The Singapore Ministry of Manpower (MOM) has recently updated its regulations, prohibiting non-Singapore entities from using an Employer of Record (EOR) to sponsor work permits for foreign workers in Singapore. This change has significant implications for U.S. and other non-Singaporean entities looking to engage foreign nationals in Singapore. Under the new rules, entities without a legal presence in Singapore must explore alternative options for employing foreign talent.
Background on Employer of Record Sponsorship in Singapore
Employers of Record have historically provided a convenient solution for foreign entities wishing to employ workers in countries where they do not have a legal presence. EORs in Singapore could previously sponsor individuals for various work passes, such as the Work Permit, S Pass, and Employment Pass, based on the worker’s qualifications and salary level. This arrangement was especially useful for companies needing to quickly and efficiently deploy foreign talent in Singapore without establishing a local entity.
The new regulations from the MOM specifically prohibit EORs from sponsoring employment passes for individuals working for non-Singapore entities. According to the MOM, doing so constitutes a legal violation, effectively closing this pathway for employing foreign nationals. Companies that have relied on EOR services for workforce needs in Singapore must now consider alternative strategies to comply with local employment laws.
New Compliance Requirements
Under the updated guidelines, non-Singaporean companies must establish a local presence in Singapore to sponsor foreign employees legally. This can be done through several avenues:
Setting Up a Representative Office: Companies can set up a representative office under Enterprise Singapore’s (ESG) Representative Office scheme. This allows businesses to have a limited presence in Singapore, primarily for market research and feasibility studies. However, this option does not permit the company to engage in any trading activities or direct business operations that involve profit-making in Singapore.
Incorporating a Local Entity: Companies may also choose to incorporate a new entity through the Accounting and Corporate Regulatory Authority (ACRA). This option provides more flexibility, allowing the company to engage in a broader range of business activities and sponsor work passes directly for foreign employees.
Short-Term Visit Pass (STVP): For temporary needs, such as attending business meetings or conferences, companies may use a Short-Term Visit Pass. This pass allows foreigners to stay in Singapore for up to 90 days for specific business activities but does not permit long-term employment.
These new regulations require companies to reassess their current workforce strategies and consider the most effective way to maintain a presence in Singapore while adhering to local laws. Companies should also be aware that attempting to use an EOR to sponsor work passes for foreign nationals may result in legal penalties for both the EOR and the foreign company.
How HSP Group Can Support You
Navigating these changes can be complex, but the HSP Group is here to help. We offer comprehensive services to assist companies in adapting to the new regulatory landscape in Singapore:
Evaluating Employment Options: HSP Group can help evaluate the best options for employing foreign nationals in Singapore. We provide detailed insights into various visa types and their eligibility criteria, ensuring companies choose the most suitable approach based on their specific needs.
Setting Up and Incorporating a Local Entity: For companies looking to establish a legal presence in Singapore, HSP Group offers support in setting up and incorporating a local entity. We guide you through the process, from choosing the right business structure to filing the necessary paperwork with ACRA. Our team provides all required services to ensure your business complies with local regulations.
Visa Application Support: Navigating the visa application process can be challenging, especially with changing regulations. HSP Group provides end-to-end support for visa applications, helping you gather the necessary documentation, complete the application forms, and liaise with MOM to ensure a smooth and efficient process.
Local Employment Requirements: Understanding local employment requirements is crucial for compliance. HSP Group advises companies on Singapore’s employment laws, including drafting employment contracts and policies that meet local standards. Our team ensures that all documentation aligns with Singaporean regulations, protecting your business from potential legal issues.
Global Mobility and Expatriate Guidance: For companies that frequently move employees across borders, HSP Group offers global mobility and expatriate guidance. We help businesses develop strategies for relocating employees to Singapore, including tax planning, compensation structuring, and compliance with local labor laws.
HSP Group is ready to assist businesses in navigating these changes and ensuring compliance with Singapore’s employment laws. Our comprehensive services, from setting up a local entity to supporting visa applications and providing global mobility guidance, ensure that your business can adapt effectively to the new regulatory environment. For further assistance or to discuss your specific needs, please contact HSP Group.