Singapore – Still Employer-Friendly

Singapore has long relied on being an employer-friendly country. Here I comment on the employment rules for, in essence, white-collar workers in a full-time role.

Very few employees in Singapore are members of a trade union or have the benefit of a collective-bargaining agreement – those that are, are typically (but not exclusively) blue-collar workers.

Singapore’s employment law is not quite ‘at will’. But either the employer or the employee may terminate the employment agreement (or make a payment of salary in lieu 0f notice) without giving a reason for the termination. Under the Employment Act, the notice period ranges from one day, if the individual has been employed for less than 26 weeks, up to four weeks if the individual has been employed for five years or more.

In practice, the period of notice is specified in the employment agreement and is typically longer than the statutory minimum: often one month’s notice for junior employees, two to three months for mid-level employees and three to six months for senior executives. (Singapore’s employment law allows for, but does not mandate, a probation period.  The notice period for termination of employment during the probation period is typically quite short – say, one week.)

Employment may also be terminated by the employer if the employee engages in various types of misconduct, as specified in their employment agreement. While investigation of any alleged or perceived misconduct may be carried out as a matter of best practice, it is not generally required.

Singapore employment law is supplemented by tripartite guidelines – the tripartite partners being the Ministry of Manpower, the National Trades Union Congress and the Singapore National Employers’ Federation.  The tripartite guidelines do not have the force of law, although they are typically followed voluntarily.

There is a tripartite guideline that, in effect, prohibits various forms of discrimination in employment – for example, discrimination on the basis of ethnicity. Some parts of that guideline have been recently incorporated into the Employment Act, making them legally enforceable.

The government recently required employers to consider whether they can offer flexible work arrangements with the stated objective of retaining employees with, for example, care-giving obligations in the paid workforce.

Non-compete and other restrictive clauses are frequently included in employment agreements in Singapore. The government announced quite a few months ago that it intended to legislate regarding non-compete obligations, at least for senior employees. But to date, proposed legislation has not been publicised.

Compliance with Singapore employment laws is required by foreign businesses that set up business in Singapore.

In practice, I observe that some foreign businesses relish the flexibility of Singapore’s employment laws compared with their home jurisdiction. Others prefer to ‘over comply’ with Singapore’s employment laws for the sake of uniformity in their international operations – that is, they prefer to use the same employment agreement in Singapore as in their home jurisdiction.