How To Start An Employment Agency In Singapore

An employment agency is a business that assists people and other businesses with their hiring and recruitment needs and represents the employing firm in negotiations with possible employees. An employment agency often handles the placement of both domestic and international job seekers, from entry-level positions all the way up to executive-level positions.

Singapore has been inviting foreign nationals to work in the country, from middle management and executive level positions to manual labor. There are now numerous placement agencies of all sizes as well as large headhunting firms, which are helping Singaporean businesses in managing their staffing requirements.

Before beginning commercial operations, any employment agency in Singapore must get an Employment Agency License (EAL). All recruitment companies must have this fundamental license, which is overseen by Singapore’s Ministry of Manpower (MOM).

WHO NEEDS AN EMPLOYMENT AGENCY LICENSE?

The Employment Agency License is required for all organizations and people conducting employment agency business in Singapore. This is true whether the agency is headquartered in Singapore or elsewhere and whether it handles jobs there or elsewhere. Activities of employment agencies include the following:

• contacting potential applicants to discuss their job applications;
• assembling the resumes of potential people who are looking for work;
• placing applicants with employers, and submitting Singapore Work Visa
• applications to the authorities on behalf of employers or candidates.

Agencies are excluded from requiring an employment agency license if they are not actively involved in matching job seekers with businesses or if their influence over hiring policies is minimal. Such entities include, for instance:

• Individuals who do ad-hoc, informal, or casual job referrals;
• Agencies or centers that match tuition teachers with clients;
• Online job portals and job bulletin boards;
• Courier services that are used in recruitment or job placement activities; and
• Campus placement divisions of Singapore’s autonomous universities.

An employment agency can choose to apply for either a Comprehensive License or a Select License, depending on the type of candidates it works with. The Select License is intended for staffing companies that hire local or international individuals with base salaries of more than S$4,500 per month. All other employment agencies that do not meet the requirements for the Select license should apply for the Comprehensive License.

REQUIREMENTS FOR SETTING UP AN EMPLOYMENT AGENCY

• Registering a Singapore company – In order to engage in recruitment activities, the applicant must first form a Singapore company and choose a business activity code that is appropriate for those activities. Refer to Singapore company registration for more information.
• Setting up a business office – The business must set up an operational office. Depending on the business goals and budget, the applicant can choose from a variety of office space options. If they want to expand on or change a conservation building, they must get permission from the Urban Redevelopment Authority (URA) of Singapore. If they want to put up signs on the conservation building, the applicant must first get permission from the Building and Construction Authority (BCA). The Singapore Civil Defence Force must give its approval before the applicant can carry out any fire safety work.
• Applying for an Employment Agency License – The business must get an Employment Agency License from the Singapore Ministry of Manpower, either a Comprehensive License or a Select License. Only legal entities are eligible to receive the license; individuals are not.
• Paying security deposit – Companies that receive a Select License are required to provide a S$20,000 security deposit in the form of a banker’s guarantee, whereas organizations that receive a Comprehensive License must provide a S$60,000 security deposit.
• Certification of employment agency personnel – All employees (whether permanent, temporary or on a contractual basis), including key appointment holders (e.g. CEO, CFO, COO, General Managers), must be certified under the Certificate for Employment Intermediaries (CEI) course in order to work in an employment agency that has been granted a Comprehensive License. Prior to acquiring an employment agency license, certification is necessary.

Key appointment holders must complete the 40-hour training, while other employees of employment agencies must complete the 32-hour course. It should be noted that certification of important appointment holders is required, regardless of whether they operate with employment agencies or not. Only if they carry out tasks relating to employment agencies all other staff members must be certified.

• Registration of employment agency personnel – No matter if they work for Comprehensive licensed agencies or Select licensed agencies, all employment agency personnel, including key appointment holders, who perform employment agency-related work must register with the Singapore Ministry of Manpower and receive a standardized registration card.

At any given moment, a worker can only be registered with and work for one employment agency. Each registration requires a one-time payment of S$160 that is non-refundable. There is no employer-to-employer transfer of the registration. The employee of a certain recruitment firm who wants to change careers and join another agency must cancel their registration and reapply for registration with the new business. If key appointment holders and other agency staff do not do employment agency-related tasks, registration is not necessary.

• Eligibility criteria for employment agency personnel – Personnel employed by employment agencies, including those with critical positions, must be a Singaporean citizen, a permanent resident of Singapore, or a foreigner with a current work visa for Singapore. She also has to be certified, if necessary. In addition, the applicant should not have any court convictions or bankruptcy.

APPLICATION PROCEDURE FOR EMPLOYMENT AGENCY LICENSE

The application process entails delivering an application form and licensing application fee to the Ministry of Manpower.

For licensing applications for employment agencies, the processing time ranges from one to three weeks. If the application is accepted, the applicant will receive an email with an in-principle approval (IPA) letter attached. The following paperwork must be submitted following receipt of the IPA letter in order for the license to be granted:

• Obtain a Banker’s Guarantee for a Security Bond from a Singaporean bank. The applicant must open a fixed deposit (FD) account with the bank in the specified amount in order for the bank to grant you a Banker’s Guarantee. The banker’s guarantee must cover 15 months from the start date.

In addition to the Security Bond, the following documents will be required: 

• A clear copy (both sides) of the Singapore ID (for Singapore Citizens and Permanent Residents) or the applicant’s Employment Pass.
• Latest copy of the company’s business profile from ACRA
• A recent passport-size photograph
• Copy of the In-Principle-Approval letter
• Copy of approval letter from the relevant authority if they will be operating under the HomeOffice scheme
• A copy of the certificate stating that the applicant has passed the Certificate for Employment Intermediaries (CEI) course
• Completed checklist form
• Any additional documents requested in your In-Principle-Approval letter.

The applicant should receive an email notifying that the application has been approved within seven days of submitting the required paperwork, providing that all of the documents are in order. A payment of S$100 must now be made in order for the license to be issued. The original application’s address will get a letter with the license. After the initial three years, the license is renewed every three years.

Employment agencies must follow the updated Employment Agency Rules. Changes to fee caps and a new fee refund procedure are among the changes. The alterations’ specifics are as follows:

Fee cap

If the fee is within the established fee cap, employment agencies may charge their clients (i.e., the employer and the chosen candidate). The amount that can be charged to employers for services won’t be capped. For the term of the authorized work permit or the employment contract, whichever is shorter, the fee charged to the candidate who is chosen for employment should not, however, exceed one month’s wage every year.

A maximum of two months’ worth of income may be used for this. The fee cap will apply to all agency fees collected by Singaporean employment agencies, regardless of whether they were obtained directly from candidates or through an intermediary recruitment agency abroad.

Fee refund

The employment agencies are required to return 50% of the candidate’s agency fees if the employer (who was a customer of the employment agency) fires the employee (who was employed via the employment agency) before the candidate has completed six months of employment.

If a candidate initiates the end of their job, this regulation does not apply. If the foreign worker’s job ends before being repatriation or within 7 working days after that point, the hiring agency must reimburse the payments.

REASON FOR REJECTED EMPLOYMENT AGENCY LICENSE APPLICATIONS

In most cases, there shouldn’t be any justification for rejecting the application provided that the applicant accurately filled out the employment agency license application. However, if the application is turned down for some reason, all hope is not lost.

Within 30 days, the applicant can submit a letter of appeal. A senior officer will consider the appeal, and it could take one to two weeks to process. Depending on the circumstances, the applicant could be asked to submit extra papers in support of the application.

ADVANTAGES OF STARTING AN EMPLOYMENT AGENCY IN SINGAPORE

• Growing Demand – Singapore’s economy is growing, which means that there is a growing demand for workers. This creates a need for employment agencies to help connect employers with job seekers.
• Lucrative Market – The employment agency industry in Singapore is a lucrative market with the potential for high profits.
• Low Entry Barriers – Starting an employment agency in Singapore does not require a large amount of capital or a physical office. This makes it easier for new entrants to enter the market.
• Government Support – The Singaporean government provides support for employment agencies, including funding and training programs.

DISADVANTAGES OF STARTING AN EMPLOYMENT AGENCY IN SINGAPORE

• Competition – There is a high level of competition in the employment agency industry in Singapore. This means that it can be difficult to establish a strong foothold in the market.
• Strict Regulations – The Singaporean government has strict regulations on the employment agency industry. This includes licensing requirements, fees, and compliance with various laws and regulations.
• Reputation – The reputation of the employment agency industry in Singapore has been tarnished in recent years due to a number of high-profile cases of abuse and exploitation of foreign workers. This can make it difficult to establish trust with both employers and job seekers.
• Labor Shortages – Singapore has a low unemployment rate and a shortage of skilled labor in some industries. This means that it can be difficult to find suitable candidates for job openings, which can impact the success of an employment agency.

Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance with your employment agency in Singapore.