Proper Human Resource (HR) due diligence is crucial for firms entering the markets of Southeast Asia.
Ignorance and underestimating the complexities of local labour laws, intricate cultural nuances and unique operating environments can lead to potentially costly mistakes. In turn, these mistakes expose companies to legal and reputational risks. This applies not only to international businesses working with a local partner but also to the hiring of local employees.
In November of last year, the Singaporean Government took action against 15 companies for discriminatory job advertisements. Under the country’s guidelines for fair employment practices, employers who advertise a position requiring a specific attribute, which may be viewed as discriminatory, should ensure that the attribute is indeed a requirement of the job, and state the reason for the requirement in the advertisement, according to the Ministry of Manpower. These companies have to publish online a public apology for 30 days, and are barred from hiring new foreign workers during this 30-day period, as well as for six months following the publication of their apology.
Many overseas companies have chosen to set up their Asian headquarters in Singapore because of its low corporate tax rate, efficient infrastructure and effective commercial laws. However, the rising number of foreign workers in recent years has led to concerns among Singaporeans about job security.
On August 1, the government introduced the Fair Consideration Framework (FCF), which requires any company with more than 25 staff that fills an employment role with a foreigner at a base salary below SGD 12,000 per month (USD 9,597) to prove that it gave qualified Singaporeans a chance to apply. Under the FCF, employers must advertise the relevant role on the Workforce Development Agency’s jobs bank for at least 14 days prior to applying for an Employment Pass for the foreigner who is filling the job.
The Singapore government also said it “will identify and engage firms that may have scope to improve their hiring and career development practices. These firms may include those that have a disproportionately low concentration of Singaporeans at the professional, manager and executive (PME) level compared to others in their industry, or subject to substantiated complaints of nationality-based or other discriminatory HR practices.”
The new rule was implemented at the same time as a change to Employment Pass thresholds. From January 1 this year, employees need to be earning at least $3,300 per month to qualify for an Employment Pass (up from $3,000 a month previously). The rule will not apply to employers with fewer than 24 staff and for roles with a salary of more than SGD$12,000 per month. Intra- and inter-company transfers will also be exempt.
Based on the latest employment data, growth in total foreign workforce (excluding foreign domestic workers and construction workers) grew 0.7% to 753,700 in the six months to June. The full year number is likely to show a slower growth from 2.3% registered between December 2012 and December 2013.