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Before Singapore Company Incorporation, Entrepreneurs Should Know These Statutes of Singapore Employment Act

Posted last August 5, 2015, 7:55 am in Business report article

The Singapore government has methodically used its strategic location to market the huge potential it has to grow a business. Regarded as the bridge between east and west; moreover, the business environment exemplifying the East Meets West culture made it one of the hottest destinations of company incorporation. In addition to that, Singapore also emerged as a thriving economy with a diverse workforce. However, foreign and local entrepreneurs interested to incorporate company in Singapore should understand the evolving labor laws and appreciate the compliance of the applicable legislation.

It is necessary for every entrepreneur to appreciate and understand the way in which the employment contract operates within the statutory framework of the Singapore Employment Act. Such understanding will surely help global entrepreneurs interested in Singapore business incorporation to survive and grow their business. Having detailed knowledge of the Employment Act governs employer and employee relationships and based on working terms and conditions and rights and obligations of employment, an employer gets a fair insight to operate a business in Singapore within the statutory framework of Employment Act.

The Important Statutes of Singapore Employment Act Every Singaporean Entrepreneur Should Know

The legislation and case laws in Singapore mandates few necessary duties of an employer. Few important statutes imposing duties on the employer in Singapore are

The Employment Act (Cap. 91)

The Act is designed to protect certain classes of employees (defined in section 2 of the Act). As per the Act, these employees are provided with minimum terms of service, which cannot be contracted out or diluted to the detriment of such employees.

On the other hand, Part IV of the same act deals with basic terms of service, as if, rest days, shift work, holidays, retrenchment benefits, leave and hours of work. The hour of work concept is applicable only to the workers and employees with salaries not exceeding above S$ 1,600.

Factories Act (Cap. 104)

This act defines what “Factory” means. A person or an individual occupying or using factory is burdened with a lot of obligations by this act. These include observing obligation related to registration, cleanliness, overcrowding, ventilation, lighting, drainage, sanitary, conveniences etc.

Recently a few of the restrictions and obligations of this act are shifted to some of the non-industrial businesses like hotels, restaurants, canteens, laboratories and medical as well as veterinary centers.

Workmen’s Compensation Act (Cap. 354)

This act briefly defines the term “Workman”. This Act has made provisions for the workmen, wherein an employer is liable to pay compensation, if a workman is accidentally injured in the facility, under his/her employment during the course of an employment.

In addition to that, the act also imposes certain compulsions on the employer like insurance. However, few industrial sectors exempt from the liability to take compulsory insurance. Some of the industries that enjoying this exemption are government owned companies, international shipping lines, banks and finance companies, international oil companies and employers employing all pupil otherwise than a way of manual labor.

The Central Provident Fund Act (Cap. 36)

The act mandates the necessity of contributing towards the Central Provident Fund (CPF). Initially, the CPF was setup with an intention as an old age saving for the employees. Eventually, the same scheme has evolved to become a comprehensive social security saving system offering financial security to the employees in their old age. Certain needs of retired employees like family healthcare, home ownership, family protection and asset enhancement can easily be fulfilled through CPF savings.

As per the act, employers need to ensure that he/she is contributing a certain sum per month against each employee in accordance with the rate set out in the revised CPF Act (Act. 36). However, the employer is offered with the liberty to deduct a percentage of that amount through the wages of employees at the time of paying out wages.

Other Relevant Legislation Acts

Apart from the acts mentioned above, a Singaporean employer will also have to stay updated and mindful of few other relevant legislative acts such as the Retirement Age Act (Cap. 274A). Remember an employer dismissing an employee based on his/her age; although, if she/he happens to be under the prescribed retirement age would be considered as guilty of the offense under the Retirement Age Act. As of now, the prescribed retirement age in Singapore is 62 years. Nevertheless, there exist some exemptions like police, cabin crew and university teaching staff, etc.

Conclusion:

Apart from those mentioned above, there is much other legislation affecting the relations of employment in Singapore. Therefore, it is necessary for an entrepreneur to understand legislation related to employing foreign workers, immigration, industrial relation, trade union and national service before Singapore company registration.