Article
3 min read
Employer of Record Singapore: Retain Foreign Talent Under MOM Regulation
Employer of record
Legal & compliance
Author
Jemima Owen-Jones
Published
August 06, 2024
Last Update
December 11, 2024
Table of Contents
What is the Ministry of Manpower’s recent clarification?
What does this clarification mean for overseas companies hiring foreign employees in Singapore through EOR providers?
What can overseas companies do to hire foreign employees legally in Singapore?
Accelerate local entity setup in Singapore with Deel
Key takeaways
- Overseas companies cannot engage foreign employees who reside in Singapore through an Employer of Record (EOR).
- To retain foreign talent in Singapore, these companies can incorporate a new entity within the country, allowing them to sponsor work passes for their foreign workers.
- Deel can offer accelerated entity setup and management, global payroll, and HR consulting and compliance so you can support foreign employees and operate compliantly in Singapore.
Singapore’s vibrant business environment attracts global talent, but recent clarifications from the Ministry of Manpower (MOM) have impacted the hiring landscape for overseas companies using Employer of Record (EOR) services.
The clarification affirms that EOR providers cannot secure work passes for foreign employees residing in Singapore, presenting challenges in talent retention and recruitment for businesses.
With extensive expertise in global payroll, HR compliance, and entity management, Deel is well-equipped to help navigate these changes.
This article outlines practical solutions, including establishing a local entity to sponsor work passes, relocating talent, or pursuing permanent residency pathways.
By using Deel’s streamlined entity setup and compliance support, your business can remain compliant and gain access to top talent in Singapore’s competitive market.
What is the Ministry of Manpower’s recent clarification?
On 9 July 2024, Singapore's Ministry of Manpower (MOM) clarified that Employer of Record service providers are not permitted to apply for work passes of their foreign employees to work for overseas customers. This clarification means that foreign employees cannot be legally hired by overseas customers through an EOR in Singapore.
This clarification does not affect EOR employees who are citizens or permanent residents of Singapore.
What does this clarification mean for overseas companies hiring foreign employees in Singapore through EOR providers?
Overseas companies cannot hire foreign employees who require work passes to operate in Singapore through an EOR service.
What can overseas companies do to hire foreign employees legally in Singapore?
Hiring foreign employees as independent contractors is not a viable solution. The Employment Pass and Personalized Employment Passes required to operate in the country are employment-based and do not permit the worker to contract with an overseas company.
Instead, foreign companies may consider the following options to engage foreign talent in Singapore:
Option one: Obtain employer-sponsored work passes via your own entity in Singapore
Hiring employees in Singapore from abroad to reside there for an extended duration requires overseas employers to form a local entity. They can sponsor the necessary Employment Pass for their foreign talent through this local entity.
Steps involved:
- Step one: Set-up a new entity that is incorporated in Singapore. Navigating this process independently can be complex and time consuming without the assistance of consultants who are experts in this field and aware of the local practices and requirements. It is also important to note that you will require ongoing assistance for the life of the entity to, for example, ensure corporate, financial and tax governance. Following incorporation of the new company Deel is able to facilitate the ongoing management of the new company.
- Step two: Apply for Employment Passes for your foreign talent. It’s important to note that Employment Pass holders are subject to specific local quota restrictions. Speak with a immigration expert before taking this step
- Step three: Source a global payroll provider to process your payments and payroll taxes for your workers quickly and compliantly through your new Singapore entity.
Get a local presence
Accelerate local entity setup in Singapore with Deel
Option two: Support relocations and visas to alternative countries
If setting up a local entity does not align with your expansion plans, consider relocating international talent to your headquarters or another location. Connect with an immigration expert to streamline this process.
Option three: Support foreign talent in becoming permanent residents or citizens of Singapore
If your foreign talent applies for permanent residency or citizenship in Singapore, they will not be subject to this law. Connect with an immigration expert to explore this option.
Deel Immigration
Accelerate local entity setup in Singapore with Deel
To help your Singaporean workforce remain in the country, Deel has mobilized priority support for local entity setup. Deel’s end-to-end service will help you set up and maintain a legal presence in Singapore and assist in obtaining the necessary employment passes for your foreign talent.
FAQs
Does the new regulation apply to specific types of worker permits in Singapore?
The MOM’s recent clarification states that EOR providers cannot apply for work passes for their foreign employees to work for overseas companies. Here’s a list of all the employment visas collectively referred to as “work passes” under the applicable laws.
This means MOM’s clarification applies to all types of passes eligible for work in Singapore.
Can overseas companies use alternative staffing solutions to retain foreign employees?
No. Labor supply and staffing of foreign employees for overseas customers are also not allowed.
Can overseas companies transition foreign EOR employees to independent contractors?
No. Foreign EOR employees usually hold either an Employment Pass or a Personalized Employment Pass. Neither permits the worker to contract with the client since they are employment-based visas.
I am a local citizen or permanent resident of Singapore. How does the MOM labor regulation clarification impact me?
If you are a local citizen or permanent resident of Singapore, the MOM labor regulation does not impact you. You can be legally hired through an EOR in the country and work for an overseas company.
I am a foreigner living in Singapore. How does the MOM labor regulation clarification impact me?
If you are a foreign employee living in Singapore, overseas companies cannot legally hire you through an EOR. To remain in the country long-term, a Singapore-based employer must hire you directly, or you can apply for permanent residency or citizenship.
About the author
Jemima is a nomadic writer, journalist, and digital marketer with a decade of experience crafting compelling B2B content for a global audience. She is a strong advocate for equal opportunities and is dedicated to shaping the future of work. At Deel, she specializes in thought-leadership content covering global mobility, cross-border compliance, and workplace culture topics.
