Employee Compensation and Benefits in Singapore

In the dynamic landscape of Singapore's employment market, understanding and effectively managing employee benefits and compensation is paramount for employers seeking to attract, retain, and motivate top talent. 

As one of the leading global business hubs, Singapore boasts a highly competitive labour market where skilled professionals are in high demand. In this environment, offering attractive benefits and fair compensation packages serves as a tool for organisations to remain competitive. But more than that, it  plays a crucial role in fostering employee satisfaction, engagement, and loyalty. 

With LinkedIn citing that 93% of organisations are concerned about employee retention, it follows that employers must work with intention to increase their desirability as an employer among professionals with high standards and expectations in the job market.

What is Compensation?

Compensation is defined as the money an employee receives in exchange for their labour, which could be in the form of a salary, wages, commissions, and bonuses.

Types of Compensation

• Hourly compensation or Wages: This type of compensation is traditionally associated with unskilled and semi-skilled labour; it is when the worker is paid the agreed upon rate for every hour they work.
• Salary: This type of payment, unlike wages, is fixed; that is, it is paid regularly regardless of the number of hours worked. So, this applies to most regular office workers and managerial roles today. 
• Commission: This is most commonly used in sales roles, and is paid as a percentage of the target amount that is sold or accomplished by the worker.
• Bonuses: Bonuses refer to typically incentive-based remuneration or payouts that reward staff for their performance. The better the performance, the better the bonus. 

What are Employee Benefits?

The main difference between compensation and benefits is that compensation is standard and applies to all workers, regardless of their situation. Benefits on the other hand, are the employer’s prerogative. It is possible for an organization not to provide their employees any benefits. However, companies, especially in competitive markets like Singapore, use benefits to motivate employees, increase engagement, and improve performance. They are also a way to accommodate various needs that team members have, such as allowing for flexible work-setups.

Smaller businesses may include fewer benefit components in their employment packages, but most bigger businesses and government agencies offer comprehensive packages.

Benefits are generally quite valuable to employees. With salary offers being generally equal for particular professional roles, a potential hire may turn to your company’s benefits package to help them decide whether to sign with you or not.

Examples of Employee Benefits

• Health Insurance Policy: This can be medical coverage, life insurance, or other variable types of insurance products that the company pays for, or in part for, on behalf of their employees.
• Paid Time Off: Also referred to as “Annual” or “Vacation Leaves” and “Medical” or “Sick Leaves”. Employers in most markets including Singapore usually begin with a standard number of hours for paid time off of their regular employees. These may increase over the period of a person’s employment or with their rank in the company.
• Long-term Performance Incentives: These are rewards or compensation structures designed to motivate and incentivize employees based on their sustained performance over a long period of time. Unlike short-term incentives, which focus on achieving immediate goals or targets, long-term performance incentives are tied to achieving strategic objectives, enhancing company value, and driving sustainable growth over the long term. These can come in the form of bonuses or other benefits.
• Retirement benefits: These are financial arrangements or compensation provided to employees upon their retirement from the workforce. They are designed to support individuals financially during their retirement years, when they are no longer actively earning income from employment. Retirement benefits typically include pension plans, where employees receive regular payments based on their years of service and salary history, as well as contributions to retirement savings accounts. 

In Singapore, such contributions are typically provided via the Central Provident Fund or CPF (more on this below). 

• Wellness programmes: More businesses are investing in corporate wellness initiatives, such as subsidised gym memberships, providing nutritious meals in-office, mental health support, and other employee assistance programmes. This is  based on the concept that when companies engage in their employees' wellness and well-being, they experience increased employee satisfaction, morale, and productivity.
• Work-from-home, Flexible Hours, and Hybrid work set-ups: In places like Singapore where many people must commute each day from home in suburban areas to work in the city centers, flexible working set-ups make it easier for employees to accomplish work and outputs even outside of the workplace. Especially in the post-pandemic work landscape, more employees than ever before consider flexible work set-ups that give them more control over their work time. Employers may opt to shorten in-office hours, allow work-from-home on certain days, or allow flexible “clock-in” and “clock-out” times throughout the work day.
• Professional development and continued education: Resources, opportunities, and financial support provided by employers to help employees enhance their skills, knowledge, and expertise throughout their careers. These benefits are aimed at fostering continuous learning, growth, and advancement within the workforce. They may include funding for tuition reimbursement, workshops, seminars, conferences, online courses, or certifications.

By investing in professional development and continued education benefits, employers demonstrate a commitment to the ongoing growth and success of their workforce.

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What Employee Benefits are Mandatory in Singapore?

In Singapore, the following are mandatory benefits that employers must provide:

• Healthcare/health insurance: Provided for under the Central Provident Fund
• Retirement Pension: Also under the Central Provident Fund
• Annual leave: This typically begins with 14 days for annual leave per year, and may increase with tenure and position
• Sick leave: Usually a separate number of days allocated for time taken off work for medical reasons
• Maternity and Paternity leave: As of 2024, Singapore requires an allowance of 4 months (or 16 weeks) maternity leave, and 2 to 4 weeks paternity leave for eligible parents of newborns.
• Childcare leave: Eligible working parents of Singapore citizen children are entitled to 6 days of paid childcare leave per year. Parents of non-citizens can get 2 days of childcare leave a year in accordance with the Employment Act.

Trends in Singapore Employee Benefits Packages

Singapore’s economy and job market are as vibrant and diverse as their workforce, offering different opportunities across industries.  In demand industries, like technology, finance, and engineering, tend to offer higher salaries (and salary growth rates), as well as premium benefits packages due to the consistent demand for specialised skills and expertise in these areas.

To better differentiate themselves and improve their employee value proposition, businesses are using their benefits packages to attract employees by offering what these job seekers are actively looking for in the context of work right now. 

In particular, with 72% of Singaporean professionals preferring hybrid work, employers must strike a balance between enforcing return-to-office policies, and maintaining flexible work arrangements.

As of 2023, the most popular work benefits included:

• Remote work options
• Wellness programs
• Flexible work options
• Extra paid leave
• Training allowance
• Career development opportunities

Conclusion

In Singapore, the job market and economy have returned to vibrant pre-pandemic levels, but employee values have shifted. It is important to stay up to date on what employees look for when it comes to employment compensation and benefits packages. The more in touch you are with employee needs and preferences in your industry, the better chances of hiring quality talent who will stay with you longer.  

If you are an organization looking to hire top talent in Singapore, let Veremark assist you - particularly when it comes to employee screening and background checks. 

We are also one of a select few Ministry of Manpower-accredited partners for Education Verification checks for your foreign hires’ work pass applications. Contact us to learn more. 

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