Singapore is a very small country in Southeast Asia with a very big influence. Little more than a city-state, Singapore is home to just 6.077 million people. However, it has a huge economy, with a GDP worth $564.77 billion, and is expected to grow by another 2% in 2025.

The IMF estimates the per capita GDP in Singapore to be $92,930 per year, placing it fourth in the world and making Singapore one of the highest-income countries existing today. Singapore’s growth has been very impressive, with its economy nearly six times the size it was 25 years ago, and more growth is predicted in the near future.

Export Category Export Value (USD)
Integrated Circuits $128 billion
Refined Petroleum $55.4 billion
Gold $18.3 billion
Packaged Medicaments $10.6 billion
Gas Turbines $9.2 billion

Singapore has a labor force of 3.672 million people, representing over 60% of its total population. The country’s education system is one of the top-ranked in the world, and that also means its workers are some of the best educated and most highly skilled. The agricultural sector employs less than 1% of the country’s workforce.

Industry, including electrical and chemical product manufacturing, employs just 14% of workers. Services dominate the economy in Singapore, employing 85% of its workforce in financial services, tourism, business services, trade, and banking. The country’s stability and importance to global trade attract many foreign investors in manufacturing and services.

To ensure their success, many choose to work with Singapore PEOs to help them manage their employees. In this guide, we’ll explain how this relationship works and how it benefits both employers and their employees.

What Are PEOs in Singapore?

A Singapore PEO, or Professional Employment Organization, is a service provider that helps clients employ workers in this country. They provide HR services for their clients’ employees, usually to a much higher standard than most small or medium enterprises (SMEs) can on their own. These services are also quite often more affordable than hiring an in-house HR team in Singapore, especially for SMEs that want to hire just a few local employees. 

When you engage a PEO, you gain a co-employer for your Singaporean employees, one with expert knowledge of the country’s labor laws and experience working with its various authorities. You take on the role of the worksite employer, managing your workers’ schedules and day-to-day tasks. However, you can outsource the rest of your functions to the PEO, which allows you to focus your attention and resources on your company’s core activities.

The PEO will take over your HR functions, including payroll, employee tax management, leave management, and benefits administration. It also helps you maintain compliance with all local tax and employment laws, so your risk of being fined or otherwise penalized for non-compliance is greatly reduced. PEOs use online, cloud-based platforms to deliver most of their services to clients and their employees, no matter where they are in the world.

They also employ experts in HR, accounting, taxes, and law to help their clients stay compliant in Singapore. Another type of provider that offers similar services is a Singapore EOR, or Employer of Record. Both types of providers provide HR and compliance services, but there’s an important distinction between them.

A PEO will act as a co-employer with clients who already own entities in Singapore and can legally hire their own employees. In contrast, an EOR provides the additional service of directly hiring local employees for its clients so that they don’t have to register entities in Singapore. Despite this difference, the terms PEO and EOR are often used synonymously, and many providers can offer both PEO and EOR services to meet their clients’ needs.

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Why Hire Through a PEO in Singapore?

Singapore is a critical part of the global trade network and an important financial center. Even if it didn’t have one of the world’s best-educated labor forces, these factors would be enough to create interest in Singaporean employees. Employing local workers can be quite challenging, but by partnering with a PEO, managing Singaporean employees can be easier, more efficient, and more cost-effective.

Your PEO partner will help you make sure that you’re working in total compliance with local labor laws, including regulations like the following:

  • Regular hours: Singaporean employees typically work eight hours a day, though they can work up to nine regular hours on some days if they work fewer than eight on others. They work 44 regular hours a week, maximum, and must be given breaks after working for six hours.
  • Overtime: When employees work more than their normal hours, they must be paid 150% of their normal wages for their overtime work. They cannot work more than 12 hours per day, including overtime, and can’t provide more than 72 hours of overtime per month.
  • Annual Leave: Employees in Singapore must be given at least seven days of annual leave, but are only entitled to this leave after they’ve worked for their employers for at least three months. This entitlement increases by one additional day for each year of service provided to the employer, up to a maximum of 14 days.
  • Maternity and paternity leave: Expecting mothers are entitled to 16 weeks of maternity leave. Their employers pay their normal wages for the first eight weeks, and can be reimbursed for this cost. The second eight weeks are paid by the Ministry of Social and Family Development (MSF), to a maximum of 20,000 SGD (Singapore dollars, or roughly 15,500 USD). New fathers who have worked for at least three months are entitled to four weeks of paternity leave. They are paid by their employers up to a maximum of 2,500 SGD/week, and their employers can be reimbursed for these payments.

To work with a PEO, you’ll need to have your own registered entity in Singapore. Luckily, this is one of the easiest places in the world to incorporate a company, with the World Bank ranking Singapore 4th in the world for ease of registration. It normally requires just two procedural steps and no more than two days to complete a registration.

Once that’s complete, however, you need to start the difficult procedure of recruiting, hiring, and onboarding new employees in line with Singapore’s employment laws. To do so, you’d need the help of legal and HR experts, and that’s what a PEO provides, so it saves you from having to create an in-house HR department or consult with lawyers and tax accountants.

Instead, your PEO does it all, managing payroll, mandatory employee benefits, taxes, and paid time off (PTO). Some may offer extra services like additional benefits administration and recruitment services to further lighten your administrative load.

Which Services Do PEOs Provide in Singapore?

Singapore is a big, busy market, and its workers are highly sought-after. Many PEO providers work in this market and typically provide the following core services:

Payroll Management

Processing payroll quickly and accurately is a major challenge for any business. In a foreign country, it becomes even more difficult because of the unfamiliar rules and processes involved. This is why managing payroll is one of the most important services a PEO can provide.

When you work with a PEO, its expert staff will have already incorporated the rules for taxes and deductions in Singapore into a general payroll system. When you hire new employees, they’re each given specific calculations based on their salaries and these deductions.

As their worksite employer, all you need to do is log the days and hours they work, then share this data with the PEO, often through its built-in time-tracking tools. It will run payroll for each pay period, usually calculating and transferring your employees’ salaries in just a few days. Even if you don’t require full PEO services, many offer global payroll management as a separate service you can take advantage of.

Employee Benefits

Singaporean employees are entitled to several mandatory benefits, including breaks, leaves, and public holidays. Your PEO will keep track of these entitlements and schedules for you, only requiring you to approve leave requests as the worksite employer.

Most PEOs also provide employee portals to their platforms, which allow your workers to keep an eye on their benefits as well. Your PEO will also manage contributions to the mandatory Central Provident Fund (CPF) and the optional Supplementary Pension Fund (SPF) at the following rates:

Central Provident Fund (CPF)

Benefit

Employee Contribution

Employer Contribution

Central Provident Fund (CPF)

20% of ordinary wages

17% of ordinary wages

Supplementary Pension Fund (SPF)

Benefit

Rate Limit

Contribution Limit (SGD)

Supplementary Pension Fund (SPF) for citizens

15% of ordinary wages

15,300 

Supplementary Pension Fund (SPF) for foreign workers

35% of ordinary wages

35,700

These SPF limits are for combined contributions from both employees and employers. One SGD (Singapore dollar) is roughly equal to 0.78 USD.

Most PEOs will also offer supplementary benefits, such as private health insurance, life insurance, and pensions. They typically connect you with plan providers and administer these extra benefits for an additional fee.

Tax Compliance

Your PEO will help you calculate and withhold pay-as-you-earn (PAYE) income taxes from your employees’ paychecks. It will normally also remit these funds monthly to the Inland Revenue Authority of Singapore (IRAS) and report to this authority as required. The personal income tax rates in Singapore follow this progressive schedule:

Income (SGD)

Tax Rate

0 – 20,000

0 SGD + 0%

20,000 – 30,000

0 SGD + 2.0%

30,000 – 40,000

200 SGD + 3.5%

40,000 – 80,000

550 SGD + 7.0%

80,000 – 120,000

3,350 SGD + 11.5%

120,000 – 160,000

7,950 SGD + 15.0%

160,000 – 200,000

13,950 SGD + 18.0%

200,000 – 240,000

21,150 SGD + 19.0%

240,000 – 280,000

28,750 SGD + 19.5%

280,000 – 320,000

36,550 SGD + 20.0%

320,000 – 500,000

44,550 SGD + 22.0%

500,000 – 1,000,000

84,150 SGD + 23.0%

Over 1,000,000

199,150 SGD + 24.0%

Recruitment and Employment Contracts

If you need help finding the skilled workers you need in Singapore, many PEOs can help you with recruiting tools and services. Some only provide platform tools and features like applicant tracking systems (ATSs) and candidate selection tools to help you recruit workers more effectively by yourself. Other PEOs offer active recruitment services for clients who want to outsource this function.

Professional recruiters assess your needs and then use their contacts, talent pools, and knowledge of the job market to quickly find you ideal candidates. Most PEOs will advise you on salary bands and benefits you can offer to make your job openings competitive and attractive. They can also help you negotiate terms with your selected candidates, prepare compliant contracts, and get them signed.

In Singapore, contracts carry a lot of weight as labor laws are relatively relaxed. Fixed-term contracts are allowed with few restrictions, but they cannot last longer than five years, including renewals. Probation periods are not mandated by law, but are commonly used and often last three to six months. Probation terms must be included in employee contracts, and employers are legally able to pay workers less or require them to work more hours during these periods.

Onboarding

You’ll need to onboard your new hires to your organization. Your onboarding tasks will normally include providing orientations, training, access to tools and systems, and introducing them to their coworkers and supervisors. Your PEO will take care of administration. It will collect their documents and personal information to create their profiles, add them to your payroll, set up salary payments, and register them with the IRAS and CPF.

Terminations

Your PEO will work as an advisor when you need to terminate workers in Singapore. It will help you calculate and provide notice periods, as well as severance pay if necessary. Most workers, except those dismissed for gross misconduct, must receive between one day and four weeks of notice, depending on their length of service. Severance pay is not mandated in Singapore, but it will need to be provided if included in employee contracts.

Advantages of Using a PEO in Singapore

More and more foreign investors are choosing to engage PEOs when they hire in Singapore because of the following advantages they can receive:

  • Quick market entry: By onboarding new hires in just a few days, most PEOs can help you enter the Singaporean market extremely quickly.
  • Cost savings: PEOs can provide top-quality HR services for far less than the cost of building an in-house HR team, especially for smaller businesses. 
  • Risk mitigation: PEOs monitor local laws, create compliant contracts, and manage your interactions with the authorities, helping you stay safe and compliant in Singapore.
  • Focus on core activities: Outsourcing your HR and compliance functions to a PEO helps you focus your resources on the key activities that produce value for your business.

Steps to Engage a Singapore PEO

To start working with a PEO in Singapore, simply follow these basic steps:

1

Select a PEO

Choose a reputable provider that provides all the services you require in Singapore without exceeding your budget.

2

Arrange a Consultation

Meet with your chosen provider to explain your needs and receive a detailed quote for its services.

3

Sign a Service Agreement

Once terms are agreed, enter a monthly or annual service agreement with the provider. You can then start hiring and onboarding new employees.

Partner With a PEO in Singapore To Expand Your Business Successfully

Singapore is a leading global hub for finance, trade, and innovation. Its highly skilled workforce, strong infrastructure, and business-friendly environment make it an attractive destination for companies looking to expand in Asia. However, navigating employment regulations and compliance can be complex. A PEO can help simplify the process.

Not sure which PEO is right for your business in Singapore? Remote People provides reliable and compliant PEO services that simplify hiring, payroll, and HR management. Let our experts help you build and manage your Singaporean team with confidence. Contact us today to get started!