Japan — 9 min
Singapore — 10 min
Expanding your talent search across borders might be just the thing your business needs to stay ahead of the competition. Hiring workers as employees or contractors across the globe is a great way to tap into local talent. With a strong economy and highly skilled workforce, hiring remote workers in Singapore is a viable option, especially if you’re looking to hire from the APAC region.
However, you’ll to have a good understanding of local labor laws and tax regulations while hiring internationally. You’ll also need to set up a payroll system to pay remote workers in Singapore quickly and accurately, in their local currency. But, global hiring doesn’t have to be a hassle as long as you have expert advice.
This article is packed full of practical guidance that can help you navigate the ins and outs of hiring and paying remote workers in Singapore.
Ready to learn more? Pour yourself a hot drink and let’s begin.
Foreign businesses can pay remote workers in Singapore by establishing a legal entity in the country, partnering with a global employment service, or paying Singaporean workers as contractors.
Launching a legal entity in Singapore is not difficult. You have to reach out to the Accounting and Corporate Regulatory Authority (ACRA), which oversees company registration in the country. Be aware that ACRA will have compliance standards you must meet before you can start hiring in Singapore.
If you would rather not spend the time and money to open a local entity in Singapore, you can partner with a global employment service. Some global employment partners use their own legal entities, whereas others are part of a partner-dependent system. Working with such a partner can help you handle compliance, payroll, tax, and benefits for your foreign workers while adhering to specific legal and financial requirements.
Paying your Singaporean workers by classifying them as contractors is much easier than paying them as employees. That’s because you don’t have to make social security contributions, offer benefits, or withhold taxes. You can simply pay them for the hours worked after they submit an invoice to you. However, intentionally misclassifying workers to avoid paying them as employees can land you in legal trouble and have other serious consequences.
Singapore's official currency is the Singapore dollar (SGD or S$). Non-Singaporean businesses generally use digital wallets to send funds. Many of these wallets convert payments into local currency automatically.
Singapore's tax system is known for being quite competitive for individuals as well as corporations. The country adheres to a territorial basis of taxation. It has low corporate tax but no capital gains tax. Information from the Inland Revenue Authority of Singapore (IRAS) can assist you in understanding the personal tax rates for each tax bracket in Singapore.
Employees are responsible for paying their own taxes to the Inland Revenue Department, so employers don’t have to withhold funds for income tax. Contractors who make more than S$20,000 a year also have to file and submit their own tax returns. The income tax rate for chargeable income brackets in the country for 2023, is as follows:
0% on the first S$20,000
2% on the next S$10,000
3.5% on the next S$10,000
7% on the next S$40,000
11.5% on the next S$40,000
15% on the next S$40,000
18% on the next S$40,000
19% on the next S$40,000
19.5% on the next S$40,000
20% on the next S$40,000
22% on an excess of S$320,00
Many parts of a salary in Singapore are taxable, including wages, bonuses, meal allowances, transportation allowances, housing allowances, and retirement benefits. Some components incur full taxes, whereas others incur partial taxes.
Your remote employees should be made aware that many aspects of their salary are subject to taxation in Singapore.
All earnings and income (base salary, bonus, commission) from employment in Singapore are fully taxable. In general, income received from overseas payments in Singapore is not-taxable, except in certain circumstances.
Retirement benefits, such as gratuities and pensions, are partially taxable.
Per diem payments are allowances for living expenses, such as meals and incidental activities, accrued during a business trip. All these are taxable in Singapore.
In Singapore, per diem payments are considered to be relevant to employees sent on brief overseas trips where they engaged in activities incidental to their employment.
The differences between allowance and reimbursement in Singapore are significant.
A per diem allowance is provided to an employee before he or she takes a trip. It is typically a fixed amount that is based on acceptable rates. A per diem reimbursement, on the other hand, is provided to an employee after they return from a business trip, and it can differ from employee to employee.
According to the IRAS guidelines, per diem allowances are taxable but per diem reimbursements are not.
There are various payroll deductions employers are required to make in Singapore, such as:
Co-operative society payments
Pension schemes, i.e., Central Provident Fund (CPF) contributions
Insurance schemes — universal health coverage
It’s essential to monitor your employees' activities and payments so that you can make necessary deductions when the time comes.
There is no official minimum wage in Singapore. In other words, you can decide how much you want to pay your workers without worrying about meeting a specific legal requirement.
Even though there's no minimum wage in the country, it does promote a Progressive Wage Model (PWM). This model encourages an increase in wages as workers gain more skills and improve their performance. Although there is no pressure toward meeting a minimum wage standard, you should consider the PWM when calculating wage and salary figures.
In Singapore, overtime pay is calculated as the number of hours worked overtime × the hourly basic pay rate × 1.5.
So, if the number of hours worked overtime is 3 and the hourly basic pay rate is S$10.50, the total overtime payment would be 3 × S$10.50 × 1.5 = S$47.25.
The main labor law in Singapore is called the Employment Act. It is Singapore’s main labor law and outlines employee rights, work roles, and employer obligations.
The Employment Act covers workers who fall under the following categories:
It does not cover domestic workers, civil servants, or seafarers. Such workers must adhere to the terms and conditions of their contract of service.
Work roles are clearly defined in the act. Managers and executives are those who have major leadership and supervisory responsibilities because they devise strategies and make critical decisions regarding remuneration, recruitment, termination, assessment, and discipline. Under this act, managers and executives include highly skilled and educated workers, such as lawyers, accountants, dentists, and doctors.
The Employment Act states that a workman is someone who spends most of their work time engaging in manual labor, even if they do have some supervisory duties. A workman is also someone who operates commercial vehicles. A variety of people are considered workmen under this law; these include:
Van, bus, and train drivers
Bus and train inspectors
Machinery and metalworkers
Machine assemblers and operators
Moreover, the Act informs workers of their right to:
Days of rest
The Act stresses that employers must:
Provide their employees with key employment terms (KETs) in writing
Record their employees' hours of work as well as their attendance
Send accurate payments to their employees in a timely manner
Notify employees of their paid leave and holiday entitlements
Offer their employees itemized payslips
Meet CPF payment requirements
The government performs regular physical and digital inspections on employers to check with businesses and organizations are complying with the Employment Act.
Working with remote contractors is different from working with remote employees. You do not have to offer regular wages and benefits packages when you hire a remote contractor in Singapore.
All you have to do to pay remote contractors in Singapore for their work over a certain period, once they submit an invoice to you. However, make sure that you refrain from misclassifying your remote contractors. Misclassification could result in a host of problems such as paying back benefits or wages, legal trouble, penalties, and fines.
There are several ways you can send payments to remote workers in Singapore, including:
Wire transfer: quick, but comes with hefty fees
Check: secure, but is slow to arrive
Money order: trackable, but have low maximum amounts
Digital payment: convenient, but prone to security breaches and technical problems
Bank transfer: safe, but has high exchange rates
If you need to convert your contractors to employees, a global employment specialist like Remote can help you make the switch easily.
You can choose to pay your remote employees in Singapore yourself by setting up a local entity in the country. However, you have to comply with local labor laws and regulations. There's also a risk of your company being considered a permanent establishment, which may become a tax liability.
This is where an employer of record, or EOR, can help. An EORs like Remote can take on the legal burden of hiring and paying full-time employees in another country, so you don’t have to!
Using an EOR is the safest, simplest, and most scalable solution to hiring and paying remote employees in Singapore. For more information on how an EOR can help you grow your business, read our helpful article on when to use an EOR.
Singapore has a highly skilled workforce that can add value to your team and can give you the competitive edge your business needs to succeed. But, there's a lot of time, money, and hassle involved in global hiring — you’ll have to comply with local labor laws and tax practices and make sure you pay your workers on time.
You shouldn't let the legal hurdles and financial challenges of international hiring stop you from finding the best person for the job. An employer of record like Remote can help you hire, pay, and onboard workers in Singapore quickly and compliantly. We can take on your HR responsibilities and make sure your company is compliant with local laws. Plus, our global payroll services can help you seamlessly process contractor invoices and run employee payroll in Singapore. Partnering with Remote leaves you to focus on growing your business!
For practical tips and tricks to get started with your remote hiring, download our guide to hiring remote workers. If you’re ready to get started on your expansion journey with Remote, sign up and start onboarding workers in Singapore today!
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