itself does not expressly prohibit foreigners from working for overseas companies while based in Singapore. No specific statutory provision directly supports the policy position, and there have been no known prosecutions or court cases establishing this interpretation.

This legal gray area means that:

• Businesses face uncertainty about enforcement priorities
• The precise legal basis of the prohibition remains unclear
• Administrative penalties could be imposed even without a clear criminal statute
• Companies must weigh regulatory risk against operational needs

Compliance Implications

For companies currently using EOR arrangements with foreign workers or considering them, the 2024 clarification suggests several prudent steps:

Transparency with MOM: Ensure full disclosure of actual work arrangements when applying for work passes, including the identity of end-clients and the nature of work performed.

Documentation: Maintain clear employment contracts that accurately reflect the employment relationship and work assignments.

Notification of Changes: Inform your EOR immediately if there are changes in work arrangements or client assignments.

Consider Restructuring: Evaluate whether establishing a local entity, representative office, or alternative arrangement might better align with current policy expectations.

Monitor Updates: Stay informed about any further clarifications or legislative amendments from MOM.

Key Benefits of Using an EOR in Singapore

Despite the policy uncertainties, EOR arrangements offer significant advantages for international companies looking to hire in Singapore.

Speed to Market

Establishing a full legal entity in Singapore involves company registration, tax registration, bank account setup, and ongoing compliance infrastructure—a process that can take weeks. An EOR dramatically accelerates this timeline. You can begin hiring employees within days rather than waiting months for entity establishment. This speed-to-market advantage is crucial for companies responding to business opportunities, launching new products, or filling urgent talent needs.

Cost Efficiency

Setting up and maintaining a local entity involves substantial fixed costs: registration fees, accounting services, annual compliance costs, audit requirements, office space, and HR infrastructure. For companies unsure about the long-term Singapore market opportunity or wanting to test the market before major investment, these fixed costs represent significant financial commitment. An EOR operates on a variable cost model—you pay fees based on the number of employees and services used, making it easier to scale up or down based on actual business needs.

Regulatory Expertise

Singapore’s employment laws are complex and subject to change. The CPF contribution rates, tax brackets, leave entitlements, and work pass categories are all area where compliance mistakes can be costly. EORs maintain dedicated compliance teams who stay current on all regulatory changes and ensure your employment practices always meet the latest requirements. This expertise eliminates the risk of costly compliance errors.

Simplified Administration

Payroll processing alone involves multiple calculations: gross-to-net conversions, CPF contributions at various rates, income tax withholdings, skills development fund deductions, and work injury compensation insurance. Add to this the filing of monthly CPF returns, annual tax filings, leave tracking, and statutory benefit management, and the administrative burden becomes substantial. An EOR handles all these functions, freeing your internal team to focus on strategic business priorities.

Risk Mitigation

Employment-related litigation, regulatory penalties, and workplace disputes can be extremely costly. An EOR assumes significant liability exposure and manages it through proper documentation, compliant processes, and expert handling of sensitive situations like terminations or disputes. This risk transfer is particularly valuable for international companies unfamiliar with local employment norms.

Global Consistency

For multinational companies building distributed teams across multiple countries, an EOR partner that operates in multiple markets provides consistency in how employees are treated and managed globally, while ensuring local compliance in each jurisdiction. This consistency supports better employee experience and reduced administrative confusion.

Statutory Benefits and Entitlements in Singapore

Understanding the benefits and entitlements employees receive is crucial for budgeting employment costs and ensuring compliance. Singapore’s benefits structure involves both mandatory statutory provisions and common supplemental benefits.

Central Provident Fund (CPF)

The CPF is Singapore’s mandatory retirement savings system. All Singapore citizens and permanent residents must participate. Both employers and employees contribute a percentage of salary (rates vary based on age, with lower rates for younger employees and higher rates approaching retirement). The CPF funds are divided into three accounts:

• Ordinary Account: Used for housing purchase, education, or investments
• MediSave Account: Funds medical and health insurance expenses
• Special Account: Reserved for retirement and long-term healthcare

Employers must enroll eligible employees and make monthly contributions. Failure to do so carries significant penalties.

Paid Leave Entitlements

Annual Leave: Employees covered under the Employment Act with at least three months of service receive a minimum of seven days of annual leave, with an additional day for each year of service (up to a maximum of 14 days).

Sick Leave: Eligible employees receive five to 60 days of sick leave depending on tenure and hospitalization needs.

Maternity Leave: Women receive 16 weeks of paid maternity leave if the child is a Singapore citizen, or 12 weeks for non-citizen children, with a minimum service requirement of three months.

Paternity Leave: Fathers receive two weeks of government-paid paternity leave if the child is a Singapore citizen and the father has been employed for at least three months.

Parental Leave: Adoptive parents can also claim leave under similar conditions.

All of these leave entitlements must be properly tracked and honored, adding complexity to payroll administration.

Health Insurance

While Singapore has a universal healthcare system through the Ministry of Health (using the 3Ms system: MediShield Life, MediSave, and MediFund), employers are required to provide healthcare to Work Permit and S Pass holders. Many employers supplement this with private medical insurance to provide better coverage and attract top talent.

Skills Development Levy

Employers must contribute to the Skills Development Fund (SDF) at a rate of 0.25% of gross salary for employees earning SGD 4,500 or more per month. This fund supports training and workforce development initiatives.

Foreign Worker Levy

For companies employing foreign workers on Work Permits, an additional foreign worker levy is imposed. The rate varies based on industry and the worker’s salary level.

An experienced EOR ensures all these benefits are properly administered and contributions are made on time.

Employment Costs and Budgeting

When calculating the true cost of employment in Singapore, companies must account for both employee salary and employer contributions.

Employer Tax and Contributions

Beyond base salary, employers must budget for:

• CPF Contributions: Typically 17% of gross salary (rates vary by employee age, ranging from 5% to 17%)
• Skills Development Fund: 0.25% of gross salary for eligible employees
• Foreign Worker Levy: For foreign employees (rates vary by work permit type, typically ranging from SGD 170 to SGD 490 per month)
• Work Injury Compensation Insurance: Varies by industry but essential for all employers

Employee Tax Withholding

Singapore uses progressive income tax brackets. For residents, rates range from 0% (for income below SGD 20,000) to 24% (for income above SGD 1,000,000). Non-residents face a flat 24% tax rate on employment income. Employers must correctly calculate and withhold these taxes.

Calculating Total Employment Cost

A helpful approach is to calculate total employment cost as salary plus average employer contributions. For example, an employee earning SGD 60,000 annually might require total employer investment of approximately SGD 72,000-75,000 when CPF and other mandatory contributions are included. An EOR can provide detailed cost breakdowns for specific salary levels and scenarios.

Payroll Management in Singapore

Proper payroll administration is foundational to employment compliance. Singapore has specific requirements that differ from many other countries.

Payment Frequency and Timing

The Employment Act mandates that salaries be paid at least monthly, and payment must occur within seven days of the end of the salary period (14 days for overtime payments). Most companies pay monthly, typically on a specific date each month.

Wage Deductions and Withholdings

Several deductions are made from employee salaries:

• Income Tax Withholding: Based on progressive tax brackets and personal circumstances
• CPF Contributions: Mandatory deductions from employee salary (ranging from 5% to 20% depending on age)
• Voluntary Deductions: Some employees may authorize voluntary deductions (union dues, loans, etc.), but these must be properly documented

Payslip Requirements

Employers must provide employees with detailed payslips showing:

• Gross salary
• All deductions (taxes, CPF, levies)
• Net pay
• Leave balance
• Any other relevant employment information

No Minimum Wage Requirement

Unlike many countries, Singapore does not have a statutory minimum wage. However, this doesn’t mean employers can pay arbitrarily low wages. Market conditions, industry standards, and individual negotiations determine actual wage levels. Foreign workers require pass holders must earn specified minimum salaries depending on their pass category.

Tax Considerations for Employers and Employees

Understanding Singapore’s tax system is essential for proper payroll management and employee communication.

Employee Income Tax

Resident individuals in Singapore are taxed on a progressive scale ranging from 0% to 24% depending on income level. Non-resident individuals face a flat 24% rate on employment income. Several factors influence tax liability:

• Residency Status: Determined by the number of days spent in Singapore and intention to establish residency
• Income Sources: Singapore-sourced income is always taxable; foreign income is only taxable if remitted to Singapore by a resident
• Personal Relief: Residents may claim various personal reliefs (earned income relief, spouse relief, child relief, etc.) that reduce taxable income

Employer Tax Obligations

Beyond withholding employee taxes, employers face their own tax obligations:

• Corporate Income Tax: On company profits (though this applies to the EOR as the legal entity, not the client company)
• CPF Contributions: Significant employer contributions to the CPF
• Skills Development Fund: 0.25% contribution
• Work Pass Levies: For foreign worker employment
• Work Injury Compensation Insurance: Required insurance premium

Tax Compliance Deadlines

Annual income tax returns must be filed by April 15 for hardcopy submissions or April 18 for electronic filing. CPF returns are filed monthly. Companies must maintain accurate records to support their tax positions.

Leave Entitlements: A Detailed Breakdown

Understanding and properly managing leave is critical for compliance and employee satisfaction.

Annual Leave

Employees with at least three months of service and covered under the Employment Act receive:

• First year to fifth year: 7 days minimum
• Sixth year onwards: Additional days (up to a maximum of 14 days total)

Employers can accrue leave on a daily basis or use other methods, but must grant at least the minimum entitlement. Unused leave can be carried forward subject to agreement, though some employers clear leave at year-end.

Sick Leave

Eligibility and entitlement depend on tenure and circumstances:

• First year of service: 4 days with medical certificate, or 2 days without
• Second year onwards: Up to 60 days depending on whether hospitalization is required

Employees must notify employers within 48 hours of absence, though some flexibility exists in emergency situations.

Maternity and Paternity Leave

Maternity Leave: 16 weeks paid leave (12 weeks if child is not a Singapore citizen), with additional unpaid leave available. Must have worked for at least three months prior to maternity leave.

Paternity Leave: 2 weeks government-paid paternity leave if conditions are met, with potential for additional unpaid leave.

Parental Leave: Adoptive parents receive similar entitlements.

These leave categories are strictly protected—employers cannot deny these leave requests or dismiss employees for taking them.

Public and Bank Holidays

Singapore observes 11 public holidays per year, including New Year’s Day, Chinese New Year, Good Friday, Labor Day, Vesak Day, and others. These holidays are in addition to annual leave entitlements. Employees who work on public holidays are typically entitled to holiday pay or a replacement day off.

Managing Leave in Practice

An EOR manages leave by:

• Maintaining accurate leave records
• Calculating accrual based on tenure and salary level
• Processing leave requests and approvals
• Ensuring payroll reflects leave taken
• Managing replacement day offs and holiday surcharges
• Providing leave statements and reports

Termination and Notice Periods

Employment relationships eventually end, and understanding termination procedures is essential for compliance.

Notice Periods

The Employment Act provides statutory notice periods based on length of service:

• Less than 4 weeks service: 1 day notice
• 4 weeks to 2 years service: 1 week notice
• More than 2 years service: 4 weeks notice

These notice periods apply to both employers and employees, and can be varied by mutual agreement or employment contract if the terms are more generous to the employee. Payment in lieu of notice is permitted.

Grounds for Dismissal

Employers must have just cause to terminate employment. Valid grounds include:

• Misconduct: Breach of employment contract, gross misconduct, or absence without approval for more than two working days
• Performance: Persistent failure to meet performance standards despite warnings
• Redundancy: Genuine business reasons eliminating the position (though this may trigger severance obligations depending on contract terms)

Employers cannot dismiss employees during or with a notice period expiring during maternity leave—a strict protection under the Employment Act.

Severance and Redundancy

Unlike many countries, Singapore has no statutory severance requirement. Any severance obligation must be established through the employment contract or company policy. Some employers provide ex-gratia payments as a goodwill gesture, but they are not legally required.

Foreign Employee Termination

When foreign employees are terminated, their work passes must be canceled within seven days of employment ending. The employee must typically leave Singapore within a specified period (often 30 days), so timing of termination notices affects visa status.

Challenges and Considerations with EOR Arrangements

While EOR services offer substantial benefits, companies should also understand potential challenges.

Policy Uncertainty Regarding Foreign Employees

The July 2024 MOM policy clarification creates uncertainty for EOR arrangements involving foreign workers assigned to overseas clients. Companies must carefully evaluate their specific arrangements and consider whether restructuring might be prudent. This uncertainty is likely to persist until either MOM provides additional clarification or case law establishes judicial interpretation.

Ongoing Costs

For some companies, particularly those planning long-term Singapore operations with significant headcount, the cumulative EOR fees may eventually exceed the cost of establishing a local entity. Companies should model long-term costs and establish a transition plan if expansion warrants entity establishment.

Less Control Over HR Practices

By delegating employment administration to an EOR, companies cede some control over how employment matters are handled. While the EOR must follow the client’s direction on operational matters, certain HR practices and procedures are managed by the EOR. Clear communication about company culture and HR expectations is essential.

Employee Awareness and Communication

Some employees may feel disconnected from the actual company if they’re employed by an EOR they’ve never directly interacted with. Clear communication about the employment arrangement, as well as strong operational engagement from the actual company, helps mitigate this concern.

Dependence on EOR Quality

The quality of EOR services varies among providers. Companies must carefully vet potential EOR partners, check references, verify compliance track records, and ensure the partner has depth of expertise in Singapore employment law and practices.

Alternatives to EOR Arrangements

Several alternatives exist for companies expanding into Singapore, each with distinct advantages and disadvantages.

Establishing a Local Entity

Incorporating a Singapore company through ACRA (Accounting and Corporate Regulatory Authority) allows full commercial operations and local employment. Advantages include complete control, potential tax planning benefits, and ability to establish Singapore-branded operations. Disadvantages include substantial setup time, ongoing compliance costs, and administrative complexity. This approach makes sense for companies planning substantial Singapore presence.

Representative Office

A representative office can be established under Enterprise Singapore’s scheme. This allows limited business development activities and employment of staff, though it cannot conduct direct commercial transactions. This middle-ground option suits companies wanting local presence but not full operational commitment.

Contractor Arrangements

Some companies employ independent contractors as sole traders or limited liability company owners in Singapore. However, this approach is problematic for full-time employees working exclusively for one company, as it likely violates employment law classification requirements and exposes companies to significant penalties.

Hybrid Approaches

Some companies combine approaches—establishing a local entity for core operations while using EOR services for specialized or temporary roles. This flexibility allows optimization of cost and control across different employee categories.

Practical Implementation: Steps to Using an EOR in Singapore

If you decide that an EOR arrangement makes sense for your Singapore hiring, here are the typical implementation steps:

1. Select an EOR Partner

Carefully evaluate potential EOR providers by:

• Verifying Singapore expertise and compliance track record
• Checking client references
• Understanding their technology platforms and reporting capabilities
• Clarifying fee structures and what’s included
• Assessing their approach to policy compliance and legal risk management
• Confirming their understanding of current MOM policy on foreign workers

2. Prepare Recruitment

Work with the EOR to:

• Develop compliant job descriptions and position specs
• Determine appropriate salary ranges and total compensation packages
• Prepare interview processes and selection criteria
• Plan onboarding timelines

3. Execute Employment Contracts

Once candidates are selected, the EOR will:

• Draft employment contracts reflecting Singapore statutory requirements and your specific terms
• Ensure contracts include all mandatory clauses (leave entitlements, notice periods, termination conditions, etc.)
• Have contracts signed by both parties
• Provide employees with copies and explanations

4. Process Onboarding

The EOR coordinates:

• Enrollment in the CPF system
• Tax registration and setup
• Health insurance enrollment (for eligible employees)
• Skills Development Fund registration
• Work pass application (if applicable)
• System setup for payroll and benefits administration

5. Ongoing Payroll and Administration

The EOR manages:

• Monthly payroll calculations and processing
• Salary payments and tax withholdings
• Leave tracking and accrual
• Benefits administration
• CPF and tax filings
• Regulatory compliance monitoring

6. Employee Relations Support

Throughout employment, the EOR provides:

• Guidance on HR matters and best practices
• Documentation of performance reviews and discipline (if needed)
• Leave administration
• Benefits communications
• Termination processing when employment ends

Key Metrics for Evaluating EOR Partners

When selecting an EOR provider, consider these evaluation criteria:

Expertise and Track Record

• Years operating in Singapore
• Number of active client companies and employees managed
• Compliance audit history and any regulatory issues
• References from similar companies

Technology Platform

• User-friendly interface for viewing payroll, leave, and employee data
• Reporting capabilities and analytics
• Integration with your existing systems
• Mobile access for employees and managers

Service Coverage

• Geographic reach (if you need multi-country support)
• Services included in base fees vs. optional add-ons
• Responsiveness and support availability
• Specialized services (benefits consulting, immigration support, etc.)

Pricing Transparency

• Clear fee structure (per-employee, tiered, additional services)
• What’s included in base service
• Optional service costs
• No hidden fees or surprise charges

Regulatory Compliance Approach

• How they stay current on legal changes
• Approach to emerging compliance issues
• Risk management practices
• Communication about legal uncertainties (like the foreign worker policy)

Cultural Fit

• Understanding of your company culture and values
• Willingness to support your HR practices
• Responsiveness to your specific needs
• Partnership approach vs. transactional service

Conclusion: Is an EOR Right for Your Singapore Expansion?

An Employer of Record in Singapore can be an excellent solution for international companies looking to quickly and compliantly hire talent without establishing a local legal entity. The speed to market, cost efficiency, regulatory expertise, and risk mitigation benefits are substantial.

However, the July 2024 MOM policy clarification regarding foreign workers and foreign clients creates a layer of complexity that companies must carefully evaluate. The legal ambiguity around this policy means prudent companies should:

• Clearly understand their specific business model and work arrangements
• Evaluate whether their use case falls within the gray area flagged by MOM
• Consider whether restructuring (local entity, representative office) might be appropriate
• Ensure full transparency with their EOR and MOM about actual work arrangements
• Stay informed about any further policy clarifications or legal developments
• Consult with legal advisors in Singapore about their specific situation

For many companies—particularly those hiring Singapore residents to work for Singapore-based clients, or those employing foreign workers for legitimate local operations—EOR arrangements remain an excellent option that can dramatically simplify international expansion.

The key to success is selecting a knowledgeable, compliant EOR partner who understands the current regulatory landscape, maintains transparency with authorities, and helps your company navigate both the opportunities and uncertainties of Singapore employment law. With proper planning and the right partner, an EOR can unlock significant advantages in your Singapore growth strategy.