An employment contract in Singapore is a fundamental instrument that outlines the terms and conditions governing the relationship between an employer and an employee. It clarifies, ensures mutual understanding, and establishes expectations for both parties.
Given Singapore’s well-structured labour framework and dynamic workforce, understanding the intricacies of employment contracts holds significant importance.
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Singapore’s primary labour legislation, the Employment Act, sets out the minimum terms and conditions for employment, as well as the rights and responsibilities of both employers and employees. This legislation offers a robust framework for ensuring fair treatment and practices within the workplace.
The act covers essential components like working hours, rest days, salary periods, notice periods, and various employee benefits such as sick and annual leave.
An employment contract, or an employment agreement, is a legally binding document between an employer and an employee. It specifies the key employment terms, covering various aspects like job responsibilities, remuneration details, probation period, and other mutually agreed terms and conditions.
While the Employment Act sets out the basic standards, the employment contract can provide additional benefits or stipulations if they do not contradict the act’s provisions. It’s common practice in Singapore for employers to clearly lay out every term to prevent ambiguities or misunderstandings in the future.
While the foundational principles of the employment contract remain consistent, there exist some key differences between contracts for local and foreign workers:
Tax Implications: Foreign employees might have different tax considerations, which can be detailed in the employment agreement to ensure compliance with Singapore’s tax regulations.
An employment contract will cover many details depending on the job. However, a fair employment contract will have the following details:
Every employment contract in Singapore typically starts with the basic details. This encompasses the names of both the employer and the employee, the job title the employee will be taking on, and the date on which employment commences.
An integral part of any employment agreement is the detailed description of the job’s scope and responsibilities. It clarifies what is expected from the employee and provides a benchmark for performance evaluations.
Central to the employment contract are the terms of remuneration. This section outlines the basic salary, additional bonuses, overtime pay, and other financial benefits. Furthermore, the employment contract should also specify the salary period, whether monthly, bi-weekly, or otherwise, and the chosen payment method through cheque, bank transfer, or cash.
This segment details the standard working hours an employee is expected to commit to and the designated rest days. It is common practice in Singapore to also mention any terms related to overtime, such as the pay rate and conditions under which it applies.
Many employment contracts include a probation period during which both the employer and the employee can assess the suitability of the working relationship. This section outlines the length of this period and the terms related to the evaluation and potential confirmation post-probation.
Benefits are an integral part of the employment contract. This includes annual and sick leave stipulations, pay computation if a public holiday falls on a rest day, and other types, such as parental or compassionate leave. The discussion of annual wage supplements should also be discussed.
Additionally, details about medical or retirement benefits and any other perks or insurances the employer provides are mentioned here.
Most employment contracts will have a list of terms that you should always double check. These are set within the contract to protect you and the employer’s business. This could mean the potential revelation of company secrets, termination clauses due to poor performance, and penalties to such that do not amount to dismissal.
As businesses evolve, there might be a need to modify certain terms of the employment contract. As agreed upon by both parties, the correct procedures to enact these changes should be detailed in the contract.
There are situations where altering the contract might be necessary and others where it isn’t permissible. The employment contract should define these scenarios to prevent potential conflicts.
Any variations or amendments to the employment contract require the mutual agreement of both the employer and the employee. Unilateral changes can be deemed invalid and could lead to legal disputes.
In Singapore, the termination of an employment agreement can occur for a variety of reasons. The Employment Act stipulates the conditions under which both an employer and an employee can validly terminate an employment contract.
For employers, common grounds include:
Employees, on the other hand, can also initiate termination based on reasons such as:
It’s worth noting that while these are some common grounds, the specifics of each employment agreement might provide additional terms or clarity.
Ensuring a fair dismissal is paramount in maintaining the employment contract’s sanctity and adhering to the Employment Act. The common practice in Singapore involves:
Upon the termination of the employment contract, employees in Singapore have certain rights that employers must respect:
The employment contract outlines key employment terms, expectations, rights, and obligations that both parties agree upon.
A clear understanding of the clauses, especially around sensitive topics like termination and non disclosure agreements, safeguards the interests of both the employer and the employee.
Individuals must diligently understand their employment rights and responsibilities in Singapore in a fast-evolving employment landscape. The intricacies of the Employment Act and the various clauses in employment contracts can sometimes be complex.
If you face uncertainties regarding workplace issues, engaging with a professional lawyer is wise. Allow The Singapore Lawyer to help you understand the complexities of employment law and ensure your rights are upheld.
Contact us today and get a 30-minute free consultation.
The notice period varies based on the employment contract. iIf unspecified, a reasonable notice period can range from 1 day to 4 weeks, depending on the duration of service.
Non-compete clauses can be enforceable if deemed reasonable in scope, time, and geography, but they are subject to scrutiny by Singapore Courts.
If an employee is only working less than 35 hours a week, they are considered part-time and will have prorated rights based on their working hours, but they are protected under the same Employment Act.
While verbal agreements are valid, it’s recommended to have a written employment contract to clearly define the terms and protect both parties’ interests.
Employees are entitled to 11 paid public holidays annually; however, the employment agreement should specify the treatment of work on public holidays.
Yes, deductions are allowed unless stipulated in the employment contract, or with the employee’s written consent.
Jonathan is the Founder and Managing Director of Tembusu Law. He is also the founder of LawGuide Singapore, a prominent legaltech startup which successfully created and launched Singapore’s first legal chatbot in 2017.
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