Hiring Your First Employee in Singapore: Every Obligation That Starts on Day One

Last updated: 6 September 2026 · Author: SBC Team

Once your first employee starts, several obligations begin at once. You must give a written record of the key employment terms within 14 days, issue an itemised payslip with every salary payment, contribute to the Central Provident Fund (CPF) if the person is a Singapore Citizen or Permanent Resident, pay the Skills Development Levy for every employee including foreigners, and hold work injury compensation insurance where the role requires it. None of this scales with company size. A one-person company carries the same duties as a firm of two hundred.

This guide covers what a first-time employer in Singapore faces, in the order it arrives: how the relationship is characterised, which work pass applies to whom, the documents you issue, how CPF works, the levies, the leave, the insurance, the fair-hiring rules, and the annual return you file for every person on your payroll.

Employee or Contractor: Settle This Before Anything Else

The label on the agreement does not decide the question. The Ministry of Manpower (MOM) and the CPF Board look at how the relationship actually operates. If it operates as employment, everything below applies regardless of what the contract is called.

The factors Singapore uses to characterise the relationship include:

• Control. Who decides what work is done, when, where, and how.
• Ownership of the factors of production. Who supplies the tools, equipment, premises and working capital.
• Business on their own account. Whether the person bears a real chance of profit and risk of loss, and serves other clients.
• Integration. Whether the person is part of your organisation or supplies a service to it.
• Substitution. Whether they can send someone else to do the work.
• Method of payment. A fixed monthly salary points to employment; payment on deliverables points away from it.

No single factor decides it. MOM weighs them together, which is why a freelancer with three clients and their own equipment sits outside employment while a full-time “consultant” working your hours on your laptop does not.

Misclassifying to avoid CPF does not work. Contributions attach to the substance of the relationship, and the CPF Board can recover arrears going back years with late-payment interest on top. The Platform Workers Act 2024 narrowed the space further from 1 January 2025 by bringing platform workers into CPF and injury coverage. If an arrangement only makes commercial sense because you are not paying CPF, reconsider it.

Residency and Work Passes: Who Needs What

Singapore Citizens and Permanent Residents need no pass. Everyone else needs one in hand before their first day, and the type follows the salary and skill level of the role.

• Employment Pass (EP) — professionals, managers and executives above the published salary floor, assessed on the COMPASS points framework. No quota, no monthly levy.
• S Pass — mid-skilled staff. Subject to a quota within your workforce and a monthly levy.
• Work Permit — semi-skilled workers in specified sectors, with quotas, levies and sector conditions.
• Narrower routes — the Overseas Networks & Expertise Pass, Tech.Pass, EntrePass and the Personalised Employment Pass serve specific profiles.

Most first hires at a young company fall under the EP, and its salary floors and COMPASS scoring are the part that catches employers out. We cover that framework in our Employment Pass and COMPASS guide, and our Employment Pass services handle the submission. Confirm current criteria on the MOM passes and permits pages before you make an offer.

The Written Terms You Must Issue

Under the Employment Act 1968, you must give written Key Employment Terms (KETs) to every covered employee hired for 14 days or more, within 14 days of their start date. The KETs are a defined list: job title and duties, start date, working hours and rest days, salary period, basic salary and how it is calculated, fixed allowances and deductions, overtime rate, leave and medical benefits, probation and notice period.

Two further obligations start at the first payday:

• Itemised payslips. Issue one with every salary payment, or within three working days of it. The payslip breaks out basic pay, allowances, deductions, overtime hours and pay, and net salary.
• Employment records. Keep the latest two years for current employees. For former employees, keep the last two years for one year after they leave.

Salary is paid at least once a month and within seven days of the end of the salary period. Overtime pay is due within 14 days. The full KETs and payslip requirements sit at mom.gov.sg.

CPF: How It Works for a First-Time Employer

CPF is Singapore’s mandatory retirement, housing and healthcare savings scheme. First-time employers underestimate it more than any other obligation here, so it is worth understanding rather than handing straight to a payroll provider.

Who CPF Is Payable For

You pay CPF for Singapore Citizens and Permanent Residents. You do not pay CPF for foreign employees on an EP, S Pass or Work Permit, because the levy system covers them instead. There is no election in either direction.

Employer Share, Employee Share, and What Moves the Rate

The employer share is your cost on top of salary. The employee share is deducted from the employee’s wages and remitted by you with your own share. For employees aged 55 and below earning above S$750 a month, the shares are commonly 17% employer and 20% employee, a total of 37%. Employees earning between S$500 and S$750 have a phased-in employee share.

Three things change the rate:

• Age band. Rates step down above 55, 60, 65 and 70. The older-worker bands have been rising in announced stages, so this is the figure most likely to be out of date in any guide, including this one.
• PR status and the year PR was obtained. A new Permanent Resident sits on graduated rates for the first two years by default. You and the employee can jointly apply to pay full rates from the start.
• Wage level. Below certain monthly wages the employee share reduces or disappears.

Check the live table at cpf.gov.sg before your first payroll, and again each January.

The Ordinary Wage Ceiling and Additional Wages

CPF is not payable on unlimited salary. Ordinary Wages (OW) are the wages payable for that month, and CPF applies only up to a monthly OW ceiling. That ceiling has risen in annual steps under a schedule announced in 2023, reaching S$8,000 a month from 1 January 2026. Confirm the current figure with the CPF Board rather than relying on the number printed here.

Additional Wages (AW) are payments not made monthly: the annual bonus, a quarterly commission, leave pay. AW carries its own annual ceiling, calculated as the total annual CPF wage ceiling less the Ordinary Wages already subject to CPF that year. A large bonus can therefore fall partly outside CPF, settled at year end.

Registration, Deadline and Late Payment

Before your first payroll you register with the CPF Board for a CPF Submission Number, then submit and pay through CPF EZPay. Contributions are due on the last day of the calendar month in which the wages were paid, with a grace period to the 14th of the following month. Late payment attracts interest at 1.5% per month subject to a minimum charge. Employer guidance sits at cpf.gov.sg/employer.

The Skills Development Levy

The Skills Development Levy (SDL) is separate from CPF and applies to every employee rendering services in Singapore: local and foreign, full-time and part-time. It is charged at a small percentage of monthly total wages with a floor and a cap per employee per month, and paid to the CPF Board alongside your CPF submission. An employer whose only staff are work-pass holders still owes SDL monthly despite paying no CPF at all. Confirm the current rate, minimum and maximum on the CPF Board’s SDL page.

The Leave Entitlements That Begin

Statutory leave under the Employment Act 1968 starts once the qualifying service period is met, not on day one.

• Annual leave. Payable to covered employees after three months of service, starting at seven days in the first year and increasing with each further year up to a statutory maximum. You can offer more; you cannot offer less.
• Sick and hospitalisation leave. After three months of service, paid outpatient sick leave and a larger hospitalisation entitlement apply, pro-rated between three and six months of service. The employee must be certified by a company-appointed doctor or one at an approved public healthcare institution, and must inform you within 48 hours.
• Public holidays. Eleven gazetted public holidays a year. If the employee works one, you owe an extra day’s salary or a day off in lieu.

Above these sit the government-paid family schemes: maternity, paternity, shared parental, adoption, childcare and unpaid infant care leave. Eligibility, duration and reimbursement turn on the child’s citizenship, the parents’ service period and the birth or adoption date. Several are part-way through announced increases, so read the current position on the MOM leave pages rather than any summary. Where leave is government-paid, you pay the employee first and claim reimbursement after.

Work Injury Compensation Insurance

Under the Work Injury Compensation Act 2019 you must hold work injury compensation insurance for every employee doing manual work, whatever they earn, and for non-manual employees earning at or below a monthly salary threshold set by MOM. Cover is optional above that line, but the liability is not. If an uninsured employee brings a valid claim, you pay the compensation yourself. For an office-based hire on a professional salary, insuring is a commercial choice; for physical work it is a legal requirement.

Fair Hiring Obligations

The Tripartite Guidelines on Fair Employment Practices require recruitment and selection on merit: skills, experience and ability to do the job. Advertisements must not state preferences on age, gender, race, religion, marital status, family responsibility or disability. The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) investigates complaints, and MOM can curtail an employer’s work pass privileges as a consequence.

The Fair Consideration Framework separately requires you to advertise the role on the national jobs portal, MyCareersFuture, for a minimum period before submitting certain work pass applications, unless an exemption applies. The advertisement must reflect the real job and a real salary range. Parliament has also legislated on workplace fairness with commencement staged after passage, so check where that stands on MOM’s fair employment pages.

Income Tax: What You File for Every Employee

You do not withhold monthly income tax in Singapore. You report earnings once a year instead. By 1 March you prepare a Form IR8A for every employee covering the preceding calendar year: salary, bonus, allowances, benefits-in-kind and employer CPF where relevant.

Under the Auto-Inclusion Scheme (AIS), employers above a stated headcount must submit that information electronically to the Inland Revenue Authority of Singapore (IRAS) by 1 March, and it flows straight into the employee’s tax return. Smaller employers hand the employee a hard copy, though joining AIS voluntarily is usually simpler once payroll software is running.

When a foreign employee leaves, a separate obligation applies. You file Form IR21 for tax clearance at least one month before they cease employment or leave Singapore, and withhold monies due to them until IRAS issues clearance. Skip it and you become liable for the unpaid tax. Guidance sits at iras.gov.sg.

Citizen or PR Hire Versus Work-Pass Hire

Most obligations apply to both. The differences concentrate in contributions, levies and exit filings.

The Practical Setup List

Before the first payday, put four things in place:

1. A payroll process. It must calculate CPF by age band and PR status, apply the wage ceilings, produce a compliant itemised payslip, and pay salary within seven days of the salary period ending.
2. CPF registration and EZPay access. Obtain your CPF Submission Number before the first month closes, not after you have missed a deadline.
3. A leave record. Track annual, sick, hospitalisation and family leave taken and remaining, per employee. You need it at year end and if MOM asks.
4. Employee data handling under the PDPA. Data collected to manage the employment relationship is treated differently from marketing data under the Personal Data Protection Act, but the protection, retention-limitation and breach-notification duties still apply, and you must appoint a data protection officer. Guidance sits with the Personal Data Protection Commission.

Frequently Asked Questions

Do I pay CPF for a foreign employee on an Employment Pass?
No. CPF is payable only for Singapore Citizens and Permanent Residents. Employees on an EP, S Pass or Work Permit sit outside the CPF system. You still pay the Skills Development Levy for them, and S Pass and Work Permit holders attract a separate monthly foreign worker levy.

When must I give my first employee their terms in writing?
Within 14 days of their start date, for any employee covered by the Employment Act 1968 and hired for 14 days or more. The written Key Employment Terms cover job title and duties, hours, salary and how it is calculated, allowances, deductions, overtime rate, leave and medical benefits, probation and notice period.

Can I hire my first person as a contractor to avoid CPF?
Not if the relationship works like employment. MOM and the CPF Board look at control, ownership of tools, integration, substitution rights and whether the person genuinely carries business risk. Where it is employment in substance, CPF is due regardless of the contract wording, and arrears can be recovered with late-payment interest.

When are CPF contributions due each month?
On the last day of the calendar month in which the wages were paid, with a grace period to the 14th of the following month. Late payment attracts interest at 1.5% per month subject to a minimum charge. Confirm the current interest and enforcement position on the CPF Board employer pages before relying on it.

Does a one-person company have to buy work injury insurance?
It depends on the role, not the company size. Under the Work Injury Compensation Act 2019, insurance is mandatory for every employee doing manual work and for non-manual employees earning at or below MOM’s salary threshold. Above that it is optional, though you remain liable to pay a valid claim yourself if you do not insure.

What do I file with IRAS for my employees each year?
A Form IR8A for each employee by 1 March, reporting the previous calendar year’s earnings. Employers above the stated headcount submit it electronically under the Auto-Inclusion Scheme. When a foreign employee leaves, you file Form IR21 for tax clearance at least one month before their last day and withhold monies due until IRAS clears them.

If your first hire needs a work pass, plan the pass application and the payroll set-up together rather than in sequence. See our Employment Pass services.