Employers of Record in Singapore: A Critical Overview
By Nicole Evangeline Poh
In recent years, Singapore’s globalised economy has seen the use of Employers of Record (EORs) — local entities that hire and pay employees on behalf of other organisations, particularly foreign ones without a legal presence in Singapore. However, a policy pronouncement by Singapore’s Ministry of Manpower (MOM) on 9 July 2024 has cast uncertainty over the legality of EOR arrangements for foreign employees working for foreign organisations with no presence in Singapore. This article examines the legal status of EOR arrangements under Singapore law, in particular, where EORs are used by foreign organisations to employ foreign workers in Singapore. It evaluates the regulatory risks and explores the options available to such businesses currently relying on EOR structures.
MOM’s Policy Position on Employers of Record
On 7 November 2023, in response to a question posed by Mr. Leong Mun Wai, a Non-Constituency Member of Parliament (NCMP), in Parliament, the Minister for Manpower stated that:
“A worker who is employed by an Employer of Record is considered an employee as long as there is a contract of service between the worker and the EOR, and they are accorded the entitlements under the Employment Act. This applies even though the workers perform work for the EOR’s client.”[1]
In a further clarification published on the MOM’s website in 2024, the Ministry expressly stated that:
“Employers of Record are not allowed to apply for work passes for foreigners to be based in Singapore while working for overseas companies without local presence in Singapore; and Employers of Record that apply work passes for foreigners to be based in Singapore while working for overseas companies would be committing an offence.”[2] (emphasis in bold).
The latter pronouncement has caused significant concern among businesses that engage foreign employees through Singapore-based EORs to service offshore clients, particularly given the potential implications for corporate compliance, employee continuity, and reputational risk. Importantly, this policy appears to be a clarification rather than a newly minted position, as no corresponding legislative amendments were introduced contemporaneously with MOM’s pronouncement. Despite stating a breach of its policy position constitutes an offence, MOM has also not identified the statutory basis of the said offence. A policy position alone cannot create an offence, which requires a statutory basis. This raises two questions – first, what offence exactly does MOM believe would be committed by EOR arrangements, and second, if MOM is unable to specify a specific offence, is its policy position legally enforceable?
The Legislative Framework
The legality of EOR arrangements hinges on compliance with statutory regimes governing employment, foreign manpower, taxation, and workplace safety. These include the:
1. Employment Act 1968 (the EA)
The Employment Act recognises employment relationships based on a “contract of service.”[3] EORs that enter such contracts with employees are recognised as the legal employer and are bound by statutory obligations, such as payment of salary, provision of leave, and compliance with dismissal regulations.
2. Workplace Safety and Health Act 2006 (the WSHA) and Work Injury Compensation Act 2019 (the WICA)
Under the WSHA[4] and the WICA[5], the legal employer (i.e., the EOR) is responsible for workplace safety compliance and compensation. Thus, EORs must ensure that employees’ wellbeing are safeguarded according to the statutory protections, even if the work site is managed by the client.
3. Central Provident Fund (CPF) and Tax Law
EORs must make CPF contributions for resident employees. [6] For foreign employees not covered under CPF, the EOR remains responsible for its tax compliance and other statutory contributions, such as Skills Development Levy [7] and foreign worker levy. [8]
4. Employment of Foreign Manpower Act 1990 (the EFMA)
The principal statute to be considered in evaluating the legality of EOR arrangements for foreigners in Singapore is the EFMA, which governs the employment of foreign manpower in Singapore, as well as the issuance and validity of work passes. MOM’s policy clarification on EOR arrangements concerning foreign employees for foreign companies suggests that EOR arrangements involving foreign employees are illegal unless the EOR is a Singapore-registered entity that directly employs and sponsors the employee.
However, there is nothing in the EFMA and its subsidiary legislation that expressly states that there is a prohibition against foreigners in Singapore being issued work passes for the purposes of working for overseas companies with no presence in Singapore.
There is also, to-date, nothing in case law that reflects MOM’s articulated policy position, or any known prosecutions of such EOR arrangements.
This article examines the provisions in the EFMA pertaining to the valid employment of foreigners in Singapore.
Section 5(1) of the EFMA provides that a person (natural and non-natural, including companies) must not employ a foreigner without a valid work pass. A contravention of this section constitutes an offence under section 5(6) of the same Act, which imposes fines of between $5,000 to $30,000 and/or imprisonment for up to 12 months, with enhanced penalties for repeat offenders.
The term “valid work pass” is defined in sections 2 and 12 of the EFMA to mean a work pass that is:
Issued for a specific employer and foreign employee;
Applicable to the trade, sector, or occupation specified in the pass or in the work pass application; and
Inclusive of any other trade or activity for which the Controller has given express approval.
This definition raises a core issue in the EOR context — if the foreign employee, although in law employed by a Singapore entity (the EOR) for the purposes of the EFMA, is in fact working for a foreign client with no Singapore presence, can it still be said that the pass is “valid”?
Legal Ambiguity and Interpretive Risks
On a plain reading, an EOR may not have contravened section 5(1) of the EFMA if it has engaged or used the services of the foreign employee for the purpose of work under a contract of service, merely because it assigned its employees to foreign companies without a presence in Singapore.
At present, it is unclear what, if any, statutory provision supports MOM’s policy position. Moreover, there is a notable absence of case law or enforcement precedents that reinforce MOM’s position. Accordingly, there is legal uncertainty as to whether such EOR structures actually breach Singapore law.
Potential Offences under EFMA
That said, MOM could potentially argue that EOR arrangements undermine the integrity of the work pass system, and do not constitute a “valid work pass” within the meaning of the EFMA. Specifically, where an employer fails to disclose:
that the foreign employee is providing services to another (i.e., an end-client),
the identity of such end-client, as well as
its trade, sector, occupation or type of employment,
it could be argued that there is no genuine employer-employee relationship between the Singapore EOR and the foreign employee. This could arguably invalidate the work pass under section 5(1) of the EFMA, and an employer of such EOR arrangements may face prosecution under section 5(6) of the EFMA.
Apart from section 5(1), MOM could potentially invoke section 22(1)(d) of the EFMA, which criminalises the provision of false or misleading information to the Controller of Work Passes or authorised officer or employment inspector (officers of the MOM). Misleading such MOM officers include failing to provide material information. This could arguably include situations where an EOR applies for a work pass for a foreign employee while omitting to disclose that the foreign employee is assigned to work for a different company. In such cases, MOM could contend that the omission constitutes a misrepresentation which misled MOM into approving the work passes on the basis that the foreign employee was only working for the EOR, rendering the work pass improperly obtained.
The penalty under section 22(1)(d) is a fine of up to S$20,000 and/or imprisonment for up to 12 months.
Additionally, under section 25(3) of the EFMA, employers who inadvertently, or without intent to mislead or defraud, provide inaccurate or erroneous information to MOM may still be subject to a financial penalty not exceeding S$20,000. Section 25B of the EMFA also gives MOM’s Controller of Work Passes the power to issue directions requiring the employer to take remedial action, with non-compliance amounting to an offence punishable by a fine of up to $10,000 and/or imprisonment of up to 12 months.
Administrative Penalties: A Parallel Enforcement Track
Even in the absence of criminal prosecution, MOM retains significant administrative powers. This means that even if a court finds that MOM does not have the necessary legal backing to support its policy position, MOM may still be able to levy administrative penalties on employers that do not abide by its policy position.
MOM’s Controller of Work Passes retains the broad discretion under section 7(5) of the EFMA to revoke work passes, debar employers from hiring foreigners by rejecting future work pass applications for potential new hires, or reject employers’ requests to renew existing employee’s work passes. Such sanctions may be devastating to businesses reliant on foreign talent, crippling an employer’s workforce and work outputs, and thereby affecting their contractual and employment obligations. MOM may also publish the employer’s name on a blacklist, causing potential reputational damage. Importantly, administrative penalties may be imposed concurrently with, or independently of, criminal proceedings: MOM can initiate prosecution action against an employer and impose administrative penalties on an employer – it does not have to choose only one of these two options.
That being said, whether or not such administrative penalties can stand up to judicial scrutiny is a separate issue for the Singapore courts to determine, should an employer decide to apply for judicial review against MOM.
As such, EORs employing foreign workers under EOR structures are exposed not only to prosecution risk, but also to practical and reputational harm if MOM chooses to act.
Legal Exposure for Clients and Officers
Liability is not confined to the Singapore EOR. Under section 20 of the EFMA, officers of a company may be personally liable where offences are committed with their consent or as a result of their neglect. Moreover, the foreign clients who benefit from the services of these employees may be liable as abettors under the EFMA.
This expansive liability framework makes it imperative for both Singapore-based EORs and their offshore clients to ensure compliance with Singapore law.
Options for Compliance and Risk Mitigation
Given the legal and administrative risks, EORs who arrange for foreign employees based in Singapore to work for overseas companies must consider restructuring their employment models. MOM has suggested two potential paths[9] for regularising foreign employee arrangements:
Representative Office – The foreign client may establish a representative office in Singapore under Enterprise Singapore’s scheme. This allows the foreign entity to conduct limited business development activities and employ staff locally, though it cannot engage in direct commercial transactions.
Incorporation of a Local Entity – Alternatively, the foreign client may incorporate a Singapore company via the Accounting and Corporate Regulatory Authority (ACRA). This allows for full commercial operations and employment of staff with appropriate work passes.
In both scenarios, the foreign client must directly employ the relevant workers, ensuring transparency with MOM about the true employer-employee relationship. Such suggestions by MOM are targeted at the foreign client and may not be practical for companies which do not wish, or are not equipped or ready to establish presence in Singapore. These suggestions are also not practical or beneficial for the local EOR as it eliminates its business function, as well as its necessity and relevance to the client-entity.
In the interim, EORs may also consider applying for short-term visit passes (up to 90 days) for staff, or relocating employees to jurisdictions with more flexible employment regimes. If none of the above options are feasible, the EORs may also consider terminating the employment contracts of the foreign employees.
Notice Periods and Renewals: A Practical Consideration
Where employment contracts are to be terminated or restructured, EORs must observe the contractual notice periods. This is especially critical for employees whose work passes are nearing expiry, and which are due for renewal. It is possible that MOM may take more serious enforcement action against EORs who renew the work passes of foreign employees who are working for overseas companies after MOM’s policy clarification in 2024, as it shows intention in subsisting in such employment arrangements despite MOM’s expressed position.
Judicial Scrutiny
A key issue that remains, is whether MOM’s policy pronouncement can withstand judicial scrutiny if challenged.
The first aspect, as outlined above, is whether or not there is a statutory offence that reflects MOM policy position. If there is no statutory offence, MOM will not be able to draft a charge for that purpose.
If there is no such offence, and MOM prosecutes an EOR on the basis that a foreign employee was hired on the basis of a work pass that was “not valid” and/or on the basis of “false declarations” made to MOM, it is open to a court whether it wishes to accept the prosecution’s characterisation that an EOR (or any business or company for that matter) has any obligation to disclose to MOM where or to whom they deploy their employees. It is up to a court to find reasonable doubt in the interpretation of the statute. The burden of proof will be on the prosecution to prove that an offence was made out, beyond reasonable doubt.
An EOR could potentially argue that there is no express legal prohibition against assigning employees to work for foreign clients, especially where the EOR maintains an active employment relationship and fulfils all statutory obligations. Whether this succeeds would turn on the exact factual matrix. Such defence also entails reputational risk and litigation cost, and may not be attractive for companies seeking regulatory certainty.
Regardless of whether MOM chooses to prosecute EORs for arrangements, which do not align with its policy position, another question remains.
If MOM undertakes punitive administrative action against companies which do not align with its policy position, in the absence of a clear statutory basis, would this be a legitimate exercise of its administrative powers? The Singapore courts have long recognised the limits of administrative discretion[10], and it may be unreasonable for MOM to exercise its administrative powers to impose punitive action on EORs if there is no clear statutory backing for its policy position.
Conclusion
The legal status of EOR arrangements for foreigners in Singapore working for overseas companies remains ambiguous. While MOM has articulated a clear policy position, the statutory framework does not currently provide explicit support for that stance. In this legal grey zone, EORs and their clients face significant exposure — not only to prosecution, but also to administrative sanctions that may severely disrupt operations and the livelihoods of its foreign employees.
Until legislative reforms provide clarity, businesses must make risk-based decisions. The safer course is to regularise employment arrangements in line with MOM’s expectations, either by incorporating local entities, establishing representative offices, or terminating such arrangements. In doing so, companies can avoid regulatory entanglement while preserving their operational agility.
A suggestion for MOM is to clearly articulate the statutory basis of the offence it described in its clarification in 2024, or move legislative amendments to align its policy and legal positions. The risk to MOM in not doing so is the possibility of legal challenge to its enforcement actions (if any).
Ultimately, the EOR model may still have a place in Singapore’s business ecosystem—but only within a transparent, legally compliant framework that aligns with both the letter and spirit of Singapore’s foreign manpower laws.
This article was first published on the Law Gazette in July 2025 and is re-produced with permission.
Disclaimer: The information provided does not constitute legal advice and does not purport to give rise to a lawyer-client relationship. You are fully responsible for seeking specific legal advice from a lawyer before taking any legal action. Should you require legal advice, you may contact us at info@covenantchambers.com.
Endnotes
[1] “Written Answer to PQ on Employers of Record (EOR) and Protection for Employees of EORs”, published 7 November 2023, https://www.mom.gov.sg/newsroom/parliament-questions-and-replies/2023/1107-written-answer-to-pq-on-employers-of-record-and-protection-for-employees-of-eors (Last accessed on 3 July 2025).
[2] “Can Employers of Record in Singapore apply for work passes for foreigners to be based in Singapore while working for overseas companies”, published 9 July 2024, https://www.mom.gov.sg/faq/work-pass-general/can-eor-in-sgp-apply-for-work-pass-for-foreigner-to-be-based-in-sgp-while-working-for-overseas-coys (Last accessed on 3 July 2025).
[3] Section 2 of the Employment Act 1968 defines “contract of service” to mean “any agreement, whether written or oral, express or implied, whereby one person agrees to employ another as an employee and that other agrees to serve his or her employer as an employee and includes an apprenticeship contract or agreement”.
[4] Section 12 of the Workplace Safety and Health Act 2006 sets out the duties of employers at workplaces.
[5] Section 7 of the Work Injury Compensation Act 2019 sets out an employer’s liability to compensate for an employee’s work injury.
[6] Section 7 of the Central Provident Fund Act 1953 sets out the contributions employers must make in respect of employees.
[7] Section 3 of the Skills Development Levy Act 1979 sets out the imposition of levy on employers.
[8] Section 11 of the Employment of Foreign Manpower Act 1990 and Paragraph 3 of the Employment of Foreign Manpower (Levy) Order 2011.
[9] “Can Employers of Record in Singapore apply for work passes for foreigners to be based in Singapore while working for overseas companies”, published 9 July 2024, https://www.mom.gov.sg/faq/work-pass-general/can-eor-in-sgp-apply-for-work-pass-for-foreigner-to-be-based-in-sgp-while-working-for-overseas-coys (Last accessed on 3 July 2025).
[10] Chng Suan Tze v Minister for Home Affairs (1988) 2 SLR(R) 525 at (86).