Employment Contract

An Employment Contract in Singapore is a formal agreement between an employer and an employee that outlines the terms of their working relationship. It is a vital legal document, providing clarity on rights and obligations, which helps to prevent misunderstandings or disputes. The contract governs aspects like salary, working hours, leave entitlements, job responsibilities, and more.

Having a written contract is not only best practice but also a legal requirement under the Singapore Employment Act for specific employment terms. The Ministry of Manpower (MOM) mandates that key provisions must be included in the contract to ensure compliance with labor laws and protect both parties involved.

This Employment Agreement template includes the following key sections:

Download this Employment Agreement template to ensure your contracts comply with Singapore labor law and Ministry of Manpower regulations. It offers a clear, legally sound framework for defining employment terms, protecting both the employer and employee. Perfect for businesses looking to streamline the hiring process, this template helps you avoid legal risks and ensures your agreements are fully compliant.

In Singapore, employment contracts are governed by the Employment Act, which sets out clear guidelines for what must be included. These terms ensure that both the employer and employee are aware of their rights and duties. Key legal requirements include:

The salary section must specify the basic salary, payment frequency (e.g., monthly), and payment method. Employers should also detail any bonuses, allowances, or commissions as part of the employee’s total compensation. This ensures that employees understand their total earnings.

The Employment Act regulates the working hours for employees, stating that the maximum is 44 hours per week, generally divided into 9-hour workdays, excluding breaks. Overtime compensation is required for hours worked beyond the standard 44-hour workweek.

Employees are entitled to annual leave, sick leave, and public holidays:

The notice period for termination depends on the length of employment. The employment contract should specify this and include the grounds for dismissal or termination, whether by mutual agreement or for cause.

The salary and benefits section of the employment contract is crucial in defining the employee’s total compensation package. This section should clearly state:

Employers must specify the basic salary agreed upon, which forms the foundation of the employee’s compensation. This is the amount before deductions for taxes, CPF (Central Provident Fund), and other contributions.

Some employers offer performance-based bonuses or commissions. If these are part of the compensation package, they should be clearly outlined in the contract, including how they are calculated and paid.

In addition to salary, many employers provide benefits such as healthcare, transportation subsidies, and meal allowances. These should be specified in the contract, ensuring transparency about the types of benefits employees are entitled to.

Employers are required to contribute to the Central Provident Fund (CPF) for their Singaporean employees. This mandatory contribution should be clearly stated in the employment contract, including the employer’s contribution rate, which is determined by the employee’s age and salary. For more detailed information on CPF contributions and rates, visit the official CPF website.

In Singapore, the Employment Act stipulates that employees should not work more than 44 hours per week. These 44 hours are usually divided into 9-hour workdays.

If an employee works beyond the standard working hours, they are entitled to overtime pay, which is calculated at 1.5 times the employee’s hourly wage. Employers must clearly define the terms of overtime in the contract, including approval processes and compensation details. Employers should also mention whether overtime is expected in the normal course of employment, as certain roles may involve a higher likelihood of working extra hours. For further details, refer to the official MOM guidelines on overtime.

A probation period is typically used to assess whether an employee is suited for a permanent role. In Singapore, probation periods usually last between 3 to 6 months and allow employers to terminate the employment relationship more easily if performance expectations are not met.

During this probation period, the notice period for termination is often shorter, typically 1 to 4 weeks. The employment contract should clearly specify the duration of the probation period and outline the expectations for both parties, as well as any changes in benefits or compensation during this time.

Leave entitlements are an important aspect of any employment contract in Singapore. Employees are legally entitled to several types of leave, which must be clearly defined in the contract:

Employees are entitled to a minimum of 7 days of paid annual leave after one year of service. This increases with the employee’s length of service, up to a maximum of 14 days for employees who have been with the company for more than 8 years.

Employees are entitled to 14 days of outpatient sick leave and up to 60 days of hospitalization leave per year, provided they meet the necessary medical certification requirements.

Employees in Singapore are entitled to paid leave on national public holidays. If an employee is required to work on a public holiday, they should be compensated with additional pay or given a day off in lieu. For more details, visit the MOM leave entitlement page.

Termination of employment can occur for various reasons, including resignation, mutual agreement, or dismissal. The contract should clearly outline the notice period required for both the employee and employer, which typically depends on the length of employment.

If the employer terminates the contract, they must follow the procedures outlined in the contract. This may include providing notice or paying severance compensation if termination is without cause.

If an employee chooses to resign, they are also required to provide notice. The notice period helps employers plan for the transition and ensure that there is adequate time to find a replacement or redistribute duties.

The contract should specify any grounds for immediate dismissal, such as misconduct, criminal behavior, or breach of contract.

If an employment contract violates Singapore’s labor laws, both employers and employees could face legal consequences. Employers who fail to adhere to the requirements of the Employment Act or do not provide certain benefits as outlined by law could be fined or face legal action. Employees, on the other hand, may be entitled to make claims for unpaid wages, unlawful dismissal, or other breaches.

Employers are encouraged to review their contracts regularly to ensure compliance with any changes to the Employment Act or other labor regulations. Using our Employment Contract template can help avoid these risks and ensure that your company remains in compliance with Singapore’s labor laws. Designed to cover all essential legal requirements, this template provides a reliable and convenient way to create clear, compliant agreements without the need for extensive legal expertise.

An employment contract is an essential document for both employers and employees in Singapore. It defines key aspects of the employment relationship, such as salary, benefits, working hours, leave entitlements, and termination conditions. By providing clarity and establishing clear expectations, both parties can avoid misunderstandings and reduce the risk of legal disputes.

Employers should ensure that their employment contracts comply with Singapore’s labor laws and are regularly updated to reflect any changes in the law. For employees, having a well-defined contract ensures that they are aware of their rights and obligations in the workplace.