Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
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A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Singapore can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Singapore, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Singapore.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Singapore is not the same as paying workers in your own country. Employees have to be paid using Singapore’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
If an employee works a 5-day work week, a workday is up to 9 hours a day or 44 hours a week.
If an employee works a 6-day work week the workday is up to 8 hours.
For employees who are covered by the Employment Act, an employee must be paid 150% of the hourly basic pay of rate for any overtime hours.
Only the following employees are entitled to overtime:
A non-workman earning up to $2,600.
A workman earning up to $4,500.
Employer
Employee
up to 20,000 - 17%
above 320,000- 22%
Salaries are paid monthly, within 7 days of the end of the salary period.
“13th month payment” is called AWS. It is not compulsory.
PTO is calculated by the:
There are 11 public holidays. If a public holiday falls on a non-working day, the employee should either receive a day’s salary in lieu of the holiday or an extra day off. If the holiday falls on a rest day, the upcoming workday will be a paid public holiday.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
The employee must inform their employer within 48 hours of inability to work and must provide a medical certificate upon return.
Paid maternity leave of 16 weeks is provided to female employees employed for more than 3 months prior to giving birth and the child is a Singaporean citizen. During this period, employers are prohibited from terminating the employment.
For the first and second child, the first 8 weeks are paid by the employer and additional 8 weeks can be reimbursed by the government.
For the birth of the third child and more, all 16 weeks of maternity leave can be reimbursed by the government.
If the child is not a Singapore citizen, maternity leave is 12 weeks
Paternity leave in Singapore is 2 weeks. To meet the requirements of Government-paid Paternity Leave (GPPL), the child must be a Singapore citizen and the father has or was legally married to the mother between the conception and birth of the child.
In the case the child is adopted, the father is also eligible for paternity leave if the child is a Singapore citizen.
Parents are entitled to 6 days paid childcare leave yearly if their youngest child is below the age of 7 and a citizen of Singapore.
Work-Related Injury Leave – The employer covers all work-related injuries that an employee has suffered either directly or through insurances.
The employee should receive 100% of their average monthly earnings in the 12 months prior to the disability for 14 days if not hospitalized.
After 14 days they shall receive 66.7%. As of September 1, 2020, all work-related medical leave must be reported to the Ministry of Manpower.
Marriage Leave is Not a Statutory Entitlement Under the Singapore's Employment Act.
Most companies offer paid leave if it is for just a few days, but may offer part-paid or unpaid if the bride or groom plans for longer periods of time.
The standard amount of paid days off given by companies is usually 3 days.
Singapore law does not mandate compulsory compassionate leave. The common practice is to offer at least 2 to 3 days of paid compassionate leave.
In the event of a termination of a local employee, the employee’s salary must be paid:
Employee resigns and serves the notice period: On the last day of employment
Employee resigns without notice and no notice period is served: Within 7 days of the last day of employment
Termination due to misconduct: On the last day of employment, however, if this is not possible, the employee must be paid within 3 business days.
Employer terminates the employment contract: On the last day of employment, however, if this is not possible, the employee must be paid within 3 business days.
The notice period in Singapore is:
1 day notice for less than 26 weeks of employment
1 week notice for employees who have been employed more than 26 weeks and less than 2 years
2 weeks’ notice for employment of more than 2 years and less than 5 years4 weeks’ notice for over 5 years of employment
The severance payment includes all the salaries and benefits due at the last day of employment. If the employee has been employed for at least 2 years, they are entitled to receive “retrenchment benefits”.
The amount given to the employee depends on what is agreed upon in the employment contract or collective agreement when applicable.
In general, retrenchment benefits are usually between 2 weeks to one month for every year the employee has served at the company.
Probation period is optional but common practice is 3-6 months.
