HR

Suffering an employee death is one of the hardest things that an employer (to say nothing of the deceased’s family) will have to handle. If the employee passes on due to work-related causes, employers will face significant liability under Singapore law.

The 7 things businesses MUST do if faced with an employee death:

1. Notify MOM
2. File a Work Injury Compensation Claim (if you have Work Injury Compensation Insurance)
3. Pay deceased employee’s family any salary owed
4. If deceased employee is a foreigner, cancel Work Pass and repatriate body
5. If death was work-related, pay mandatory compensation
6. Return employee’s belongings to family
7. How to protect your business against liability for work-related death

Step 1. Identify whether the employee’s death occurred due to work OR occurred at a workplace:

The responsibilities of the employer will vary depending on how OR where the employee died. Employers must act immediately to identify which the 2 scenarios below apply:

• Scenario 1: The employee’s death was not related to work OR occurred outside the workplace.
• Scenario 2: The employee’s death occurred due to work OR at the workplace

Scenario 1: Employee’s death occurred due to non-work-related causes OR outside the workplace

If an employee dies due to non-work-related causes, or dies outside the workplace, then employers don’t need to report the incident to MOM. Employers are not liable under the Work Injury Compensation Act for such deaths.

Examples:

1. Employee slipped and fell outside the office, after knocking off work. Employers are not liable under the Work Injury Compensation Act for injuries while travelling to and from work, from home. Since the employee death occurred outside the workplace, and was not work-related, the employer does not need to report the incident.
2. Employee was killed in a road accident while on public transportation, on the way to work. Same rationale and outcome as point (1). Employer does not need to report the incident.
3. Employee has been battling stomach cancer for past 6 months. The cancer was not related to work. The employee eventually succumbs to the disease while hospitalised in ICU. Employer does not need to report the death to MOM. The employee death was not related to work, and the death occurred at the hospital which is outside the workplace.

Scenario 2: The employee’s death occurred due to work OR at the workplace

Employee’s death due to work:

If an employee dies from work-related causes, employers must notify MOM of the passing immediately. Examples of work-related causes would be falls at construction sites, being electrocuted while working on wires, or getting hit by vehicles while on the way to lunch.

Employee’s death at the workplace:

If an employee dies at the workplace, employers must notify MOM immediately. Workplaces would be any area where the employee is assigned to work. It could be the company office, a third-party project site the employee needs to visit, a client’s office, etc.

If there is doubt over whether the death was related to work or happened at the workplace, then employers should err on the side of caution and report the incident to MOM ASAP.

Step 2: Notify MOM/Commissioner for Workplace Safety and Health ASAP

You must notify the Commissioner for Workplace Safety and Health ASAP. To do this, employers can send an email to [email protected]

In the email to the Commissioner, employers should state the following:

• Date and time of employee’s death
• Place of death
• Name and identification number of deceased employee
• Your company name
• Name of workplace occupier. This refers to the person or organisation who controls the premises the employee works in. For instance, if the deceased employee had died while working in a retail shop, the workplace occupier could be the shop owner or landlord. If the workplace occupier is a factory that is registered with MOM, the workplace occupier is the individual whose name is on the factory’s certificate of registration.
• Description of accident that caused the death
• Name and contact details of individual who sends the email to the Commissioner

Step 3: File a Work Injury Compensation Insurance claim ASAP

For employers who have a Work Injury Compensation Insurance policy, notify your insurance broker or insurance company immediately after you notify the Commissioner for Workplace Safety and Health. Do not delay notifying your broker or insurer, or your claim may not be accepted.

If MOM finds that the employee’s death really was due to a work-related cause, Work Injury Compensation Insurance will cover the mandatory compensation that you’ll need to pay to the deceased’s family. This can go up to $225,000 or more – more on that later in this article.

Step 4: Submit an incident report to MOM, within 10 days of the employee’s work-related death

To file the incident report, employers may use the WSH incident reporting online tool.

Employers who fail to make the necessary reports can be jailed up to 6 months, and or fined up to $10,000.

Employers must include the following in the incident report:

• Description of accident/disease that caused employee death
• Personal details of employer
• Company details
• Employee personal details
• Details of Work Injury Compensation Insurance

Employers are required to keep all incident reports for at least 3 years, so it’s a good idea to save the report, and/or print it out and store it in a secure location.

Once employers submit the incident report, MOM will begin its investigation process.

Must employers report worker deaths while travelling?

It depends.

Employee death while travelling between work and home does not need to be reported.

Employee death while travelling from work to other work sites needs to be reported.

Must employers report deaths for workers who died on their lunch breaks?

Yes. Lunch breaks are counted as part of work and such deaths must be reported.

Travelling to and from lunch breaks is counted as part of work, and such deaths must also be reported.

Example: Tim is an employee of Company ABC (names fictitious). Tim was driving from his company’s office to a client’s office when he got into a road accident. Tim passed away. This was a work-related incident, so Company ABC must report the death to MOM.

Step 5: Pay any outstanding salary owed to deceased employee

A deceased employee may have salary, bonuses, overtime payment, and other sums that were owed to them before they passed on. These accrued sums belong to the employee’s personal representative, which is the person the employee legally nominated to manage their affairs upon death. Most often, the personal representative will be a member of the employee’s family, such as their spouse.

Before making any payments to the employee, it’s best to contact the employee’s next-of-kin, to determine who is managing the deceased’s affairs. Most employers will collect an “emergency contact” from their employees – this will work also. Employers should contact the employee’s emergency contact first, because the deceased employee’s bank account will usually be frozen when the bank is informed of their death. Contacting the next-of-kin first allows employers to arrange the logistics of which bank account to pay the sums owed.

The amount that employers must release to deceased employees will depend on how salary is calculated in the worker’s employment contract. For instance, employees who receive monthly payments should have their salary pro-rated to reflect the number of days worked before they passed away. For daily-wage workers, the daily wage should be pro-rated to reflect the number of hours worked before the worker passed away.

Payment of maternity leave pay, if employee dies while on maternity leave, before childbirth

If an employee dies while on maternity leave, but before childbirth, the employer must pay her remaining maternity leave pay in full. This is compulsory under Section 79 of the Employment Act.

Some key facts to note about paying maternity leave benefits for expecting employees who pass on:

1. Maternity leave pay is the employee’s gross pay. (Gross pay = basic pay + allowances + overtime/bonuses/commissions/etc. Exclude CPF).
2. Paid maternity leave varies from 12 to 16 weeks.

Employers must pay the remaining maternity leave pay to the person nominated by the worker to receive such payments. Often, it will be the deceased employee’s spouse. If no one has been nominated, the employer should pay the employee’s personal representative.

Step 6: Pay mandatory compensation for work-related deaths

By law, employers must pay compensation to the family of employees who die from work-related causes. This is mandated under the Work Injury Compensation Act (WICA).

Minimum amount employer must pay, for each work-related death: $76,000

Maximum amount employer must pay, for each work-related death: $225,000

The above amounts can be adjusted higher depending on the age of the employee. The families of younger employees will have to be paid more compensation for work-related deaths. The amount will be determined by MOM after they have conducted their investigation into the employee’s demise. MOM will issue employers a Notice of Assessment (NOA), which will inform employers of how much compensation they must pay.

Not paying required compensation under the Work Injury Compensation Act is punishable by jail and/or fine.

WICA covers all employees in Singapore, regardless of nationality. This means even if the worker is a foreigner worker, employers must pay the foreign worker’s family in their home country. Also, WICA operates on a no-fault basis. This means that even if the worker who died at (or from) work due to their own carelessness, the employer must compensate the worker’s family. Even if the employer had no responsibility for the employee’s death, it is irrelevant.

Death compensation is a lump sum compensation. Given the size of the required compensation, companies that don’t have WICA Insurance may go bankrupt.

Exceptions for WICA compensation:

Employers are not liable to pay compensation under WICA if:

• Employee commits suicide or deliberately injure themselves
• Employee dies or gets injured while under the influence of alcohol or drugs
• Employee’s death was not work-related

Step 7: Returning belongings

Employers should arrange for the employee’s personal belongings at the workplace to be packed and delivered to the family, depending on how the family wishes for their loved one’s belongings to be handled.

Protect your business from liability from employee deaths:

As established earlier, businesses in Singapore are liable for $76,000 to $225,000 (or more) for an employee passing away due to work-related causes. This is a massive amount of money, and could easily send most SMEs into serious financial trouble, or even bankruptcy. Work Injury Compensation Insurance will pay this amount for you. It also covers medical expenses for work-related injuries/sickness, including Covid-19 (up to $45,000), and also covers compensation for temporary/permanent disability.

Buy Work Injury Compensation Insurance from $5/month online

Whether someone is in a contract of service vs contract for service for your company has important consequences. For instance, you must pay workers in a contract of service CPF, and they are entitled to a whole host of other labour rights. For instance, contracts of service workers must have sick leave, maternity/paternity leave, non-working days, overtime and more. However, workers in a contract for service are not entitled to such rights.

We’ll explain:

• What is a summary of contracts of service vs contracts for service?
• What is a contract of service?
• What is a contract for service?
• What are the 11 legal differences between contracts of service vs contracts for service?
• What’s a legal case demonstrating the difference between contracts of service vs contracts for service?
• Why is it important to differentiate contacts of service from contracts for service?
• How to protect your company from liability for workers under contracts of service?

What is a summary of Contracts of Service vs Contracts for Service?

What is a contract of service?

A contract of service is an agreement where one party agrees to hire another party as an employee. Contracts of service are the standard form of contracts for hiring employees. Contracts of service apply to both full-time and part-time employees.

A contract of service is usually provided in the form of an Employment Agreement. Such an agreement will list out the Key Employment Terms for the employee.

Employers must provide certain entitlements, and are responsible for certain liabilities, for workers under a contract of service. We cover these responsibilities towards the end of our guide, under the section titled “Why is it important to differentiate contacts of service from contracts for service?”.

What is a contract for service?

A contract for service is an agreement between where one party agrees to hire another party as a freelancer/ independent contractor. A freelancer is typically paid to carry out a particular job or project, with a set fee. Examples of freelancers/independent contractors include:

• Individuals providing services like graphic design, house renovation, odd-job labourers, etc.
• Vendors providing services like IT consulting, strategy consulting, printing services, shipping services, etc.
• Vendors providing products like vending machine rentals, industrial machine wholesale, food wholesale, etc.

Sometimes, independent contractors are engaged on a long-term basis via retainer payments. Common examples include external lawyers kept on monthly retainers, or Public Relations firms paid a regular retainer to advise on marketing needs.

Freelancers are not allowed to claim various entitlements that are provided to employees, such as overtime, leave, and compensation for work-related injuries. We cover these differences under the section titled “Why is it important to differentiate contacts of service from contracts for service?”

What are the 11 legal differences between Contracts of Service vs Contracts for Service?

You have to look at the totality of the 11 criteria to decide. There is no single, one-size fits-all criteria. This is the same process that the Courts will apply, if a lawsuit is filed to decide whether a person is under a contract of service (or contract for service). Such lawsuits are typically filed because the person feels they have been mistakenly classified under a contract for service, and therefore been deprived of the various rights that workers under contracts of service enjoy.

Differentiating factor 1: Independent contractor clause

Most freelancer agreements will contain an “independent contractor” clause. This is a clause that clearly marks that person as a freelancer.

Here’s a sample independent contractor clause:

1. The Service Provider is an independent contractor, and not an employee
2. The Service Provider shall have control over the manner and form in which work is to be performed, in the best interests of the Hiring Company
3. The Service Provider will supply their own equipment and manpower and resources to complete the Project”

If such a clause is absent, then the Courts will look at the other 10 factors to decide whether the person is under a contact for service or contract of service. In some rare cases, some employers may try to insert this independent contractor clause into their hiring agreement, but the degree of control they exercise over the person may actually tilt the person towards being an employee. In such scenarios, the Courts will also look at the other 10 factors to decide whether the worker is an employee or freelancer.

Differentiating factor 2: Control

The Courts will examine the level of control that the company exerts over its workers. For employees, the employer will have control over what work is to be done, and how it is to be done. For instance, an IT company can dictate to its employees what software to build, what programming language to use, what lines to code to insert, what functions to perform – the list goes on.

For freelancers, the level of control that the hiring company can exert will vary, depending on the nature of the project. Some freelancer arrangements may involve a high level of control by the hirer. For instance, a company hiring an IT vendor can specify what software it needs to build, what programming language/tech stack to use, what functions to perform, and more. However, other situations may see the hirer having significantly less control over freelancers. For instance, a company hiring a freelance graphic designer to design a corporate logo is unlikely to be able to tell the freelancer exactly how to draw the logo (if it could, then the hirer would just draw the logo themselves!). The hirer may provide generic ideas about the kinds of emotions they want to convey, the kinds of corporate colours that should apply, etc., but it’s unlikely to be able to control the freelance designer’s work with too much force.

Because of the level of variation in control, this is not a hugely important factor in differentiating contracts of service vs contracts for service. This will form merely one part of the overall analysis.

Differentiating factor 3: Importance of work to company

The Courts will consider the level of importance of the work completed by the worker. For instance, does the worker perform menial or peripheral tasks for the company? Business owners frequently outsource non-core functions like HR, accounting, and IT support to vendors or freelancers, via contracts for service. If the function is core to the business, then it usually only makes sense for companies to keep such workers as employees. Companies are unlikely to outsource their competitive advantages.

Differentiating factor 4: Method of payment

Generally, employees are paid a fixed salary each month. This salary may include other additional incentives like bonuses, annual wage supplements (AWS), allowances, overtime pay, etc. Whatever the case may be, the focus is on whether a salary is paid.

Freelancers, on the other hand, are more likely to not be paid a salary. The nature of hiring a freelancer is to avoid such fixed overhead costs. Therefore, freelancers are more likely to be paid via tips, commissions, or general ad-hoc payments. Examples would be a freelance graphic designer, who is paid $100 per icon that they design. This payment is not a regular monthly salary, but an ad-hoc payment done for a single job.

Differentiating factor 5: Restriction on external employment

Employees are almost always contractually bound to work for only one employer. They cannot have outside employment (i.e. moonlighting). If a contract states that there is an obligation to work for only one employer, it is likely that the Courts will find that the person is an employee.

Freelancers do not generally have this restriction, as they can work for multiple companies.

Differentiating factor 6: Working hours

Employees generally have fixed working hours. This can be your standard Monday to Friday, 9AM to 5PM hours. It could be delegated in shifts, or three-days-on-two-days-off schedules.

Freelancers tend to not have fixed working hours. Generally speaking, they have more control over their own schedules. For instance, an outsourced IT company will respond whenever the client contacts them to fix an IT bug or start a new project, but otherwise, the IT vendor won’t be working for the client from 9AM to 5PM every day, unlike an employee would.

In terms of importance in determining whether a contract is of service or for service, the Courts usually will not place a great importance on evaluating working hours. There is a great deal of variation in working hours, so this will just be one aspect of consideration.

Differentiating factor 7: Overtime pay

Only employees have a legal entitlement to overtime pay.

Freelance workers do not have a legal right to overtime pay. If a hiring company does pay freelancers for overtime, that is done purely out of goodwill.

If a worker receives overtime pay from their company regularly, that can be good evidence that an employer-employee relationship (i.e. a contract of service) exists. Otherwise, why would the company bother paying for overtime?

Differentiating factor 8: Annual Leave, Sick Leave, Maternity/Paternity leave

Only employees have a legal entitlement to annual leave, sick leave, and maternity/paternity leave.

Freelance workers do not have a legal right to these types of leave. If a hiring company does provide freelancers with leave, that is also done purely out of goodwill.

If a worker is able to apply for and claim leave from their company (especially if that leave was approved multiple times), that can point strongly to a contract of service, rather than a contract for service. Most hiring companies will not give their freelancers paid leave since it’s an extra expense.

Differentiating factor 9: Right to terminate, dismiss, or suspend

The majority of employment contracts will contain a clause stating that the employer has the right to terminate, dismiss, or suspend the employee. This is a key factor in contracts of service. Most contracts for service will not contain this clause.

Differentiating factor 10: Delegation authority

Generally, employees don’t have the ability to delegate tasks to a third-party. For instance, if a boss of a strategy consulting company tasks their subordinate to complete a consulting project, the subordinate is unlikely to be able to hire a sub-contractor to finish the project for them. Even if the subordinate were able to hire a sub-contractor, it’s likely that it would only be for specific parts of the project that required specialist knowledge which the subordinate doesn’t possess. It’s unlikely that the subordinate would have the authority to outsource all their work without seeking their boss’ approval.

On the other hand, independent contractors tend to have greater ability to delegate their work to a third-party. For instance, let’s take the same example of the corporate strategy consulting company mentioned above. In this case, let’s say the boss of the company was hired as an independent contractor to advise on an M&A deal. In this case, let’s say the boss needs to delegate his work to some external parties, like accountants and financial valuation experts to assist on the project. The boss is likely to be seen as an independent contractor because he has the power to delegate his work to other third-parties.

Differentiating factor 11: Provision of Accommodation, Uniforms, Name Cards, Other Material with Company Logos, Access to Company Events, etc.

Usually, only employees have access to these benefits. Company housing, company uniforms, company name cards with their position stated, etc. It is uncommon that independent contractors will receive such items.

What’s an example of a contact of service vs contract for service lawsuit?

A great example to illustrate the factors above is the 2019 case of Public Prosecutor v Jurong Country Club (JCC). In this case, JCC was facing potential legal penalties for not making CPF contributions to an alleged employee, known as Mr. Yusoff, from 2003 to 2016. Mr. Yusoff was hired by JCC as a fitness instructor for its gym. The Court of Appeal ruled that Jurong Country Club was not liable for CPF contributions to Mr. Yusoff, because Mr. Yusoff was not in fact an employee at all.

The Court of Appeal found that the following factors rendered Mr. Yusoff an independent contractor/freelancer, rather than an employee of JCC:

Factor 1: Control

The club’s level of control over Mr. Yusoff only extended to requiring him to be at the JCC gym daily. It exercised little control over the specific way Mr. Yusoff conducted his training sessions.

Factor 2: Delegation authority

Mr. Yusoff did not have delegation authority, as he was not allowed to find a replacement gym instructor if he could not be present to train members. However, the lone fact that Mr. Yusoff did not have delegation authority does not prove that he was an employee, rather than a freelancer. Since Mr. Yusoff was JCC’s sole gym trainer, it was reasonable for JCC to expect Mr. Yusoff to provide the training services himself. Also, Mr. Yusoff had decades of training experience. A replacement trainer may not have the same depth of skill and fitness knowledge that Mr. Yusoff would have had, providing for a poorer experience for JCC’s gym clients. It was therefore logical that JCC would not want a replacement of potentially inferior quality, and would instead insist on such a highly experienced trainer providing the services himself.

Factor 3: Method of payment

Mr. Yusoff’s compensation was weighted more heavily towards a commission. He also had a monthly retainer.

While a compensation scheme that has a larger commission component is not itself indicative of being a freelancer, it is part of a broader pattern of facts that points towards Mr. Yusoff being on a contract for service.

Factor 4: Work arrangements

Factor 4 proved to be critical in demonstrating that Mr. Yusoff was on a contract for service. Mr. Yusoff was not counted as an employee, and was therefore excluded from JCC’s internal manpower roster for budgeting purposes. Mr. Yusoff was not invited to staff-only events, such as JCC’s “Dinner and “Dance”. This Dinner and Dance was compulsory for all employees, with penalties for those who did not show up.

Furthermore, Mr. Yusoff:

• Did not report to the HR department
• Was not issued an HR manual for study
• Was exempted from employee performance reviews
• Did not have KPIs to meet

This was not the case for employees, who had to comply with the criteria set out above.

Mr. Yusoff was also not provided with an access card that would allow him to enter all areas of JCC. This was unlike employees, whose access cards permitted them to go to every (or almost every) part of JCC. His access card only permitted him access to the gym.

Mr. Yusoff’s JCC identification number was also different compared to all other employees.

Mr. Yusoff was also allowed to conduct training sessions for non-members for his own additional income. This was unlike employees, who were barred from engaging in activities at the club to earn extra income. JCC’s HR manual stated that employees who engaged in such activities were to be fired.

Factor 5: Benefits

Mr. Yusoff did not have Work Injury Compensation Insurance from 2003 onwards. This is because Work Injury Compensation Insurance only applies to employees, and does not cover independent contractors.

Mr. Yusoff was not provided with annual leave, sick leave, and hospitalisation benefits. This is unlike employees, who received these entitlements/benefits.

After evaluating this series of factors, the Court of Appeal ruled that Mr. Yusoff was actually an independent contractor, hired by JCC under a contract for service. This case illustrates are taken into consideration when evaluating whether a worker is under a contract of service, or a contract for service.

What should employers do if there is a legal dispute over Contracts of Service vs Contracts for Service?

Employee has dispute with employer (contract of service dispute)

Most contracts of service (i.e. employment agreements) will usually include a “dispute resolution” clause. This clause will usually specify that disputes must first be settled in mediation or arbitration, before lawsuits can be filed. Alternatively, such clauses may have the employee waive their right to take legal action against their employer, and compel employees to resolve matters strictly in arbitration.

It’s important for business owners draft your contract of service/employment agreement well, to limit the extent of your liability against disgruntled employees.

Freelancer/vendor has dispute with hiring company (contract for service dispute)

Most hiring contracts will include a “dispute resolution” clause also. This clause will state the methods of resolution available if there is a dispute or breach of contract. For instance, the clause may have the freelancer/vendor waive their right to pursue civil litigation, and instead only settle disputes via arbitration.

It is vital that business owners include a dispute resolution clause in their contracts with external vendors. This protects their company in case the freelancer/vendor makes allegations (e.g. breach of contract) and decides to sue you.

Another not-uncommon scenario is when workers who are under a contract for service (i.e. freelancers) argue that they are actually under a contract of service (i.e. employees). This is most commonly done when workers feel they have been deprived of certain benefits that employees are entitled to.

In such scenarios, speak with a lawyer who can advise you on the best course of action. Don’t engage the disgruntled worker in negotiations before you get advice from a lawyer. It’s also best to have a legal professional present during any negotiations you hold with the person in question.

How are Contracts of Service, and Contracts for Service, terminated?

Ending a Contract of Service

An employer can simply rely on their contractual right to the end the contract of service. This will be spelled out in the Employment Agreement. No other reason, other than this right to terminate the contract, needs to be given.

Employees can end their contracts of service by quitting. For employees on time-limited contracts, the Employment Agreement will end upon expiry of the contract.

Ending a Contract for Service

A contract for service may be terminated if the performance of the project or service is disrupted due to unforeseen circumstances, or it becomes impossible to continue on a project that is already in progress.

It is important for the independent contractor or freelancer to negotiate the terms of the contract for service carefully. This is so that the contracting counter-party or client is aware of the alternatives that might be available in the event of an unforeseen or sudden termination of a project or service.

It is also important for the independent contractor or freelancer to ensure that his or her interests are safeguarded in the event that the client chooses to prematurely terminate the freelancer’s services.

For example, the freelancer may negotiate for a clause that ensures that he or she is remunerated for the time and effort that has already been spent working on the project, as well as to prevent the client from using the freelancer’s work and/or ideas, in whole or in part, without adequate compensation.

Why is it important to differentiate Contracts of Service from Contracts for Service?

Business owners must provide for many labour rights for employees, since they under contracts of service. However, businesses do not have to provide these rights for freelancers, since they are under contracts for serivce. Knowing who is an employee and who is a freelancer will help ensure that businesses do not become liable for mistakenly classifying someone as a freelancer, and then incurring serious legal liability because they did not provide these various rights to them.

Rights that apply only to contracts of service (i.e. employees) include:

#1. CPF contributions:

Only employees are entitled to CPF contributions made by their employers. CPF contributions vary by age, and can make up a substantial amount of additional earnings over time. For instance, workers under 55 are entitled to 17% of their salary as CPF contributions, to be made by their employer.

Both part-time and full-time employees are entitled to CPF contributions by their employers. Freelancers are not entitled to CPF contributions by the companies who hire them.

#2. Rights under Employment Act:

Only employees are entitled to the various employment rights granted under the Employment Act. The Employment Act provides many protections for workers. This includes rules on maximum working hours, mandatory overtime pay, mandatory rest days, extra mandatory compensation if for being made to work on rest days or public holidays, and more.

Freelancers are not covered by the Employment Act, and therefore do not have these rights.

#3. Rights under Work Injury Compensation Act (WICA):

Only employees are entitled to the rights granted by the Work Injury Compensation Act. This Act makes it legally compulsory for companies to compensate workers for their work-related injuries/diseases, including Covid-19. Companies must pay for up to $45,000 in medical expenses for treatment of work-related injuries (e.g. fracture after falling at work), or work-related sickness (e.g. lung disease from breathing in sawdust at work).

The Work Injury Compensation Act also makes it compulsory for lump-sum compensation to be paid in case the worker dies or becomes temporarily/permanently disabled due to work. Compensation for work-related death can go up to $225,000 (can be higher in some cases). Compensation for work-related disability can be up to $289,000 (can also be higher in some cases).

Freelancers are not covered by the Work Injury Compensation Act, and therefore cannot claim compensation if they happen to suffer work-related injuries/sickness.

#4. Employer’s vicarious liability for employee’s mistakes/misdeeds:

Vicarious liability only applies to actions committed by employees, not independent contractors.

Vicarious liability means being legally liable for the actions of someone else. In the case of employers, this means that companies can be held legally liable (i.e. sued) for mistakes or misdeeds committed by their employees. For instance, a driver employed by a shipping company may get into a road accident, damaging someone else’s car and hurting them in the process. The driver of the damaged car can sue the company, holding them vicariously liable for the damage and injuries he’s suffered.

Vicarious liability can also apply to cases where employees use their company positions to cheat other people. For instance, a worker may send fake invoices to defraud customers of the company. Defrauded customers can then sue the company, claiming they are vicariously liable.

How to protect your company from liability for workers under contracts of service?

For employees (i.e. those under a contract of service), you should carry Work Injury Compensation Insurance to protect them. Employers in Singapore are legally liable for any work-related injury/disease contracted by employees, including Covid-19! Employers must pay the following costs:

• Employer must pay up to $45,000 medical expenses for employee’s work-related injury/disease
• Employer must pay up to $225,000 in case of employee’s work-related death
• Employer must pay up to $289,000 in case of employee’s work-related temporary/permanent disability

Work Injury Compensation Insurance will cover all the costs above. Get Work Injury Compensation Insurance from $5/month now!

You should also strongly consider the following protections for your business:

Get Public Liability Insurance from $9/month

Get Commercial Property Insurance from $12/month

Get Professional Indemnity Insurance from $42/month

Get Directors & Officers Liability Insurance from $42/month

Sometimes, an employee just isn’t right for the job. They might not have the necessary skills to do the jo properly. They might lose motivation, and their work quality might suffer. Other times, companies might not be in good financial shape, and be forced to cut manpower costs. There’s a million different reasons why companies may have to let their workers go.

Whatever the specific reason for ending an employee’s contract, it’s important to know how to do it legally. In Singapore, there are 4 legal reasons that employers can use to end an employment contract. If you don’t want to get sued by your employee for illegal dismissal, make sure that you know what these legal reasons for terminating employees are.

In this guide, we’ll explain:

• Summary of legal vs illegal reasons for termination
• What are the 4 legal reasons for terminating employees?
• What are some important guidelines to follow when terminating employees?
• What method of termination carries the least legal risk?
• What are the 6 steps to terminating employees smoothly?
• How should I protect myself from employee termination lawsuits?

Summary of legal vs illegal reasons for termination

If you’d like to know more about the illegal reasons for dismissing employees, read our excellent guide on Unfair and Illegal Dismissals in Singapore.

What are the 4 legal reasons for terminating employees in Singapore?

The dismissal of employees is governed by the Employment Act. This is a piece of legislation first passed in 1968, and was most recently amended in 2019. The Employment Act stipulates 4 legal reasons for terminating employees from your company.

These 4 permissible reasons are:

#1. Right to dismiss under employment contract

Singapore is an at-will employment jurisdiction. This means that the employer-employee relationship can end at any time, for any reason (as long as it’s not a reason that’s considered illegal). Either the employer or employee has the power to terminate the relationship.

This means that employers can terminate employees by simply relying on their right to end the employment contract. No other reasons (e.g. “you’re not performing well”, “management doesn’t think you can make it”, etc.) have to be explicitly cited.

In such dismissals, notice must be given. The notice period should follow the period stated in the employment contract (e.g. 1 month notice, 2 months’ notice, etc.).

#2. Misconduct

Misconduct refers to behaviour that does not fulfill the terms of the employment contract.

Examples of misconduct include:

• Lying or displaying unethical behaviour
• Stealing
• Absenteeism
• Taking MCs by feigning illness
• Fighting
• Aggressive/threatening behaviour
• Insubordination
• Negatively affecting the company’s reputation
• Disruptive behaviour
• Sexual harassment

Misconduct is the only reason that does not require a notice before dismissal. However, a due inquiry must be conducted by your employer, on the alleged act of misconduct, prior to making a decision on dismissal.

#3. Performance

Employers can dismiss employees for performance-related reasons. For instance, if your employee is not meeting KPIs, is lazy, is not producing quality work, or is just generally not capable of meeting the demands of the job, you can dismiss them.

However, if you dismiss an employee for poor performance, you must provide evidence of their sub-par performance. This means that if you are preparing to dismiss someone for not meeting the demands of the job, start collecting evidence now.

Examples of evidence to prove lacklustre performance include:

• Missed goals, missed sales targets, missed KPIs, etc.
• Negative performance reviews
• Feedback from superiors about poor performance
• Cuts in bonuses or other performance-related pay
• Lack of promotions compared to other employees

Have this evidence clearly documented in writing, because you will have to provide this evidence when you terminate the employee.

If the dismissed employee files an unfair dismissal claim against you later on, you must show this evidence to prove that the dismissal was fair. If you have properly document evidence of the employee’s poor performance, then your dismissal will be considered permissible and you won’t run into thorny legal issues.

#4. Retrenchment

If employers need to cut costs due to financial difficulties, they can perform retrenchments.

There are certain legal procedures that you must follow if you perform a retrenchment:

1. Notify MOM, if you have at least 10 workers, and you’re retrenching 5 or more workers:

Employers who meet the following criteria must notify MOM of retrenchments that they are undertaking/have undertaken:

• Your company has at least 10 employees
• You have retrenched 5 or more employees within a 6-month period

2. Provide your employees with notice

You must provide notice to your retrenched employees, in accordance with their employment contracts.

FAQs on Conducting Retrenchments:

Are retrenchment benefits compulsory?

No. Unless the employment contract you’ve issued to the employee contains a retrenchment benefit clause, there is no legal requirement to pay retrenchment benefits. Employers are encouraged to pay retrenchment benefits out of fairness and recognition for their employees’ contributions. However, this is not compulsory.

Retrenchment benefits are governed by Section 45 of the Employment Act. This section states:

“No employee who has been in continuous service with an employer for less than 2 years shall be entitled to any retrenchment benefit on his dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work.”

As you can see, it does not mandate employers to make payment of retrenchment benefits.

How much retrenchment benefit to pay:

If retrenchment benefit is stated in the employment contract:

If you’ve stated in the contract how much you will pay during a retrenchment exercise, then you must pay that amount. For instance, if the employment contract states that retrenched workers will be entitled to 1 months’ retrenchment benefit, and the retrenched worker’s salary is $4,000/month, then you owe the retrenched worker that $4,000 sum.

If retrenchment benefit is not stated in the employment contract:

If you choose to pay the benefit out of goodwill, then the market norms are between 2 weeks to 1 months’ salary, per year of service.

Are retrenchment benefits subject to CPF contributions?

No. Both the employer and employee do not have to make CPF contributions for retrenchment benefits.

The TADM has release guidelines on performing retrenchments. These guidelines are not legally binding, but employers should take heed of them:

What are important guidelines to follow when terminating employees?

If you want to avoid legal trouble when terminating employees, make sure you follow the guidelines below.

#1. Terminating foreign employees

Foreign workers on Employment Pass/S-Pass:

Employers must cancel the Employment Pass/S-Pass within seven days of firing the workers. The Employment Pass/S-Pass holder will receive a 30-day short term visit pass, after which they must leave Singapore. If the Employment Pass/S-Pass holder has other passes attached to it, e.g. a Dependent’s Pass, all such other passes will also be cancelled.

The employer must notify IRAS of the termination. The employer must withhold all payments due (e.g salary, bonus) to the foreign employee from the day the employee is notified of their termination. This is to perform the tax clearance proceducre. IRAS will make sure that all taxes have been paid by the foreign employee. Once IRAS completes their tax clearance procedure, they will issue a tax clearance certificate. The employer can then release the payments due to the employee.

#2. Provide the proper notice period

In most cases, the employment contract with the worker will state the required notice period. Most notice periods are usually 1 month, although some contracts will stipulate notice periods of 2 or 3 months.

The employee is still entitled to their salary during the notice period. This includes CPF contributions. Just treat notice period pay as regular pay.

When the decision to terminate the employee has been made, give notice to the employee that their employment is terminated in writing. Note that the notice period includes the day on which the notice is served onto the employee.

If the employment contract doesn’t state the notice period, then use the following notice periods:

#2. If you don’t serve the employee notice, you have to pay salary in-lieu

Sometimes, employers don’t want the terminated worker to serve their notice period. For instance, financial firms or technology companies may deal with highly sensitive information, and terminated workers must immediately be barred from receiving such information.

If you don’t allow the employee to serve their notice period, then you must pay them salary in-lieu. This is also commonly known as letting them take “gardening leave”. You will have to pay the salary that’s equal to the notice period. For instance, if a terminated employee earns $5,000/month, and their notice period is 1 month, you’ll have to pay $5,000 to them as salary in-lieu.

CPF contributions do not have to be made for salary in-lieu of notice. This means that if you don’t require the terminated employee to stick around to get work done, it is more cost-effective to pay them salary in-lieu, rather than have them serve the notice period.

#3. Offsetting notice period with annual leave

Employees can use their annual paid leave to offset (i.e. shorten) the notice period served.

#4. Offset notice period vs being on annual leave during notice

There is a difference between offsetting the notice period versus simply being on annual leave during the notice period.

Offsetting the notice period means to shorten the notice period. For instance, if a worker’s notice period is 1 month, and the worker has 15 days of annual leave, they can shorten the notice period by 15 days. The employer will only have to pay for 15 days’ of salary, since that is the notice period served. Offsetting is often used if the worker has gotten another job, and wants to start employment at the new company ASAP.

If the worker does not offset the notice period, they can simply choose to take annual leave. The employer must pay the salary for the full notice period. For instance, if the notice period is 1 month, a worker can choose to take 15 days of annual leave during the notice period. The employer will have to pay for 1 months’ salary.

For terminated workers who leave with unused annual leave, they can encash the unused leave. The employer must pay the terminated worker for each day of unused annual leave.

#6. Sick leave during notice period

Sick leave cannot be used to offset/shorten notice periods. However, sick leave that’s taken will be counted towards an employee’s notice period.

#7. Maternity Leave and termination

An employer cannot terminate an employee who is on maternity leave. This is illegal. Read more about this in our guide on unfair dismissals, or our maternity leave guide for employers.

Employees cannot use their maternity leave to offset their notice period. However, employees can still apply for maternity leave while they’re serving their notice period. Each day that the employee is on maternity leave will count as part of their notice period.

All maternity leave that is not consumed before the end of the notice period will be forfeited. Outstanding maternity leave cannot be transferred to the new company.

Example: Jane is a new mother who’s unfortunately been retrenched. Jane’ notice period is 1 month. Jane still has 2 months of maternity leave remaining. Jane can apply for 1 months’ maternity leave. This way, she can stay home to take care of her child, while still serving her notice period. The remaining 1 month of her maternity leave will be forfeited once she leaves her current company.

An employer must pay maternity benefits that his/her employee would otherwise be eligible for if a notice of dismissal is given without sufficient cause within 6 months of an employee’s confinement if the employee is retrenched within 3 months of her confinement. This payment is in addition to any retrenchment benefit which the employee is entitled to.

#8. Childcare/Infant care leave and notice period

Childcare leave to offset/shorten the notice period.

#9. Employee cannot start work with another company until the end of the notice period

When an employee is serving their notice period, the employment contract is still live. The employee cannot start working for their new company until the date of termination. The employee must continue to fulfill their responsibilities until the notice period ends.

What method of termination carries the least legal risk in Singapore?

Since Singapore is an at-will employment jurisdiction, you have a right to terminate the employment contract simply because you want to. So, if you need to dismiss an employee, an employer can simply say: “I’m exercising my right to terminate your employment contract.” That’s it. No long stories about not meeting expectations, or not doing this or that. End it there.

Simply exercising your right to end the employment contract is the legally safest method to terminate an employee. You do not have provide any other reasons. Remember, if you cite poor performance as a reason, you must provide evidence. If you don’t have proof of poor performance, your employee can sue you for illegal dismissal.

When you rely on your right to terminate the employment contract, and provide the proper notice period, it becomes much more difficult to build a legal case against you for unfair dismissal.

Some legal risks remain, which employers should be wary of:

• Ensure that you are not terminating the employee for illegal reasons, such as discrimination or deprivation of entitlements (e.g. maternity leave). If you are in fact dismissing a worker for such reasons, and there is strong evidence to prove this, you can be sued. In our guide on whether you can terminate employees during medical leave, we explain how it is not difficult to sue employers for firing workers to deprive them of medical leave entitlements.
• If you are conducting a retrenchment, state this openly. Do not disguise a retrenchment as individual terminations, as there is little benefit in doing so. It’s also illegal, and MOM will take enforcement action against errant employers.

How to terminate employees (relatively) smoothly?

Letting someone go is tough. Here’s how to get your dismissal right. Remember that it’s not personal – it’s just business.

Step 1: Inform HR

Let HR know that you need to terminate an employee. HR will be most familiar with the legal procedures for terminating someone. They’ll make the necessary arrangements for terminating workers. For instance, they’ll inform IT to cut the employee’s access to digital materials.

Step 2: Plan transitions

Have discussions with the relevant stakeholders if you want to terminate an employee. It’s good to get team buy-in if a worker needs to go, so that other stakeholders (e.g. team leaders) can make the necessary arrangements to find replacements.

Get started on finding a replacement once the decision has been made internally to terminate the employee. You don’t have to wait till after they’re gone to look for new candidates.

Step 3: Do it at the end of the work day

If you’re in the office, do it when most other employees have left. This minimises the amount of embarrassment for the employee.

Step 4: Get straight to the point

“Tim, it’s been a pleasure working with you. I need to let you know that you’ve been let go.”

Different managers will handle employee terminations differently. Some managers like to engage in small talk first to sooth nerves (usually, their own!) before dropping the inevitable bombshell. That isn’t technically wrong – everyone has their own style of handling delicate issues. However, there isn’t really a lot of meaning behind engaging someone in friendly banter, if at the end of it you’re going to fire them. Small talk makes them think that this is just going to be another nice “chat with the boss”, which heightens the disappointment later on. You’re going to make a decision that will significantly alter the course of their careers (at least temporarily). The sooner you let them know, the quicker you can both move on with your professional lives.

When informing an employee that they’re being let go, remember that you don’t need to provide explanations. If you cite poor performance, remember that you are legally required to provide evidence. If you cite misconduct, remember that you are legally required to have held an inquiry before the termination. If you don’t have the required evidence for either of these reasons, simply say that you’re letting them go and leave it at that.

Step 5: Cover specifically what happens next

Lay out specifically the employee’s notice period, their pay, consumption of any remaining company benefits, unused annual leave, employment references, explanations to clients and co-workers, handovers of projects, etc.

Step 6: Thank the employee and wrap up

Keep it cordial. Terminations are not personal, but professional. Let the employee know that their contributions are appreciated, and wish them the best for their next job.

How should I protect myself from employee lawsuits?

Workers who are terminated can respond in highly unpredictable ways. Disgruntled employees can launch employment-related lawsuits against you. Whether the case has merits or not is a separate matter – once the lawsuit hits your door, you’re going to have to spend money defending it!

A particularly damaging way for lawsuits to be launched is to personally target the company’s directors and officers. Directors include board directors, and officers include people inthe company with managerial authority (e.g. C-Suite down to junior HR managers who handle employees’ termination matters). When directors/officers are targeted personally in lawsuits, the limitation of liability offered by a “Private Limited” entity won’t protect them.

That’s why having a good Directors and Officers Liability Insurance policy is critical. This type of insurance protects you from many types of lawsuits, such as:

• Unfair dismissal lawsuits
• Employee harassment lawsuits
• Oppression and other shareholder lawsuits
• Negligence lawsuits
• Defamation lawsuits
• …and more

Directors and Officers Liability Insurance pays for your lawyer’s fees (which can be hundreds of thousands), plus court damages/settlements. Having a Directors & Officers Liability policy could save you huge sums of money – millions, even.

Get Directors & Officers Liability Insurance to protect you from employee lawsuits. From just $42/month!

In this guide, we’ll walk you through the 5 key types of dismissals that are unfair, illegal, and wrongful in Singapore. Letting employees go is never easy. However, there are certain types of termination that are illegal in Singapore. For instance, firing an employee to stop them from taking maternity leave is illegal. If an employee files a report with MOM, the employer can be brought to Court and charged with a criminal offence.

We’ll explain:

• Summary of legal vs illegal dismissals
• What constitutes a legal dismissal?
• What constitutes an unfair/illegal/wrongful dismissal?
• What are the consequences for unfair/illegal/wrongful dismissal?
• What is the least risky way to dismiss employees?
• What is the time limit for claims for unfair dismissals?
• How to protect your company from employment lawsuits?

Summary of legal vs illegal dismissals:

What constitutes a legal dismissal?

In Singapore, a dismissal is valid for the following reasons:

What constitutes an unfair/illegal/wrongful dismissal?

There are 5 main dismissal reasons that are against the law in Singapore:

• Discrimination on age, disability, gender, ethnicity, family commitments, and more
• Deprivation of benefits or entitlements
• Dismissal for poor performance or misconduct without evidence
• Forced resignation
• Punishing employee for exercising employment rights

If you fire an employee for any of the above reasons, they have legal grounds to sue you. Government bodies like MOM may also take disciplinary action against your company.

Unfair Dismissal 1: Discrimination on age, disability, gender, ethnicity, family commitments, and more

Businesses are prohibited from terminating employee for the following reasons:

• Age
• Disability
• Gender
• Ethnicity
• Religion
• Family commitments
• Marital status
• Country of origin
• Pregnancy

Most countries don’t allow employers to terminate employees for the reasons above, and for good reason. It is not good for society for businesses to terminate employees for having a disability, or needing to take care of their families.

Example: Marie is a 55-year old accountant working for an accounting & auditing firm. One day, Marie is told she’s being let go. When Marie probes the reason for her dismissal, the HR director tells her it’s because she’s “too old to do the job”. The HR director explains that, at 55, she’s too slow to get tasks done, and the company could hire younger employees who could work faster.

In such a situation, Marie can file a wrongful dismissal claim against her employer with the TADM (Tripartite Alliance for Dispute Management). If the case is not resolved at the TADM, it will be referred to the Employment Claims Tribunal, to be heard by a judge. The judge can then award Marie damages for discriminatory termination.

Unfair Dismissal 2: Depriving an employee of benefits or entitlements

Businesses cannot terminate an employee to stop them from claiming company benefits, or legal entitlements.

Examples of legal entitlements include:

• Maternity leave
• Paternity leave
• Paid sick leave

It’s important to note that entitlements are legal rights. Employers cannot deny these rights to their employees. Preventing employees from accessing their entitlements is an offence. Employers who fire employees to deprive them of benefits can be jailed and/or fined.

Often, companies who fire employees to deprive them of entitlements do so to save money. For instance, maternity leave can be up to 16 weeks, and some unethical employers may want to save on paying for 4 months of salary for an employee who won’t be working. This is why some employees rightfully complain about being terminated shortly after informing their company that they are pregnant. Other employers may want to terminate employees who are hospitalised, so they won’t have to pay for hospitalisation leave for the injured/sick worker.

Example 1:

Cheryl is pregnant, and is just a few weeks away from her expected birth. She applies for 16 weeks of maternity leave, which she’s entitled to by law. Cheryl’s employer fires her within a few days of her maternity leave. Cheryl can file an unfair dismissal claim with the TADM. Cheryl may also file a civil lawsuit against her former employer.

Example:

Thomas was diagnosed with a kidney ailment and had to be hospitalised for 2 months. Singapore law provides for a minimum of 2 months (60 days) of paid hospitalisation leave, if the employee has worked at the company for at least 6 months. Shortly after Thomas informs his employer that’s been hospitalised, his employer fires him so they won’t have to pay Thomas’ salary while he’s in hospital. Thomas can file an unfair dismissal claim with TADM. Thomas can also file a civil lawsuit against his former employer.

Unfair Dismissal 3: Forced resignation

Employers cannot force employees to resign. This is usually done when the employer makes life so difficult for the employee that the worker feels they have no choice but to quit.

Example:

You run a wholesaling business. You decide you want to terminate one of your senior employees, named John. However, John has a 2-month notice period in his employment contract. You know that when you terminate John, you have to pay him 2 months’ worth of salary. You also know that John is unlikely to be productive once you tell him he’s being let go. In order to save on paying John his notice period pay, you decide to make life exceptionally difficult for him. You suddenly demote John by making him report to a junior employee. You task John with impossible deadlines, and overload him with work. Soon, John gets the message and quits.

John can file a complaint with the TADM, or sue you in court for forcing him into an involuntary resignation. John can argue that you placed him under immense distress, and had no choice but to quit. As a result, John was deprived of his entitlement to 2 months’ notice pay (remember: deprivation of entitlements is illegal!). John has a legal case against you for unfair dismissal. If you’re found guilty, you will have to pay John compensation, and you may even face jail time or fines.

Unfair Dismissal 4: Dismissal for poor performance or misconduct without evidence

Employers must remember that if you dismiss a worker for i) poor performance or ii) misconduct, you must provide evidence to support the dismissal. If you don’t provide any evidence, it is considered an illegal termination.

Dismissal for poor performance:  

If an employee is dismissed for not performing at work (e.g. missing KPIs, bad quality of work done, etc.), you have to provide evidence. If you’re intending to terminate an employee because they’re not performing, make sure you start collecting evidence ASAP. You’ll need to show this evidence when you terminate the employee. Also, if you get sued later on for this, you’ll need to rely on this evidence to defend your company.

Dismissal for misconduct:

You have to hold an official inquiry if you accuse an employee of misconduct. The employee must be given the opportunity to defend themselves. Only after holding an inquiry can you dismiss an employee for misconduct.

Unfair Dismissal 5: Punishing employee for exercising employment right

You cannot terminate an employee to punish them for exercising their employment rights.

Here’s a list of some key employment rights:

• Right to request mediation if employer doesn’t pay salary
• Right to overtime pay if work hours exceed hours stated in employment contract (only for non-managers/executives, or manual workers earning under $4,500/month, or office-based workers earning $2,600/month)
• Right to report suspicious activities within the company to relevant authorities (e.g. police)
• Right to have salary paid within 7 days from end of salary period (14 days for overtime pay)
• Right to access legal entitlements for paid sick leave, paid maternity/paternity leave
• Right to have an inquiry held, and to defend oneself, before being dismissed for alleged misconduct

Example:

Tim witnesses a senior executive in his company physically abusing workers. Assault is a criminal offence. Tim gathers evidence of the senior executive’s criminal acts, and reports the executive’s behaviour to HR, and also files a police report. Shortly after Tim reports the executive’s behaviour, he is fired. Tim can lodge an unfair dismissal claim against his former employer. Both Tim and the victims of the abuse can file lawsuits against their employer, for unfair dismissal and assault, respectively.

What are the consequences for unfair/illegal/wrongful dismissal?

When an employee files a claim against an employer with the TADM, the TADM will mediate the issue between the employee and employer.

The TADM and ECT can award the following:

• Award for loss of income from unfair dismissal: Up to 3 months of employee’s salary (calculated using gross rate of pay, which is basic pay + overtime + bonuses)
• Award for harm caused to the unfairly dismissed employee: Up to 3 months of employee’s salary (calculated using gross rate of pay, which is basic pay + overtime + bonuses)

The final award can be adjusted (increased or decreased) by up to 50%. The judge will consider if there have been aggravating factors. Examples include harsh employment conditions like abusive superiors, false statements made by the employer to justify the dismissal, or particularly egregious acts by the employer. The judge can also consider mitigating factors, like if the employee was dishonest or if there was poor work performance.

What is the time limit for claims for unfair dismissals?

It depends on who the employee wishes to file a claim with.

Filing an unfair dismissal claim with TADM or MOM:

The time limit to file an unfair dismissal claim is 1 month from the last day of employment. It’s a short timeline. Employees who feel they’ve been unfairly dismissed must do so quickly, if they want to lodge a complaint with TADM or MOM.

Women who face unfair dismissal due to pregnancy-related reasons have a longer window. They can file complaints with TADM or MOM within 2 months from their child’s birth.

Filing an unfair dismissal claim with the Courts (e.g. Magistrate’s Court):

The time limit is 6 years from the last day of employment.

Given the high level of awareness around employment rights, it’s not uncommon for workers to file complaints if they feel they’ve been unfairly dismissed. Given the high level of emotion associated with being fired, unfairly dismissed workers can gather evidence with great energy within 1 month for filing a complaint with MOM.

Also, there is a long deadline of 6 years for suing employers in civil court. This means that employers have to carry 6 years of liability for employees who’ve been dismissed. Even workers who were fairly dismissed, but feel they were unfairly terminated, can bring lawsuits against their employer. The

How to protect your company from employment lawsuits?

Employers can face significant liability from terminating their workers. If not done properly, you can face serious legal issues. Since employees have up to 6 years to sue you in court, you will carry potentially significant liability for a long time.

If employees feel they’ve been unfairly terminated, they can launch lawsuits against both the company, and against its directors and officers. Directors include board directors, and officers are anyone in the company with managerial authority (e.g. C-Suite down to junior HR managers who process the employee’s termination). Directors and officers can be sued personally, which means that the limitation of liability offered by a “Pte Ltd” entity won’t apply.

That’s why Directors and Officers Liability Insurance is critical. It covers a broad range of lawsuits, like:

• Unfair dismissal lawsuits
• Employee harassment lawsuits
• Oppression and other shareholder lawsuits
• Negligence lawsuits
• Defamation lawsuits
• …and more

Directors and Officers Liability Insurance pays for your lawyer’s fees (which can easily cost you hundreds of thousands of dollars), plus court damages/settlements. If you face a lawsuit from a disgruntled employee, having a Directors & Officers Liability policy could save you huge sums of money – millions, even.

Get Directors & Officers Liability Insurance to protect you from employee lawsuits. From just $42/month!

Bringing onboard interns and trainees is an excellent exchange between the hirer and hired. Interns and trainees get valuable access to first-hand experience in their chosen industry. They can build networks, which can be invaluable in landing good full-time roles. Employers also are able to get closer access to talent, since internships provide employers with an ability to really suss out their competencies.

It’s important to know that just like regular full-time employees, interns and trainees have employment rights too. Business owners should familiarise themselves with these rights, so that they don’t fall astray of labour regulations in Singapore.

Contents:

1. Employment Rights of Interns in Singapore
   1. Compensation for work-related injuries/sickness
   2. Basic pay
   3. Overtime pay
   4. Intern pay deadlines
   5. CPF
   6. Annual leave
   7. Sick leave
   8. Rest days
   9. Work hours and breaks
   10. Deductions
2. Employment Rights of Trainees in Singapore

Employment rights for interns in Singapore

If you employ an intern under a contract of service, the intern is an official employee of your company, and the intern will be covered by the Employment Act and the rights that it provides. If you have an employment contract with your interns, chances are that they are working for you under a contact of service.

Contracts of service are different from contracts for service. Contracts for service apply to independent contractors or freelancers. Freelancers are not covered by the Employment Act. Students doing internships as part of graduation/curriculum requirements are also not covered under the Employment Act. Do note that this only refers to internships required by the school curriculum. If the student performs an internship that is not required by the school, e.g. summer internship to gain experience, earn pocket money, etc., then they will be covered by the Employment Act.

It is more common for internships to be structured as contracts of service, since interns are not often taken in as freelancers. Therefore, this guide will be written for interns employed under a contract of service.

Here’s a table summarising the list of intern employment rights. We’ll go through each of these rights in this guide.

#1. Interns must be compensated for work-related injury/sickness, including Covid-19

Under the Work Injury Compensation Act (WICA), employers are liable to pay for their interns’ work-related injuries/sicknesses, including Covid-19.

Employers must pay for the following costs:

• Medical expenses, up to $45,000 per intern
• Lost salary while on MC (up to 1 year for hospitalisation leave, and up to 1 year for outpatient leave)
• Temporary/permanent disability compensation, up to $289,000 per intern
• Death compensation, up to $225,000 per intern

WICA regulations set out a comprehensive set of expenses that employers are liable for, if their interns get injured or sick due to work. The $45,000 cap for medical expenses is high. The compensation for lost wages is also high – interns who get injured or diseased from work can claim up to 1 years’ worth of salary from you. If interns sue under Common Law, employers can face unlimited civil liability for work-related injuries/sicknesses.

If you’re hiring interns, it’s important to consider covering them with Work Injury Compensation Insurance, which will cover all these costs for you.

Example: Mark is an intern with an architectural firm. Mark goes to a site visit to check on the progress of a new house being built. While at the work site, a concrete block falls and strikes Mark on the head. Mark suffers a severe head injury. He has to undergo extensive surgery to clear a blood clot in his head. The blood clot unfortunately caused Mark to lose vision in one eye. He also falls into a coma for 2 months. His medical bills are $90,000. While he was an intern, his monthly pay was $1,000.

Medical expenses: Mark’s employer will have to pay the maximum of $45,000 for his medical expenses.

Lost salary: The employer will have to pay $2,000 ($1,000 times 2 months) for the 2 months that Mark was hospitalised due to the work-related incident.

Permanent disability: The loss of one eye is a permanent disability. Mark’s employer will have to pay $144,500 as permanent disability compensation.

Total cost to employer: $191,500

#2. Basic pay

Do employers have to pay interns?

No. The law does not require employers to pay their interns. It is perfectly legal to take in unpaid interns. If you choose to pay interns, there is no minimum wage that you must pay them.

Of course, just because something is legal doesn’t mean it’s always the best thing to do for business. Internships are a great way to recruit new talent into your company. Unless your company has a super strong and visible brand (e.g. Goldman Sachs, Grab, etc.), offering an unpaid internship is probably going to turn most potential applicants off. You’re probably not going to get top-tier talent without paying a salary. You should compensate your interns with at least enough money for necessities (e.g. travel, food, etc.). Otherwise, they might not have a very favourable view of you as an employer. This might reduce your pipeline of talent once the interns graduate and are available for full-time employment. Also, if your employment contract with the intern has stipulated a salary, you can’t just cut their pay off when you feel like it. You have to honour the terms of your employment contract.

The only exception to minimum pay on interns this concerns government grants. There are national grants available to reduce the costs of intern compensation. For instance, under the SGUnited Traineeship Scheme, employers must pay a minimum of:

• $1,800/month for university graduates
• $1,100/month for ITE graduates

Under the Global Ready Talent Programme, employers can receive subsidies of up to 70% of their interns’ pay. However, employers must offer interns a minimum pay (before subsidies) of:

• $800/month to ITE and polytechnic students,
• $1,000/month to university students

#3. Overtime pay

Interns who earn $2,600/month or less are protected by Part IV of the Employment Act, and therefore must be paid overtime if they work more than their regular hours.

Employers must pay overtime for work in excess of 44 hours in a week. Overtime refers to each hour of work done that exceeds the hours stated in their employment contract. For every hour of overtime, MOM requires employers to pay 1.5x the intern’s basic salary.

Businesses cannot make interns or employees work more than 72 hours of overtime per month.

#4. Intern pay deadlines

How often do employers have to pay their interns?

Employer must pay their interns at least once per month. They are free to pay them more often than that (e.g. once a week). However, employers are not free to delay payments over a longer duration (e.g. once a quarter).

Deadlines for salary:

Employers must pay their interns within 7 days of the last day of the payable month.

Example: Sally starts work on 1^st January. Her allowance period is from the first to last day of each month. Sally’s employer must pay her for the work she did in January, by 7^th February.

Deadlines for overtime pay:

Overtime compensation must be paid within 14 days after the last day of the payable month.

Example: Jim starts work on 1^st January. His allowance period is from the first to last day of each month. He does overtime work. Jim’s employer must pay his basic allowance for the work he did in January, by 7^th February. The employer must also pay his overtime compensation by 14^th February.

Pro-rated pay:

You can pro-rate your intern’s pay if they miss some days of work. This is the same process as with regular full-time employees. Common reasons for pro-rating pay include:

• Intern taking unpaid leave
• Intern ends employment before the end of the month
• Intern starts work after the first day of the month;

Use this formula to calculate pro-rated pay:

(Number of days worked/Number of days the intern is supposed to work) * Monthly gross pay

Note: Gross pay is basic pay + allowances (e.g. transport/food allowance) + overtime pay. It doesn’t include CPF.

Example: Sammy is an intern at your company. His monthly gross pay is $600. Sammy’s contract requires him to works 20 days a month, but he only works for 10 days. Sammy’s pro-rated pay is therefore $300.

Paying interns when they leave the company:

There are deadlines for paying your interns their salary when they leave your company. There are two deadlines, depending on whether your intern have given you proper notice in accordance with their employment contract, or not.

Intern provided you with proper notice, as stated in their employment contract: Pay the salary owed to them on the day itself. You cannot delay this payment till the next day.

Intern did not provide you with proper notice, as stated in their employment contract: Pay the salary by the 7^th day after their employment ends.

Required notice periods for interns:

Your employment contract should state the notice period. If you didn’t specify a notice period, then apply the minimum notice periods below:

These minimum notice periods are provided for under Part II, Paragraph 10 of the Employment Act.

Notice periods apply to both employers and interns. A 1-day notice period means your intern can up and leave by giving you 1-day’s notice. It also means that you can terminate your intern’s employment by informing them 1 day in advance.

#5. CPF contributions

The majority of interns will qualify for CPF contributions. The only exceptions are:

• JC students interning during school holidays
• Polytechnic, ITE and university students performing internships required to graduate (whether during the school term or school holidays)
• Foreign university students who take internships in Singapore

Apart from the individuals in the categories above, you will have to make CPF contributions for all interns who receive a salary or allowance. The employer CPF contribution rate for employees under 55 years old is 17%. This means if you pay your interns $1,000/month in salary, you have to contribute an additional $170/month for their CPF. That’s a total of $1,170/month.

#6. Paid leave

Are interns entitled to take leave?

Yes. If your interns have worked for your company for at least 3 months, they are entitled to take i) pro-rated paid annual leave, and ii) paid sick leave. Take note that such paid leave is a legal entitlement. Employers must grant this leave to their interns. It’s not a benefit that employers can retract as and when you wish.

Pro-rated paid annual leave

Interns are entitled to take paid annual leave, just like your regular full-time employees. Since many internships are less than a year (most are 3-6 months long), employers will likely be pro-rating the annual leave entitlements of interns. The amount of leave is pro-rated to the number of months that the interns will work.

MOM has stipulated that all employees in their 1^st year of service are entitled to a minimum of 7 days of paid annual leave. You can give more than this, but you can’t give less. The vast majority of internships are under a year, so in most cases you’ll be using this 7-day figure to do your pro-rating of leave.

Helpful tips for calculating pro-rated annual leave for interns:

1. Round to the closest whole number when pro-rating annual leave.
2. When calculating the number of days of work, don’t include days where interns work less than half a day. Only count days where they work more than half a day.

Example: Tim is an intern at your company. Tim will intern for 4 months. Tim’s pro-rated annual leave is 4 months (Tim’s internship duration) divided by 12 months (length of a year), times 7 days (minimum leave entitlement). That gives us 2.33 days. Round this to the closest whole number, which is 2.

Therefore, you must provide Tim with at least 2 days of annual leave.

Going AWOL, and its impact on leave

If an intern goes absent without official leave (AWOL) for more than 20% of their working days, they will not be entitled to claim any annual leave at all.

#7. Sick leave

Similar to full-time employees, interns are entitled to take sick leave. You must provide for a minimum number of sick leave days, depending on how long the intern will work for your company. The table below summarises this:

You are free to provide your interns with more sick leave than the amounts stated above. However, you cannot provide less than these minimums amounts.

Employment contracts with interns

You should provide employment contracts to your interns. In your employment contracts, you must list out the Key Employment Terms (KETs). This is a similar requirement to taking on full-time employees.

Here are the KETs you should state in the employment contracts with interns:

• Intern full name
• Company full name
• Intern job title
• State intern’s main work duties/responsibilities
• Employment start date
• Employment duration
• Work schedule: daily working hours, number of working hours per week, and non-working or rest days
• Salary amount
• Salary payment period (e.g. 1x a month)
• Allowances
• Bonuses, commissions, and other additional incentives
• Overtime pay rate (e.g. $5 per hour)
• Overtime payment period (e.g. 1x a month)
• Company benefits (if applicable): medical insurance, recreational benefits, dental benefits, etc.
• Amount of leave: annual leave, sick leave, maternity/paternity leave
• Probation period (if applicable)
• Notice period
• Place of work (optional, but recommended to include this if the employee will work from an address different from the company’s registered address, e.g. WFH arrangement)

Having a clearly-drafted set of KETs will minimise the possibility of employer-employee disputes later on.

#8. Rest days

The Employment Act requires businesses to provide office-based workers earning $2,600/month or less with rest days. Most interns will have a salary under this threshold. This means employers will have to provide such interns with at least one rest day, per week.

The employer can determine the rest day – for instance, a Saturday. When employers decide on the rest day, they also need to share a rest day roster with the employees in advance (at least before the start of each month), so that interns are aware of the days they don’t need to work. A rest day is 24 hours long.

If employers want to have their intern work on a rest day, that is permissible. However, employers must pay their interns extra salary for such work.

#9. Work hours and breaks

In keeping with the spirit of protecting lower-wage workers, Singapore law stipulates maximum consecutive work hours and mandated breaks for these employees.

Employers must provide a 45-minute meal break for every 8 hours of work.

Maximum work hours

Employers cannot make interns who $2,600/month or less work more than 12 hours a day. This is legislated under Paragraph 38 of the Employment Act.

An intern may be required to exceed these limits only if there are exceptional situations such as:

• Intern’s work involves defending Singapore’s security
• Intern’s work involves urgent repairs to machinery and equipment
• Intern is part of an industry integral to Singapore’s industrial economy
• Intern is required to assist with an accident at work
• Intern is required to assist with a threat to the business

Employers must provide a 45-minute meal break for every 8 hours of continuous work the intern performs.

#10. Deductions

Business owners can make deductions from intern salaries in some situations. Here are some common situations where such claw-backs are permissible:

1. Intern damages business property: Deduction amount has to be the same value of the damage caused. Maximum deduction is 25% of one month’s salary.
2. Intern is absent without official leave (AWOL): Deduction amount has to be the same value of the wages payable for days AWOL. Maximum deduction is 25% of one month’s salary.
3. Intern receives accommodation, amenities, or other services: Deduction amount has to be the same value of accommodation, amenities, or other services provided. Maximum deduction is 25% of one month’s salary. For deductions in point (3) only, employers must seek consent from the employee.

If an employee is liable for multiple deductions, the total deductions employers can make is 25% for all deductions combined. This protects employees from potentially having their entire salary deducted.

Consequences of breaching interns’ employment rights

MOM takes a serious view of employers who don’t comply with their obligations to workers. If you breach the various employment rights described here, you can be convicted of a criminal offence. Under Section 112 of the Employment Act, significant penalties apply.

First offence:

You can be jailed up to 6 months, and/or fined up to $5,000.

Second offence onwards:

You can be jailed up to 12 months, and/or fined up to $10,000.

Employment Rights of Trainees in Singapore

Generally, trainees do not sign employment contracts, and are therefore not considered employees. Non-employees do not benefit from the employment rights described above. Most terms of employment, like types of leave, leave days, benefits, etc. will be mutually agreed between the trainee and the employer. Non-employees do not receive CPF contributions.

Trainees who sign an employment contract (specifically, a contract of service), are likely to be considered employees and therefore have the above employment rights.

SGUnited Trainees

Workforce Singapore has issued statements that SGUnited trainees are not considered employees, and are not covered by the Employment Act. This has a range of important implications for employers.

This applies to both the i) SGUnited Traineeship, and ii) SGUnited Mid-Career Trainees.

Here are some key employment facts for employers who hire SGUnited trainees:

Employers are encouraged to treat trainees fairly. From a business perspective, this makes perfect sense. If businesses treat trainees unfairly, it’s likely to retain the trainees after the traineeship period ends. In this age of accountability that’s fueled by social media, businesses who mistreat their trainees can expect to receive very bad online PR that will likely affect their sales, and general ability to do business.

Employers should offer trainees similar terms as their interns, such as by providing:

• Adequate salaries/allowances,
• Overtime pay
• Reasonable work hours
• Annual paid leave
• Sick leave

Mandatory insurance for SGUnited Trainees

If you wish to hire an SGUnited trainee, you must purchase Work Injury Compensation Insurance for them. This is a requirement set out by SGUnited.

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There’s often a lot of confusion surrounding paternity leave. How much paternal leave can fathers take in Singapore? Can self-employed men qualify? Is it paid or unpaid? Do foreigners qualify? Can employers deny paternity leave? Just like in the previous article we did on maternity leave, we’ll demystify these questions, and more. We’ll discuss:

1. What is paternity leave?
2. Who is entitled to paternity leave in Singapore?
3. Paternity leave vs maternity leave
4. How much paternity leave must employers provide?
5. How much must employers pay for paternity leave?
6. When can employees take paternity leave?
7. Can employers seek reimbursement for paternity leave?
8. Can employers terminate employees on paternity leave?
9. Can employers deny employees paternity leave?
10. Can fathers share parental leave with their wives?
11. How should employers support soon-to-be fathers?

#1. What is paternity leave?

Paternity leave is a guaranteed employment right in Singapore, for fathers whdio qualify. The right to paternity leave is an condified in the Employment Act. This means that as an employer, you must grant paternity leave to your male employees who are expecting children. It is illegal to deny this leave, and punishments can range from a fine to jail time. Self-employed fathers can also claim paternity leave, subject to certain conditions.

Along with maternity leave, paternity leave is an important part of social policy to encourage childbirth. It helps working parents balance their commitments at home and at work, particularly during the crucial period when a child is newly born.

#2. Who is entitled to paternity leave in Singapore?

For fathers to be entitled to paternity leave, they must satisfy the all of the 3 following criteria:

1. His child must be a Singapore citizen, AND
2. He must either be currently married to the child’s mother, or have previously been married to the child’s mother from conception till the child’s delivery, AND
3. He must have worked for his employer, or been self-employed for at least 3 months before the child’s delivery

Let’s unpack these points so we get a better understanding of who does or doesn’t qualify for paternity leave.

Criteria 1 – Child’s citizenship:

An employee will fulfill this criteria if his child is either a Singapore citizen by birth, or if his child becomes a citizen within 12 months of birth. A child automatically becomes a Singapore citizen from birth if they are born in Singapore, and at least one parent is a Singapore citizen.

Since paternity leave has to be consumed within 12 months of the child’s birth, realistically, the child has to become a citizen within 11 months after birth if the father still wants to take paternity leave.

Criteria 2 – Marriage:

Paternity leave is different from maternity leave in that the father must currently be, or have been, married to the child’s mother.

Criteria 3 – Employment duration before child’s delivery:

Finally, the father must have been working for a company, or been self-employed, for at least 3 months before the child’s birth.

Can foreigners claim paternity leave in Singapore?

Yes. Foreigners are entitled to paid paternity leave in Singapore, as long as:

• The child is a Singapore citizen, AND
• They are married to their spouse or were married from child’s conception till birth, AND
• Been employed or self-employed for at least 3 months before child’s birth

Basically, the 3 criteria outlined above.

Can fathers claim paternity leave for adopted children?

Yes. Fathers of adopted children are entitled to paid paternity leave, but they must meet certain requirements.

To qualify for paternity leave for adopted children, the following criteria must be fulfilled:

• The child must be adopted within 1 year of of the date of the “Formal Intent to Adopt”.
• The adopted child must be below 12 months old when the “Formal Intent to Adopt” is declared.
• The child must be a Singapore citizen. If the child is a foreigner, at least one parent must be a Singapore citizen, and the child must acquire citizenship within 6 months of adoption.
• The father claiming paternity leave must have worked for his employer for at least 3 months, or been self-employed for at least 3 months, before the date of declaring his formal intent to adopt

The meaning of “Formal Intent to Adopt” is as follows:

• For adopted child who is a Singapore citizen: Formal intent is declared on the date the father files court application to adopt
• For adopted child who is a foreigner: Formal intent is declared on the date of in-principle approval for child’s Dependent Pass

Adoption paternity leave can start when the employee declares their formal intent to adopt. This means that adoption leave can begin from the following dates:

• Date of filing of the court application to adopt (for children who are Singapore citizens), or
• Date of in-principle approval for a Dependent Pass (for children who are foreigners)

Similar to maternity leave, the entire 2-weeks of adoption paternity leave must be utilised before the child turns 1-year old. Any unused paternity leave will expire after the child turns 1.

#3. Paternity leave vs Maternity leave

Here’s a helpful comparison between the two types of leave.

#4. How much paternity leave must employers provide?

Employers must provide 2 weeks of paid paternity leave, to employees who qualify.

Does paternity leave include weekends? What days should be counted?

Paternity leave includes weekends, rest days, and non-working days. Essentially, it’s all the days in a calendar.

#5. How much do employers have to pay for paternity leave?

Use the formula below:

Number of working days per week * weekly salary

The maximum paid paternity leave rate is $2,500 per week, including CPF contributions. Fathers can only be paid for a maximum of 6 work days per week, even if they normally work for 7 days per week.

Example: Mike works for your company. His monthly salary, including CPF, is $4,000. His regular work days are Monday to Friday (5 days per week). He takes 2 weeks of paternity leave to care for his newborn. You must pay Mike $2,000 for his 2 weeks of paternity leave.

#6. When can employees take paternity leave?

MOM has published guidelines on when paternity leave should be taken.

If your employee wishes to take paternity leave in a single block within 16 weeks (4 months) of their child’s birth, they don’t need to reach a mutual agreement with their company. Remember, paternity leave is an entitlement, after all.

However, if the employee wants to schedule their paternity leave on an ad-hoc basis through the year, then they’ll have to get their company to agree to this. For instance, some fathers may want to spread their 2 weeks of leave bit by bit through the year. This way, they have more flexibility to quickly relieve their spouses or other caretakers looking after the child.

Self-employed fathers

Self-employed fathers can use their paid paternity leave at any time within 12 months of their children’s birth (or adoption), depending on their work commitments. For self-employed fathers, they must show proof they have lost income during their paternity leave

#7. Can employers seek reimbursement for paid paternity leave?

Yes. Under the Government Paid Paternity Leave (GPPL) scheme, the government will compensate businesses for the 2 weeks of leave pay.

Businesses must pay their employees’ the paternity leave compensation first, then file a claim for reimbursement with the government.

#8. Can employers terminate employees on paternity leave?

The ability to terminate workers on parental leave is a common question that employers have. The answer is the same for both paternity and maternity leave, and that is: it depends on the reason for termination.

Terminating an employee on paternity leave is a serious matter. It can only be done for just or sufficient cause. Examples of such causes include:

1. Termination due to misconduct: E.g. Fraud, theft, insubordination
2. Termination due to performance: Poor performance at work
3. Termination due to redundancy: The position is no longer required

Sometimes, employers may have self-centered reasons for wanting to remove employees who are on paternity leave. For instance, some companies may want to save on paying the worker salary while on paternity leave. It’s important to take note that the following reasons for termination of a worker on paternity leave is not allowed:

1. Termination to deprive employee of entitlements
2. Termination due to discrimination: e.g. age, parental commitments, marital status, etc.
3. Termination to take revenge on employee: e.g. firing someone after they file a legal claim against you

Companies cannot terminate employees to deprive them of entitlements or benefits. Paternity leave is one such entitlement. If a company does so, those responsible can be charged with an offence.

What happens to paternity leave benefits if the employee resigns?

Any remaining paternity leave benefits are forfeited. If the employee is joining another company, there can be no transfer of paternity leave benefits from one company to the next.

#9. Can employers deny paternity leave?

No. Paternity leave is an employment right that is enshrined in Singapore law. It is not merely a benefit that can be taken away as one pleases. Employers must grant paternity leave to employees who request it. The precise dates and scheduling of paternity leave can always be discussed between employer and employee, but it is illegal for employers to deny this right.

Penalties for denying paternity leave

Employers who deny eligible employees from accessing their paid paternity leave will face serious consequences. Offenders may be jailed up to 12 months, and/or fined up to $10,000.

#10. Can fathers share parental leave with their wives?

In Singapore, husbands can tap into their wives’ maternity leave. This is useful, since maternity leave can be up to 16 weeks long, while paternity leave is 2 weeks long. Your employee can use up to 4 weeks of their wife’s paid maternity leave. This allows for a more equal sharing of parenting responsibilities between dads and mums.

Example: John and Tricia have just had a child. Tricia qualifies for 16 weeks of maternity leave. Tricia wants to get back to work quicker, so John steps in shoulder more childcare responsibilities. John taps into 4 weeks of Tricia’s maternity leave. This gives John 6 weeks of paternity leave. Tricia now has 12 weeks of maternity leave remaining.

The qualification criteria for shared parental leave are:

1. The child’s father must qualify for paid paternity leave, and
2. The child’s mother must qualify for paid maternity leave, and
3. The child must be a Singapore citizen

The compensation for shared parental leave (for dads) is the same as paid paternity leave. It’s a maximum of $2,500 per week, including CPF contributions.

#11. How should I support my employees who are about to become fathers?

It’s an exciting but stressful time for workers who are about to become dads. Employers should try to support their soon-to-be-fathers. Here are some helpful tips that you can implement to make your workers feel more supported:

1. Create support groups: Organise the people in your company who’ve experienced fatherhood. Have them link up with their colleagues who are about to become fathers themselves. It’s a great way for first-time dads to learn from their more experienced colleagues about the joys and challenges of being a working dad. Also, such support groups can help create a more tight-knit company culture.
2. Be understanding: Juggling fatherhood and work life isn’t easy. Babies could have medical emergencies. Stress at home could eat into work. Whatever the case, it’s a good idea to be more understanding of your employee’s circumstances. If someone’s just had a child, and maybe they made a mistake at work, it’s a good idea to empathise rather than criticize. Constructive feedback paired with empathy can help you build long-term loyalty between your company and your dad-employees.

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Business owners and HR directors often have questions regarding maternity leave policies. Do all pregnant workers qualify for it? How much maternity leave must I provide? Can maternity leave be staggered to reduce work disruptions? We’ve put together this helpful guide to walk employers through the A-Z’s of maternity leave in Singapore.

We’ll address the following points on maternity leave:

1. What is maternity leave?
2. Which employees are entitled to maternity leave?
3. How much maternity leave must employers provide?
4. How much must employers pay for maternity leave?
5. Can employers claim reimbursement for paid maternity leave?
6. What are the rules on adoption leave?
7. What are the penalties for denying maternity leave?
8. What happens if there’s a dispute over maternity leave?
9. How should I support employees who are expecting?

What is maternity leave?

Maternity leave is leave that mothers can apply for, to prepare for the responsibilities of childbirth. Maternity leave is a legal entitlement in Singapore. This legal entitlement is enshrined in Part IX (“Maternity Protection and Benefits and Childcare Leave for Parent) of the Employment Act. This means that, under the force of law, you must grant maternity leave to your female employees who are expecting children. You cannot legally deny this leave to them.

Maternity leave plays an important policy function in encouraging workers to start families. It helps employees balance work-life responsibilities, and helps women remain employed when having children.

Which employees are entitled to maternity leave?

In the private sector, the only employees who do not qualify for paid maternity leave are:

1. Employees who’ve worked for your company for less than 3 months, before delivery date
2. Seafarers
3. Domestic workers

As long as your employee doesn’t fit into any of the 3 categories, above, you must provide maternity leave for them. This means that virtually all female workers will be entitled to paid maternity leave.

If an employee has worked for less than 3 months for your company before childbirth, they will still qualify for 12 weeks of unpaid maternity leave.

Are PRs and foreigners entitled to maternity leave?

Yes. Employers must provide PRs and foreigners with maternity leave. All female workers regardless of nationality will qualify for this.

The only difference is that the duration of maternity leave will differ, depending on the citizenship of the child. We’ll discuss this point a few paragraphs down.

When can my employees begin maternity leave?

Your employees can start their maternity leave 4 weeks before their estimated delivery date. They may start later than 4 weeks before their expected delivery, but they cannot start earlier than this.

How much maternity leave must employers provide?

The duration of maternity leave depends on how long your employee has worked at your company before delivery, and whether the child is a Singapore citizen.

Maternity leave must be consumed in the following manner.

*Notes on flexible maternity leave:

There are limits on how much maternity leave can be used flexibly.

For mothers with 12 weeks of maternity leave, the formula is: 4 weeks x the number of working days per week. Flexible leave is capped at 24 days.

Example: Megan’s job requires her to work 5 days a week. Megan is entitled to a maximum of 20 days of flexible leave.

For mothers with 16 weeks of maternity leave, the formula is: 8 weeks x the number of working days per week. Flexible leave is capped at 48 days.

Example: Janice’s job requires her to work 4 days a week. Sarah is entitled to a maximum of 32 days of flexible leave.

These limits help to balance the need for new mothers to manage their personal responsibilities, with the employer’s need to ensure smooth work schedules.

Examples of Maternity Leave scheduling

Let’s look at some examples of how employees are able to schedule their maternity leave.

Example: Sarah has worked for 2 years at your company as a management associate. Sarah’s child is a Singapore citizen. She is therefore entitled to 16 weeks of paid maternity leave. She works a regular 5-day week. This means that Sarah is entitled to consume 40 days of maternity leave flexibly (8 weeks times 5 working days), if you agree with it.

Sarah schedules a 14-week block of maternity leave about a month before her estimated due date, to prepare for childbirth. She wants an uninterrupted break from work so she can care for her child, and to recuperate. Sarah is now left with 2 weeks of maternity leave. She decides to use these 14 days flexibly through the rest of the year.

How many weeks of maternity leave will employers have to pay for?

Which days are included in maternity leave?

Maternity leave includes weekends, rest days, and public holidays. Just count every day in the calendar!

So, 12 weeks of maternity leave would mean 84 days of leave (12 times 7). 16 weeks of maternity leave would mean 112 days (16 times 7).

Can employers claim reimbursement from the government for paid maternity leave?

Yes. Under the Government Paid Maternity Leave (GPML) scheme, the government will compensate businesses for paid maternity leave.

The criteria to qualify for the GPML are:

1. Employee must have worked for your company for at least 3 months, before delivery
2. Employee’s child must be a Singapore Citizen

The reimbursement amount increases with the number of children your employee has.

The old criteria of being legally married is no longer required. Single parents can now qualify for paid maternity leave. Employers can apply to be reimbursed for maternity leave for single mothers.

Businesses must pay their employees their maternity leave first, and then file a reimbursement claim with the government.

However, if she does not give her employer at least a week of notice before going on maternity leave (and does not have a good reason for not giving such notice), she is only entitled to receive half the payment.

Adoption leave

If your employee adopts a child, they also qualify for maternity leave entitlements. If your employee meets the qualification criteria, then you have to provide them with 12 weeks of paid maternity leave.

Employees can qualify for adoption leave if:

1. The adopted child is below 12 months of age when the employee declares their formal intent to adopt. The meaning of formal intent is as follows:
   1. For child who is a Singapore citizen: Date employee files court application to adopt
   2. For child who is a foreigner: Date of in-principle approval for child’s Dependent Pass
2. The child must be a Singapore citizen. If the child is a foreigner, at least one parent must be a Singapore citizen, and the child must acquire citizenship within 6 months of adoption.
3. Employee must have worked for employer for at least 3 months, before formal intent to adopt

Adoption leave can start when the employee declares their formal intent to adopt. This means that adoption leave can begin from the following dates:

1. Date of filing of the court application to adopt (for children who are Singapore citizens), or
2. Date of in-principle approval for a Dependent Pass (for children who are foreigners)

Like with maternity leave for childbirth, the entire period of leave must be consumed before the child turns 1-year old.

Can employees share their maternity leave with their spouses?

Yes. Your employee can share up to 4 weeks of her maternity leave with her husband.

Can I ask my employee to work during maternity leave?

If your employee is on maternity leave in the first 4 weeks after giving birth, you are not allowed to ask them to work. The first 4 weeks after childbirth is reserved for the employee to recuperate.

Employers can request for employees to work during the remaining 8-12 weeks of their maternity leave. Working during maternity leave must be mutually agreed upon. If your employee works on any day during the remaining duration of her maternity leave, you must either:

• Offer her off-in-lieu, or
• Pay her 1 day’s extra salary (in addition to her paid maternity leave, for that day).

Maternity leave in exceptional circumstances

Giving birth to twins (or more): This is counted as a single delivery. Delivering twins does not double the maternity leave entitlement.

Premature births: Employers must provide the mother with 16 weeks of maternity leave.

Still birth: Employers must provide the mother with the full amount of maternity leave she qualifies for (i.e. either 12 or 16 weeks).

Still births are not counted when determining maternity leave benefits that scale with the number of children.

Miscarriage or abortion: No maternity leave benefits. Employees will have to use sick leave or other types of leave.

An employer’s obligations to pregnant employees

Can a business terminate an employee who is on maternity leave?

It is an offence for a business to dismiss an employee who is on maternity leave without just or sufficient cause.

Here are some reasons that qualify as just or sufficient cause:

1. Misconduct: Dishonest or unruly behaviour at work. E.g. Employee engaged in theft, fraud, insurbordination, etc.
2. Performance: Employee is not performing their job to required standards.
3. Redundancy: The position is no longer required.
4. Moonlighting: The employee is secretly working for someone else during maternity leave.

Here are some reasons that are illegal:

1. Deprivation of benefits/entitlements: E.g. wanting to save on maternity leave pay by firing worker
2. Discriminatory grounds: E.g. firing worker based on level of family commitments, marital status, disability, etc.
3. Retaliating against employees exercising employment rights. E.g. firing worker to take revenge on them for submitting a mediation claim against you.

So even though businesses are technically allowed to dismiss employees on maternity leave, the justification that companies have for the dismissal is extremely important. If a business is thinking of saving themselves the expense of maternity leave pay by removing workers on maternity leave, that would be illegal. If a business wants to dismiss employees who are new mothers because they think that new mothers won’t be able to focus on work anymore, that would be discriminatory, and therefore illegal. This guards against workplace discrimination. Employers must have specific reasons, and be able to prove these reasons, to dismiss workers on maternity leave.

Today, many employees are aware of their maternity leave rights. Such information is readily available on government channels, like MOM’s website. If a business dismisses workers who are on maternity leave, they should expect a high probability of receiving an unfair dismissal claim lodged against them. If businesses are planning to let go of employees on maternity leave, they must make sure that it is only done for the justifiable reasons outlined above. They should also have solid evidence to prove their case in a mediation tribunal or in court.

Can businesses terminate pregnant employees?

If you terminate a pregnant employee within 6 months the employee’s estimated delivery date, or on the delivery day, without just or sufficient cause, then you must pay the worker the full amount of paid maternity leave.

If you retrench a pregnant employee within 3 months of their estimated delivery date, or the date of her confinement, then you must pay the employee the full amount of paid maternity leave.

Example: Jane works for a retail business. Jane is 8 months pregnant. Jane qualifies for 12 weeks of paid maternity leave. The chain is downsizing due to financial difficulties, and Jane is retrenched. The retail business must pay Jane her 12 weeks of maternity leave salary, since she was let go within 3 months of her delivery date.

Penalties for firing pregnant employees

If a business terminates a pregnant employee without just or sufficient cause, the affected employee can file a claim with TADM. The TADM will mediate the case. If no solution is found, the case will be sent for review in the Employment Tribunal Court. Judges can impose penalties on companies who are found to deliberately fire pregnant workers.

Also, the Minister for Manpower has the power to intervene personally. The Minister for Manpower can:

• Order the employer to reinstate the terminated employee their former position, and pay for the lost income if she had not been terminated, or
• Pay the terminated employee damages as compensation for the unfair firing

Can employees sue employers for maternity-leave related disputes?

If your employees and you face a dispute related to maternity leave, they can file a mediation claim with the Tripartite Alliance for Dispute Management (TADM). For instance, pregnant workers who have been terminated while on maternity leave can file a claim if they feel you unfairly dismissed them.

If mediation talks break down, the case will be sent to the Employment Tribunal Court (ETC). A judge will hear the case and make decision on the dispute, and what resolutions (if any) are necessary.

Some examples of corrective actions that an ETC judge may make:

• Employer must pay damages to the employee, or
• Employer must reinstate employee to their previous role, and compensate the employee for lost income due to the wrongful termination

If your employee is a member of a trade union, they can also approach the union to advocate for them.

Can employees moonlight for another employer during maternity leave?

No. Employees cannot work for someone else during maternity leave. If you discover that your employee is working elsewhere when they’re on maternity leave, you are allowed to dismiss them. Any remaining maternity leave benefits will be forfeited. Employers won’t be liable for the remaining paid maternity leave.

What happens to maternity leave benefits if the employee is terminated for just or sufficient cause?

Pregnant employees, or employees on maternity leave, who are terminated justifiably will not be entitled to receive their maternity leave benefits. If they have already claimed some maternity leave pay, the remainder of their maternity leave benefits will be forfeited.

What happens to maternity leave benefits if the employee resigns?

Pregnant employees, or employees on maternity leave, who resign will not be entitled to receive any remaining maternity benefits.

Supporting your employees who are expecting

Here are some helpful tips to supporting employees who are expecting children.

1. Guide expecting employees on available maternity benefits: Pregnancy is stressful enough. Add to that the stresses of having to work while preparing for birth, and expecting employees can feel overwhelmed. Make it easier on your workers by briefing them on their maternity leave entitlements. If your company has additional benefits that you provide to pregnant workers, educate them on that also. Employees might have received a pamphlet or “briefing day” when they first joined, but HR policies may not be something that everyone is familiar with.Walking through the various benefits available helps to take off lots of stress from your employees. It allows them to easily apply for the right benefits. They’ll certainly appreciate this gesture from you as their employer.
2. Create support networks: If you have employees who are mothers, it’s a good idea to organise an informal support network in your company. This way, employees who’ve been through childbirth before can support other employees who may be going through it for the first time. This not only helps your employees feel supported, but can also make your team bonds stronger.

Protecting pregnant employees (and all other employees)

If your employees suffer work-related injuries/sickness, you are liable to pay for their medical expenses. You must also pay for their wages while they’re on MC. If your expecting employees suffer injuries or illness at work, you could be facing some seriously high medical bills. For instance, a pregnant employee could trip and fall at work, which might cause serious harms to herself and her baby. Make sure you get Work Injury Compensation Insurance, which pays for medical bills, and lost wages while on MC.

Get Work Injury Compensation Insurance, from $5/month

You’re planning your company’s manpower roster for the next month. You realise there’s a public holiday, but you need to get workers to work on that day. You know that you have to pay workers some kind of extra compensation to work on public holidays, but you’re not fully clear on the legal specifics. We’ve written this guide in layman’s terms to help employers better understand whether they can make employees work on public holidays, and how much they have to compensate employees for doing so.

We’ll answer the following points below, which are amongst the most common questions that employers have:

1. Do employers have the power to get employees to work on public holidays?
2. What are the official public holidays in Singapore?
3. How much must you pay employees who work on public holidays?
4. What are the various forms of compensation available for working on public holidays?
5. How much must you pay part-timers who work on public holidays?
6. How much overtime pay do you have to contribute for working on public holidays?
7. Is it legal to withhold public holiday pay?
8. How should I protect employees from injuries and illness?

Do employers have the power to get employees to work on public holidays?

Yes, you certainly can. Employers in Singapore are allowed to require employees to work on Public Holidays.

If your employee is governed by the Employment Act, then there are some conditions that you must adhere to. You can pay your worker additional wages for working on that public holiday. Or, if your worker falls in certain categories, you can grant your worker an additional day off. We’ll delve into the specifics of these later on.

Let’s first define what the public holidays are in Singapore.

What are the public holidays in Singapore?

Singapore recognises 11 public holidays each year. These are, in chronological order:

1. New Year’s Day
2. 1st day of Chinese New Year
3. 2nd day of Chinese New Year
4. Hari Raya Puasa
5. Hari Raya Haji
6. Good Friday
7. Labour Day
8. Vesak Day
9. National Day
10. Deepavali
11. Christmas Day

The dates of public holidays are announced by MOM each year. Some dates of public holidays are the same every year. For instance, the Christmas holiday falls on the 25th of December each year, and National Day falls on the 9th of August each year. Other public holidays will vary their dates from year to year. For instance, Hari Raya Puasa can begin on different dates each year, and the same applies to the Chinese New Year holidays. Public holiday dates are available here.

Special note for Polling Day

In addition to these annual public holidays, other events also constitute public breaks. Polling Day (a.k.a. voting day), for both the General Elections and the Presidential Elections, is a public holiday. Voting days for by-elections, however, are not public holidays. Employers should note that they must allow adequate time-off for their employees to vote. Employers cannot unreasonably withhold employees from voting, just because they have scheduled work commitments on Polling Day. This allows the maximum turnout possible for the important process of selecting public leaders.

Compensation rates for working on public holidays

If you require your employees to work on a public holiday, then you must pay them additional wages. These additional wages must equal to the basic rate of pay + gross rate of pay. Here’s an explanation of both pay rates:

Basic pay rate: This refers to the basic pay that you pay your worker, as stipulated in the employment contract. It excludes additional payments like overtime pay, allowances, and benefits.

Gross pay rate: This refers to the basic pay, plus any allowances given under the employment contract. It does not include payment for overtime work.

Example: Eric works as a computer repairman for your company. On a public holiday, your computer servers break down, and you require Eric to repair them urgently. You call him back to work, and Eric spends a full working day attending to the repairs. Eric’s basic pay is $4,000/month. His allowances are $500/month, for travel and meals.

Eric’s basic pay rate of $200/day is already accounted for in his monthly basic salary. The additional compensation you owe Eric is his gross pay rate. You must therefore compensate Eric an additional $225, for his work on a public holiday.

Compensating employees who are not working on public holidays

For your workers who are paid a monthly salary, you don’t have to factor in additional pay if they’re not working on public holidays.

For your workers who are paid a daily salary, you must still pay them if they don’t work on a public holiday. You must pay them 1 days’ salary at their gross pay rate.

Employees who aren’t working on a public holiday must still be paid. They will draw 1 day’s salary at their gross pay rate.

Tip: You do not have to pay employees who don’t work on public holidays if the employee does not show up for work on the day and or after a public holiday, without seeking your approval (i.e. goes AWOL). This prevents employees from trying to maximise time off by disappearing around a public holiday.

Compensating employees who work on public holidays

If you work on a public holiday, the types of compensation you are entitled to depends on what day the public holiday falls on (e.g. working or non-working day), and also your role in the organisation. The following tables summarise the different ways you can compensate employees who work on public holidays:

Use this first table for the following workers:

• Manual workers earning more than $4,500/month
• Non-manual workers earning more than $2,600/month

Use this second table for the following workers:

• Manager or executive (e.g. PMET)
• Manual workers earning $4,500/month or less
• Non-manual workers earning $2,600/month or less

Requesting employees to work on a public holiday, that falls on a working day

Option 1: Extra pay

For workers on a monthly salary: There’s no need to pay monthly-salaried employees extra salary. Their monthly salary will already take into account compensation for any potential public holidays.

For workers on a daily salary: If the public holiday falls on a working day, then you have to pay your daily-salaried employees one extra day’s salary. This extra salary is calculated using the employee’s basic pay rate. (Basic pay rate = basic salary only. This excludes allowances, CPF, overtime pay, bonuses, etc.)

Even if the working day is a half-day, you must still pay your workers the full day’s rate.

Example: Mark is an engineer at your company. You ask him to work on a public holiday. His basic salary is $5,000/month. He works 20 days a month. This means his basic pay rate is $250/day ($5,000 divided by 20 work days).
You must pay Mark an additional $250 for his work on a public holiday.

Option 2: Off-in-lieu

Instead of paying your workers, you can provide them with a day off on another date.

Option 3: Time off

Time off is only available for the following employees:

• Managers and executives (e.g. PMETs)
• Manual workers earning more than $4,500/month
• Non-manual workers earning more than $2,600/month

Here are examples of time-off:

• If your employees work under 4 hours on a public holiday: You must give them 4 hours time-off-in-lieu
• If your employees work over 4 hours on a public holiday: You must give them 1 day off-in-lieu

If you have manual workers earning less than $4,500/month, or non-manual workers earning less than $2,600/month, you cannot simply offer time off for work done on a public holiday. Instead, you must provide them with a rest day. A rest day is 24 hours without work. This is intended to protect lower-wage workers from overwork.

Requesting employees to work on a public holiday, which falls on a non-working day

Non-working days are days which you do not have to work. For most employees on a regular schedule, this will be Saturdays and Sundays. However, for some employees who do shift work, their days off will differ. For example, some employees may work 4 days on, 2 days off. This is common in the F&B, retail, manufacturing, or customer service sectors.
For workers on a monthly salary: There’s no need to pay monthly-salaried employees extra salary. Their monthly salary will already take into account any potential public holidays.
For workers on a daily salary: If the public holiday falls on a working day, then you have to pay your daily-salaried employees one extra day’s salary. You should use the employee’s gross pay rate. (Basic salary + allowances. This excludes bonuses, CPF, overtime, etc.)
Even if the working day is a half-day, you must still pay your workers the full day’s rate.

Option 2: Off-in-lieu

Instead of paying your workers, you can provide them with a day off on another date.

Option 3: Time off

You can provide workers with time-off-in-lieu. You can only do this for the following workers:

• Managers and executives (e.g. PMETs)
• Manual workers earning more than $4,500/month
• Non-manual workers earning more than $2,600/month

Requesting employees to work on a public holiday, which falls on their rest day

Rest days are days where you don’t work, and you’re not paid because you’re not working.
Rest days only apply to manual workers earning under $4,500/month, or non-manual workers earning under $2,600/month.
You cannot make your employees work on their rest day, unless there are exceptional reasons to do so. Examples of exceptional reasons:

• The employee is engaged in shift work, and there cannot be gaps in the shift, hence necessitating them working on their rest day
• There is an accident or emergency situation at work, and you need the employee to help
• The employee must perform urgent work for machinery or equipment
• The employee must perform work that is essential to the “life of the community” (e.g. healthcare services)
• The employee must perform work that is essential to the economy of Singapore
• The employee must perform work to defend Singapore

Compensation for employees working on a rest day depends on whether you told your employee to work on a rest day, or whether your employee requested to work on their rest day themselves.

Employer requesting employee to work on rest day: If your employee works 50% of their regular working hours, you must pay 1 day’s extra salary. If your employee works over 50% of their regular working hours, you must pay 2 days’ extra salary.

Use their gross pay rate.

Employers must also provide one day of paid leave, consumed immediately after the employee finishes work on their rest day.

Employee themselves requesting to work on rest day: If your employee works 50% of their regular working hours, you must pay half a day’s extra salary. If your employee works over 50% of their regular working hours, you must pay 1 days’ extra salary.

Use their gross pay rate.

Employers must also provide one day of paid leave, consumed immediately after the employee finishes work on their rest day.

Public holiday pay for part-timers

Part-time employees are also entitled to public holiday pay, just like regular employees. The only difference is that part-time employees working on public holidays will have their pay pro-rated. Here’s the formula for pro-rating part-time employee pay:
(Part timer’s annual hours) / (Equivalent full timer’s annual hours) * Equivalent full timer’s daily hours

This formula looks a little complex, so let’s break it down with an example:
Sarah is a part-time employee working at a restaurant. Her basic pay is $8/hour. She works 20 hours a week. This is half of the 40 hours a week for full-timers. She joined the restaurant on 11 August. This means that there are only 2 public holidays left in the year – Deepavali, and Christmas.

Sarah’s boss requests for her to work on Christmas, for an 8-hour shift. Here’s the amount Sarah’s boss needs to pay her, by law:

Basic pay:

$8/hour multiplied by 8 hours worked = $64

Public holiday additional pay (pro-rated for part-timer):

(Sarah’ s annual hours) / (Equivalent full-timer’s annual hours) * Equivalent full timer’s daily hours

Using the background information above, the equation looks like this:
(1040 hours) / (2040 hours) * 8 hours = 4 hours additional pay

$8/hour multiplied by 4 hours =  $32

The total sum is therefore:

Total part timer pay for public holiday= Basic pay + Prorated public holiday pay

Total part timer pay for public holiday= $64 + $32 =$96

Final result:

Sarah’s boss must pay $96 for having her work on Christmas. If your employment contract provides travel allowances, you must also give the part-timer one day’s worth of travel allowance for working on a public holiday.

Overtime pay during public holidays

Irrespective of whether the public holiday falls on a work day, non-work day, or rest day, your employees will still qualify for overtime pay. This means that if your employees work more hours than usual, you must pay your employees overtime pay.

Example: Sam is a delivery driver working for your company. Sam’s hours, as stipulated in your employment contract with him, are 8 hours a day. It’s the year-end holiday season, and there are lots of extra orders to fulfill. You request for Sam to work on Christmas day, for 12 hours. As an employer, you are legally obligated to pay Sam for 4 hours of overtime.

Overtime limits: Take note that employees can only work 72 hours of overtime per month. You have to apply to MOM for an exemption if you need them to work over 72 hours of overtime. If you don’t have an exemption from MOM, and you’ve already hit this limit, you can’t make them put in more overtime.

Can I not pay my employees for working on public holidays?

No. It is illegal to withhold the legally mandated payments to employees if you have them work on public holidays. You can be charged with a criminal offence for doing so. Your employees can approach the Tripartite Alliance for Dispute Management (TADM) to file a legal claim against you. The TADM will mediate the case between your employee and your company. Your worker can file a claim for up to $20,000.

Employees have a relatively long time to file such disputes. The TADM will hear cases up to 1 year from the date of the dispute. If your employee has left your employment, they have up to 6 months to file a claim against you with the TADM. If mediation doesn’t succeed in producing a solution, then the case will be referred to the Courts. Employee-employer pay disputes will be heard in the Employment Claims Tribunal (ECT).

If the Courts find you guilty of unlawfully withholding payments, it is a criminal offence. You can be jailed up to 12 months, and/or fined up to $10,000.

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When you run a business, you’ll likely have to reimburse your employees for various expenses and costs. The most common type of reimbursement is for business-related expenses. For instance, your salespeople may entertain clients, and will likely need to be compensated for meals and other gifts they provide to customers. You will also have to reimburse employees for medical expenses, particularly if these expenses stem from work-related injuries/diseases. You may also need to file reimbursement claims as a business owner, such as when claiming compensation for maternity leave benefits from the government. This guide will go over the key aspects of employee reimbursements.

Here’s a summary of the key points:

1. What is an employee reimbursement?
2. Reimbursements vs disbursements
3. Legally mandatory vs optional reimbursements for employees
4. Do you need to make CPF contributions for reimbursements?
5. Are you allowed to refuse employee reimbursements?
6. Can you claim reimbursements for employee benefits?

What are reimbursements?

A reimbursement is money the company pays to employees, to compensate them for expenses incurred.

Example: John works as a sales manager for a company. As part of his job, John has to entertain clients over meals. He also has to travel to meet clients in Singapore and in various parts of Asia. John can file reimbursement claims with his employer for his work-related meals, and transportation expenses.

On the other hand, a disbursement is a sum of money paid by a company to someone when he or she incurred an expense as an agent – in other words, when that person contracts with a supplier in the name of the company or another person.

Reimbursements vs Disbursements

Sometimes, people get confused about the difference between reimbursements and disbursements. A disbursement is a sum of money paid to external parties, for expenses ultimately incurred by your company. For instance, let’s say you contract a party planner (company B), to organise a year-end Dinner-and-Dance to reward your staff. The party planner orders a variety of hampers and gifts to present to your staff at the event. The party planner can make an advance payment to the hamper and gifts supplier first. The party planner will then lodge a disbursement claim with your business, to claim compensation for the expenses incurred in planning the event.

Legally mandatory vs optional reimbursements

Employers are legally obligated to reimburse employees for medical expenses, up to a certain amount. All other reimbursements are optional, unless otherwise stated in your employment agreement.

Medical expense reimbursement:

MOM requires employers to reimburse employees for paid sick leave. This is part of Singapore law.

If your employee takes paid sick leave, you must pay the following expenses:

1. Medical consultation fee
2. Employee salary while on paid sick leave

You must reimburse your employee for their medical consultation fee, if the following conditions are met:

• Your employee has worked for you for at least 3 months
• Your employee’s medical consultation results in at least 1 day of paid sick leave
• The medical certificate is issued from a public institution, or a healthcare provider appointed by your company

Common questions about medical expense reimbursements

Q1: Do I also have to pay for my employee’s medication?

Answer: No. You only have to pay for the medical consultation fee. You don’t have to pay for the medication.

Q2: Do I have to pay for my employees’ medical consultation if they visit see a private clinic?

Answer: No. You only have to pay if they visit a public institution, or a healthcare provider appointed by you. See here for the list of approved institutions.

Q3: Do I have to pay for medical consultations for cosmetic procedures/plastic surgery?

Answer: No. Employers do not have to compensate workers for cosmetic procedures. If a member of staff wants a botox shot, or a nip-and-tuck, that’s great. They’ll just have to do it on their own dime!

Take note that the above reimbursements only apply for non-work-related injuries/sickness. If your employee gets suffers a work-related injury/sickness, the types of medical expenses that you have to compensate them for immediately becomes much broader. If the injury/sickness if work-related, you must compensate your employee for all medical costs related to the injury/sickness, up to a maximum of $45,000. This includes medication, and other medical expenses – not just medical consultation costs.

Optional reimbursements:

You are not legally obligated to compensate employees for all other kinds of expenses. Of course, just because it’s not legally obligatory, doesn’t mean it makes good business sense to not pay your employees for certain important expenses. For instance, if you don’t compensate your sales staff for the money they spend on clients, then your salespeople are not likely to go the extra mile to keep your clients happy. You can say goodbye to niceties like hampers, gifts, good meals, and other attractive incentives that your salespeople use to keep your clients close to you. Even though these reimbursements are optional in the eyes of the law, you should think about the ultimate impact on your sales and profits when considering whether or not to reimburse employees for certain expenses.

Here’s a list of common expenses that business owners will typically compensate employees for:

1. Client entertainment expenses: keeps clients happy and sales coming in
2. Travel expenses: allows your sales staff to meet clients at their convenience
3. Meal expenses: nice staff benefit to help employees defray costs while eating out
4. Clothing/uniform allowances: usually provided if staff have to wear uniforms, e.g. in F&B or service business environments.

Do businesses need to make CPF contributions for reimbursements?

It depends on whether these reimbursements are ad-hoc, or whether they are allowances that form part of your employee’s monthly salary.

Ad-hoc reimbursements: You don’t have to pay CPF contributions for ad-hoc reimbursements to employees.

Example: One of your employees submits a travel and meal reimbursement claim to you. The employee had to take a taxi to meet a client, and had to buy dinner for the client. You don’t have to make contributions to the employees’s CPF for the reimbursements to pay to this employee.

Tip: As part of industry-standard compliance practices, make sure that your employees submit official documents like receipts to substantiate these claims.

Allowances that are part of employees’ salaries: You must make CPF contributions if you provide allowances that form part of your employees’ salary.

Example: Your employee is paid $4,000/month. This is the breakdown of her monthly wage:

1. Basic salary: $3,000
2. Allowance for transport, entertainment, and meals: $1,000

You must make CPF contributions on both the basic salary and the allowance component. This is because the allowance is part of an employee’s salary, which means it’s subject to CPF contributions.

Can I refuse to reimburse employees?

Yes, as long as the reimbursement is not related to medical consultations, or work-related injuries/sicknesses. Let’s revisit the table that highlights mandatory vs optional reimbursements.

You can refuse reimbursements for the expenses in the right column. Unless you’ve specifically agreed to compensate workers for such expenses in your employment contract, you don’t have to pay your workers for such reimbursement claims.

You cannot refuse reimbursements for claims in the left column. For instance, you cannot refuse reimbursement claims for medical consultations, when workers take paid sick leave. This is a legal entitlement under Singapore law. This is designed to protect workers’ rights to access medical care, and to adequate rest when ill. It is a criminal offence to not reimburse workers for qualifying medical consultation fees. Under the Employment Act, you can be jailed up to 12 months, and/or fined up to $10,000.

If you fail to compensate employees for certain expenses that were agreed upon in your employment contract, your employees can file a legal claim against you. They may do so in the Employment Claims Tribunals (ECT) (for claims under $20,000), or file a civil lawsuit against you. Employees can sue company directors personally in such cases. It’s best to consider getting Directors and Officers (D&O) Liability Insurance, which will cover employee vs director lawsuits.

For lawsuits filed in the ECT, the courts will review several aspects of the claim:

1. Why the claim was filed, and the facts of the case
2. How much is being claimed against you
3. Any efforts made by you or the employee to settle the dispute out of court

The ECT will then decide whether you have to compensate the employee for their claim. If you have an expense that you’ve agreed to compensate employees for in their employment contract, it’s best to honour that agreement. It’s never good to allow cases to go to court, unless the employee in question is truly being unreasonable and making demands that are not within their employment contract. Court proceedings are a big extra expense, suck up lots of time, and are poor for publicity and staff morale.

Can businesses get reimbursed for employee benefits?

Business owners can claim compensation for certain employee benefits that they provide. The most common examples are maternity leave, paternity leave, and childcare leave. The government will compensate you for providing such benefits to your workers. This is designed to encourage employers to provide these benefits to workers. This allows workers a better work-life balance, and also helps the policy goal of increasing the country’s overall births.

As an employer, you must continue paying your employees’ salary while they are on family leave (i.e. childcare leave, maternity leave, and paternity leave). However, you can claim reimbursements for employee benefits for family leave from the government.

Reimbursement for childcare leave

There are two schemes that provides compensation for businesses to grant their workers paid childcare leave. These schemes are differentiated according to how old the employee’s children are.

The first scheme applies to childcare leave taken for children under 7 years of age. It’s called the Government-Paid Childcare Leave (GPCL) scheme. As an employer, you can claim reimbursement from the government. The government will pay for 3 days of childcare leave, for each qualifying employee.

The second scheme applies to childcare leave taken for children between 7-12 years of age. It’s called the Extended Childcare Leave (ECL) scheme. As an employer, you can claim reimbursement from the government. The government will pay for 2 days of childcare leave, for each qualifying employee.

Reimbursable amount:

For the GPCL scheme, the maximum reimbursement that employers can claim is $500/day.

For the ECL scheme, the maximum reimbursement that employers can claim is $500/day.

Qualification criteria for childcare leave:

1. Childcare leave taken must be for child(ren) must be in the age groups stated above (basically 12 years old or younger)
2. Child(ren) must be Singapore citizens
3. Employee must have worked for the employer for at least 3 months

Reimbursement for Maternity leave

Businesses can claim compensation from the government for employees who take maternity leave. You can claim 8 weeks of maternity leave salary for your employee’s first and second child. You can then claim 16 weeks of maternity salary for the third child, and beyond.

Your employee must meet the criteria under the Government-Paid Maternity Leave (GPML) scheme. Read more about maternity leave in Singapore.

Reimbursable amount:

The maximum amount employers can claim is $10,000 for every 4 weeks of maternity leave. This figure includes CPF contributions.

Qualification criteria for maternity leave:

1. Maternity leave can be taken up to 4 weeks before the child’s birth. All maternity leave must be used within 12 months of the child’s birth.
2. Child must be a Singapore citizen
3. Employee must have worked for the employer for at least 3 months

Reimbursement for Paternity leave

Businesses can claim compensation from the government for employees who take paternity leave. You can claim 2 weeks of paternity leave salary. Unlike with mothers, the amount of leave claimable does not increase with additional children. It is capped at 2 weeks, per child.

Your employee must meet the criteria under the Government-Paid Paternity Leave (GPPL) scheme. Read more about paternity leave in Singapore.

Qualification criteria for maternity leave:

1. Paternity leave can only be taken after the child’s birth. All paternity leave must be used within 12 months of the child’s birth.
2. Child must be a Singapore citizen
3. Employee must have worked for the employer for at least 3 months

Reimbursable amount:

The maximum amount employers can claim is $2,500 for every 4 weeks of paternity leave. This figure includes CPF contributions.

Childcare, maternal, and paternal leave reimbursement procedure

You will need to submit your reimbursement claim to the government within 3 months of your employee’s return from childcare, maternal, or paternal leave. You may submit your claim online via the Government Paid Leave (GPL) portal.

Here are quick links to the official application forms that your employees can use to apply for paid family leave.

1. Childcare leave form
2. Maternity leave form
3. Paternity leave form

You will need either the official forms, or your own form (which captures similar information to the official one) as part of your reimbursement submissions. You’ll also need some additional information, which you can find here.

Reimbursement for work-related injuries/sickness

Under Singapore law, all employers must compensate their employees for work-related injuries and sicknesses. This includes work-related Covid-19 infections. This is legislated by the Work Injury Compensation Act.

Work Injury Compensation Insurance is widely purchased in order to alleviate these potentially large costs from employers.

To submit a Work Injury insurance claim, employers must first notify MOM about their employee’s work-related injury or sickness. Employers must provide an incident report, the employee’s personal details, medical documents like doctor’s reports, and other reports like police statements (if applicable).

MOM will then carry out an investigation. After investigations, MOM will issue a Notice of Assessment (NOA), which stipulates the amount of compensation the employer owes to injured/sick employee. After the NOA has been issued, employers can then file a claim with their insurance company to compensate them for these expenses.

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