The 4 key employment terms

It is essential for all employers to have a good understanding of employment terms in Singapore, the benefits and responsibilities when hiring an employee. Having an in-depth understanding of employment terms will help you as an employer deliver the best experience to all employees and keep them away from struggles. 

Employment terms allow both parties to clearly understand their obligations and duties, which in the employer’s case, is to ensure that all the rights of the employees are met. When you have a mutual understanding with your employee, it strengthens the relationship you have with your employee, allowing for effective work production. On top of that, it will help you gain success as an employer.

Let’s take a quick look at some of the most important employment terms that you should be mindful of. 


One of the very first things to note about employment terms is that under the Employment Act, all salaries must be paid at least once a month. However, employers can choose to pay it at shorter intervals. Additionally, the salary should be paid to the employee within seven days after the end of the salary period. However, there are exceptions such as overtime, resignation without notice and other situations. For overtime work, the salary must be paid within 14 days after the end of the salary period.

Working Hours

The average workweek is 5 days, with employees working up to 9 hours a day. Alternatively, the contractual hours of an employee are up to 44 hours a week. For employees who have a six-day workweek, working hours should be restricted to 8 hours a day. 

For employees who work less than 44 hours every alternate week, their contractual hours can be up to 48 hours a week but capped at 88 hours in any continuous 2-week period.

Additionally, in the case of shifts up to 12 hours a day, the contractual work hours are up to an average of 44 hours per week over a continuous 3-week period. For employees who are not shift workers but have agreed to work 12 hours a day, the employer must be aware of the requirements put in place. 

The employees have to give their consent in writing, with the provisions of Sections 38 and 40 of the Employment Act explained to them, as well as being informed of their daily working hours, number of working days in each week and their weekly rest day.

In the case where an employee is working beyond their contractual hours, employers will need to pay overtime. In Singapore’s Employment Act, it is clearly defined that an employee should be paid 150% of the hourly rate for each extra hour worked. However, not everyone is eligible for overtime. Employees can only claim overtime if they are a workman who earns under $4,500 or a non-workman who earns up to $2,600 per month.


Employees are entitled to paid annual leave after having worked for their current employer for at least three months. Their yearly leave entitlement depends on how many years of service they have with their employer, whereby they should be offered at least seven days from their first year of service. However, most employers provide generous annual leave that ranges between 14 and 20 days, which is the required number for employees in their 8th year of service and thereafter.

Additionally, under the Employment Act, employees are entitled to 11 paid public holidays in a year. In the case where a holiday falls on a rest day, the next working day will be a paid holiday. Likewise, sick, maternity, paternity, shared parental, and childcare leave should be provided to the employees as well.

Employees are eligible for 16 weeks of paid maternity leave provided they meet the following requirements; the child is a Singapore citizen, they have served their current employer for a continuous period of at least 3 months before the birth of their child. Alternatively, for those self-employed, they have to be engaged in their work for at least 3 continuous months and have lost income during the maternity leave period. Employees also have to give their employers at least a week’s notice before going on maternity leave and informed them as soon as possible of your delivery. Otherwise, you are only entitled to half the payment during maternity leave, unless you have a good enough reason for not giving the notice.

Eligible working fathers are entitled to 2 weeks of paid paternity leave funded by the Government, provided they meet the following requirements. The child is a Singapore citizen, and they are or had been lawfully married to the child’s mother between conception and birth. They have to have served their current employer for a continuous period of at least 3 months before the birth of their child. For self-employed working fathers, they have to be in your work for a continuous period of at least 3 months before the birth of their child and have lost income during the paternity leave period. Adoptive fathers are also entitled to Government Paid Paternity Leave (GPPL) if they meet the above requirements. Working fathers are also able to apply to share up to 4 weeks of their wife’s 16 weeks of Government Paid Maternity Leave, subject to their wife’s agreement. Additionally, the child has to be a Singapore citizen, and the child’s mother has to qualify for Government Paid Maternity Leave. They also have to be lawfully married to the child’s mother.

Employees are also entitled to both paid outpatient sick leave, and hospitalisation leave if they have worked for at least 3 months with their employer and have informed or tried to inform their employer within 48 hours of their absence. Additionally, to qualify for paid sick leave, they must be certified to be unfit for work by a medical practitioner registered under the Medical Registration Act or Dental Registration Act.

Alternatively, paid hospitalisation leave is intended to cover the period that a hospital doctor deems that an employee requires hospital care, in cases when the employee is either warded or underwent day surgery, when the employee is not hospitalised but requires bed rest (e.g. pregnancy-related complications), or when the employee requires rest or further medical treatment for the condition after his discharge from the hospital to recover. There may also other specific circumstances such as Quarantine Orders as required by law which would qualify employees for hospitalisation leave. 

Paid hospitalisation leave is not an extension of paid outpatient sick leave. Therefore, to qualify for paid hospitalisation leave the employee has to be warded in a hospital as an in-patient or for day surgery, quarantined under any written law or certified by a medical practitioner who can admit patients into an approved hospital.


The variable component of an employee’s wages includes the 13th-month bonus, otherwise known as the Annual Wage Supplement (AWS). The AWS is a single annual payment on top of the employee’s total annual wage and is limited to a one month’s salary. 

The AWS is not compulsory, and there are no stringent rules put in place. Payment depends on the employment contract or collective agreement. Employers are encouraged to give their employees AWS to reward them for contributing to the company’s performance, however the employer reserves the right to negotiate for a lower amount of AWS if business performance is exceptionally poor for the year. 

Duration of Employment

The Employment Act of Singapore does not have specific clauses which define the probation period of employees. However, the standard practice of employers in Singapore is to designate employees under a period of probation which typically ranges between 3 and 6 months. As the length of period which an employee can be designated to be under probation depends on the employer, the employment contract must also specify this information accordingly.

The employment contract should also specify a notice period, which the employee must serve when resigning, or they would have to pay compensation in lieu of notice. This is equivalent to the salary that the employee would have earned during the required notice period.

A termination letter is mandatory, any notice of termination either by the employer or employee has to be in writing. Without a termination letter, an employee is still considered as an employee of the company. 

If the employment contract did not specify the notice period, the notice period would depend on the employee’s length of service. For employees who have served for less than 26 weeks, the notice period is a day. For those who have served 26 weeks to less than 2 years, the notice period is a week. Employees who have worked for 2 years to less than 5 years have to serve a notice period of 2 weeks, with those having a length of service of 5 years or more has to serve a notice period of 4 weeks. The notice period includes the day on which the notice is given, as well as public holidays, rest days and non-working days.

The notice period can be waived by mutual consent between the employer and employee, or alternatively, either employer or employee may terminate employment without notice when the terms of employment have been breached. The party that breached the terms of employment must pay compensation in lieu of notice.

Employees may leave without notice if their employer fails to pay their salary within 7 days of it being due. However, you should check with your employer why payment hasn’t been made before deciding whether to leave. On the other hand, employees are considered in breach of contract, and their employer can terminate employment without notice, if they are absent from work continuously for more than 2 working days without approval and a good excuse, or informing/attempting to inform their employer of the reason.


As an employer, you can qualify for tax deductions or exemptions by implementing portable medical benefits. Portable medical benefits are medical benefits that employees can bring with them if they change employers. This is different from non-portable medical benefits, which are lost when employees stop working or change employers. If you, as an employer, implement any of the 3 portable medical schemes, you will get a higher tax deduction for medical expenses of total employees’ remuneration. 

Under the Portable Medical Benefits Scheme (PMBS), you make an additional contribution to your employees’ MediSave account every month, where your employees will be able to use that contribution to pay for the premiums of MediShield Life or Integrated Shield Plans, which can help to cover their in-patient needs. You need to implement PMBS for at least 20% of your local employees as at the first day of the financial year being assessed and for all local employees who start their employment during that financial year, to qualify for a 2% tax deduction limit.

Another scheme is the Transferable Medical Insurance Scheme (TMIS). TMIS is an enhanced group hospitalisation and surgical insurance that you can buy for your employees. It extends in-patient coverage up to a maximum period of 12 months when an employee leaves employment. You need to implement TMIS for at least 50% of local employees as at the first day of the financial year being assessed, to qualify for the 2% tax deduction limit.

The last scheme is providing a Shield plan, under this scheme you can provide your employees with in-patient medical benefits in the form of a Shield plan, either MediShield Life or an Integrated Shield Plan, and pay the premium of the Shield plan on behalf of your employees. Premiums may be pro-rated based on the period of employment for employees who do not work the full 12 months of the financial year. If an employee already has an Integrated Shield plan, you can credit the amount of premium of the Integrated Shield Plan the company has chosen into the employee’s MediSave account. You need to provide Shield plans for at least 20% of your local employees as at the first day of the financial year being assessed and for all local employees who start their employment during that financial year, to qualify for the 2% tax deduction limit. Alternatively, you need to pay the Shield plan premiums on behalf of your employees, either by paying the insurance company directly or reimbursing the amount of premium into your employees’ MediSave accounts.

How to manage all these employment terms as an employer?

As you can see, being an employer is not an easy job. You need to pay attention to numerous aspects and manage the payments made to the employees. Things become complicated when you are trying to calculate the payroll, manage leave deductions, pay overtime and the bonuses. This is where an employer can think about using a suitable software tool.

DashBod is a tool that can help you manage all your accounting and finance related work with minimum effort and struggle. You will be able to manage everything in a single centralised platform and enjoy all the amazing benefits that come along with it. 

The accounting function available with DashBod will help you ensure seamless integration, along with the inventory and HR functions of your business. You will be able to overcome all complexities that are associated with employee management with DashBod’s help.

Additionally, DashBod also assists your company’s process automation. All you need to do is define some data and rules before automating, and the tool will work according to your configurations and gets your work done by the end of the day! For example, you can define the salaries, deductions, and overtime rates on DashBod, and you will be able to get the working hours of an employee and payroll calculated. It is also possible to define the salary structure and other deductions such as social contributions and CPF information.

So, if you are an employer, taking a look at DashBod is one of the best things to do. 

Explore DashBod now and get to know the amazing benefits that come with it. 

DashBod will help you to propel your business to greater heights!