SINGAPORE – Expats in Singapore who work for foreign entities via a third party known as an Employer of Record (EOR) will have to explore new options to extend their stay. This is in light of restrictions clarified by the Ministry of Manpower.

Companies looking to do business in Singapore that lack a legal presence in the city state have to work with EORs to manage the complexities of international recruitment, onboarding, compensation & benefits, and compliance on their behalf.

For years, global enterprises entering the Singapore market have benefitted from the solutions offered by EORs, so much so that the EOR sector was valued at an estimated US$1.9 billion in 2023 and is expected to reach US$3.7 billion by 2030.

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EORs barred from sponsoring work permits in Singapore

However, foreign companies cannot enlist an EOR to sponsor the employment permit of workers who are neither citizens nor permanent residents of Singapore, the MoM said.

On one hand, a foreign company engaging an EOR can only hire local talent. On the other hand, foreign talent wishing to remain employed in the city state can only work for local businesses – following visa and labour regulations, such as the granting of work permits.

The MoM reminds employers: “Work passes are for foreigners to work for Singapore-based companies. To be based in Singapore for an extended period, foreigners will need to be hired by their company on a regular work pass.”

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Exploring other hiring options for non-Singapore talent

These restrictions mean non-Singaporean entities will have to explore other options to hire non-Singaporean talent, according to Chris Anderson, who is part of the international employment practice group at US law firm Jackson Lewis PC.

“A question that often comes up in our international employment and mobility practice is whether and to what extent an EOR can sponsor an individual for a work permit in the country where the individual will work. This issue typically comes up when an entity does not have a legal presence in that country and needs the EOR (who does have a local legal presence) to employ the individual,” Anderson explained.

In most countries, if the talent up for hire is not a citizen or permanent resident of the host country, then the business will need the EOR to sponsor the individual for a work permit.

“Historically, EORs in Singapore could sponsor individuals for various work passes (Work Permit, S Permit, and Employment Pass) depending on the individual’s training and salary level,” Anderson said.

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“However, the MoM has expressly stated on its website that EORs may no longer sponsor expatriates to work in Singapore for an overseas company. The MoM states that doing so would be a legal violation.

“As a result, US and other non-Singapore entities wanting to engage an individual in Singapore who is not a Singapore national or permanent resident will need to consider other options, such as setting up a representative office or other legal entity presence that can legally sponsor the individual for the applicable work pass,” he said.

What options do foreign businesses have? The MoM recommends:

• Setting up a representative office through Enterprise Singapore’s (ESG) Representative Office scheme
• Incorporating a company with the Accounting and Corporate Regulatory Authority (ACRA)

“Alternatively, if the foreigner wishes to explore business opportunities in Singapore, they can apply for a Short-Term Visit Pass (STVP) to attend company meetings, corporate retreats or meetings with business partners for up to 90 days each year,” the MoM said.