Singapore’s Ministry of Manpower has recently updated its Employer of Records (EOR), introducing significant changes to the way companies hire foreign workers. Companies can still use EOR for visa sponsorship but they must also have a Singapore legal entity. This change has many implications and will require a new evaluation of the way businesses in Singapore operate. Understanding the new regulations is important for companies that rely on EORs to manage foreign talent.
New Regulations: What You Need to Know
According to the new guidelines issued by MOM, companies from abroad can no longer solely rely on EOR services for visa sponsorship and managing foreign employees. Businesses must have a Singaporean legal entity to maintain their eligibility. The previous system allowed companies to engage talent without having a local presence through EOR. Your foreign workers might no longer be eligible for sponsorship if you do not have a legal entity. This means that businesses must rethink how they approach talent acquisition and workforce planning in Singapore.
The new regulation is designed to reinforce Singapore’s employment market, and ensure that businesses have a permanent and accountable presence within the country. This requirement of a local entity affects not only administrative processes, but also broader strategic considerations about how your company operates on this dynamic market.
What Impact Does Your Business Have?
This shift in regulation brings both challenges and possibilities. As a result, companies without a legally-binding entity could face compliance risks. To avoid legal and staffing issues, companies must act quickly to avoid any potential challenges. Failure to comply with new regulations can jeopardize foreign worker employment and result in penalties.
This change may prompt some companies, to set up a permanent base in Singapore and enhance their position on this dynamic market. Singapore’s reputation for being a global hub of business offers many benefits. These include access to the largest financial market in the world, highly-skilled workforce, and stable regulatory environment. A local entity will help you to take advantage of the opportunities in the region while strengthening your ties.
To adapt to these changes, you must assess your current situation. This may include setting up an entity legally, understanding local laws, and changing your global workforce strategy.
Practical Steps to Compliance
- Assess Impact: Review the current foreign workforce and determine the impact of the new regulations on each employee.
- Consult Experts Speak to legal and HR professionals who are familiar with Singapore employment laws and seek guidance in establishing your legal entity and complying with the law.
- Create a Legal Entity Register your business at the Accounting and Corporate Regulatory Authority, obtain licenses and implement payroll and tax systems that are compliant. AgileHRO is able to help you navigate these complexities.
- Use EOR Services: After you’ve established a local entity you can use EOR services to streamline the administrative process of visa sponsorship.
- Local Talent is Important: As a strategic decision, you may also want to consider Singapore Citizens or Permanent Resident candidates for the positions affected by new regulations. This can mitigate the impact and ensure compliance.
Why it is Important to Act Quickly
Transitioning to the new regulations must be quick. Delays in setting up a legal entity, or in adapting to a new model, can lead to noncompliance. Rapid action is essential to smooth operations and reduce risks.
Transparent communication is also essential during this time of transition. Keep your employees informed of the changes that are being made and the steps taken by your company to ensure compliance. This will boost morale and help you maintain trust and job security within your team.
Explore Alternatives to Moving Forward
The new regulations can present challenges but they also offer opportunities for innovation and growth. Establishing a legal entity is a great way to enhance your company’s reputation in Singapore and to be more competitive in the region.
There are other options for businesses who aren’t ready to make this leap. Partnerships with local companies or a localized talent acquisition approach could be used to bridge the gap. These strategies can be particularly useful during the interim phase as you decide whether creating a legal entity will benefit your business in the long run.
Summary: While Singapore’s new EOR regulations add complexity to managing global workforces, they also provide opportunities for businesses that want to strengthen and reassess their operations strategies. Acting quickly, seeking professional guidance and exploring all options, including leveraging EOR in conjunction with local presence and sourcing talent locally, can help your company continue to thrive in Singapore’s dynamic environment.
AgileHRO will support you in these transitions. We can help you navigate regulatory changes, maintain compliance and ensure your employees are supported.
