What is an employer of record (EOR)?
An employer of record (EOR) is a third-party company that handles employment responsibilities for workers on behalf of another business. Instead of setting up a legal entity in Singapore, an EOR becomes the official employer while you maintain control over daily work activities and performance management.
What are employer of record services?
EOR services manage all legal employment requirements, including payroll, taxes, benefits and compliance with local labour laws. The EOR acts as the official employer on paper, handling contracts, work permits and regulatory submissions, while the company directs the employee's actual work.
This arrangement streamlines international hiring by removing the need to establish local subsidiaries or navigate complex employment regulations. Companies can hire talent in Singapore without understanding every detail of local employment law, visa requirements or tax obligations.
How does hiring through an EOR work?
The EOR process creates a three-way relationship between a company, the EOR provider and the employee. Key steps in the process include:
- Choosing an EOR provider. Select a provider with Singapore expertise and experience in your industry.
- Defining employment terms. Work with the EOR to create employment contracts that meet Singaporean legal requirements while reflecting your company's needs.
- Onboarding the employee. The EOR handles contract signing, work permit applications and CPF registration. Your company manages job-specific training and work activities.
- Ongoing management. The EOR processes payroll, handles tax filings and ensures compliance. Your company maintains direct management of work assignments and performance reviews.
- Contract changes or termination. Employment changes go through the EOR for legal compliance, while your company makes business decisions.
This structure separates legal employment responsibilities from operational management, allowing companies to hire quickly while maintaining control over work quality and business outcomes.
What are the benefits of an EOR?
Faster market entry and expansion.
EOR services eliminate the time needed to establish a Singaporean subsidiary. Companies can hire employees within weeks instead of waiting for legal entity setup and regulatory approvals. Companies can hire one employee or 50 through the same EOR relationship, supporting business growth without additional legal structures.
Simplified compliance.
Singapore employment law covers work permits, CPF contributions, employment contracts and termination procedures. Employment mistakes can result in penalties, legal disputes or visa problems. EOR providers handle these requirements automatically, reducing the risk of costly violations.
Reduced setup costs.
Setting up a Singaporean subsidiary involves legal fees, registration costs, office requirements and ongoing administrative expenses. EOR services provide immediate access to Singaporean talent without these upfront investments.
Expert local knowledge.
EOR providers understand Singapore's unique requirements, such as work permit categories, CPF contribution rates and employment termination procedures. This expertise prevents common mistakes that delay hiring.
What alternatives to EOR exist?
Direct subsidiary setup.
Establishing a Singaporean subsidiary provides complete control over employment practices. This works best for companies planning a significant long-term presence with multiple employees.
Professional employer organisations (PEO).
PEOs share employment responsibilities rather than becoming the sole legal employer, providing more operational control while offering compliance support.
Independent contractors.
Hiring contractors avoids employment relationships entirely, though Singapore has strict classification rules. Suitable for project-based work or short-term assignments.
Regional service companies.
Some businesses establish regional hubs in Singapore to serve multiple Asian markets, combining subsidiary benefits with broader geographic coverage.
The right choice depends on hiring volume, timelines, control requirements and long-term business plans.
Are there any legal and compliance considerations?
Singapore employment law governs working hours, overtime pay, annual leave and termination procedures. The Employment Act sets minimum standards.
Foreign employees require work authorisation through Employment Pass, S Pass or Work Permit categories, each of which has different salary thresholds and qualification requirements. EOR providers can handle these applications.
Employers must contribute to employees' CPF accounts at rates varying by age and employment type. Singapore requires income tax withholding, Skills Development Levy payments and foreign worker levy contributions, where applicable.
The Personal Data Protection Act (PDPA) governs employee information handling, requiring consent for collection, secure storage and proper disposal processes.
Working with qualified EOR providers ensures compliance across all areas through current regulatory knowledge and automatic updates.
What are the common challenges when using an EOR?
EOR providers offer standardised employment packages that may not match specific company benefit preferences, affecting employee satisfaction in competitive markets.
Service levels vary between providers. Some handle basic compliance while others provide comprehensive HR support. Mismatched expectations can create operational problems.
Complex pricing structures may include hidden fees for visa applications, contract changes or termination processing, causing costs to exceed estimates.
The three-way relationship can create communication delays or confusion about responsibilities. Workers may struggle to understand the relationship between their legal employer (EOR) and their manager. Providers may not understand company culture, potentially creating conflicts in employment practices.
EOR systems may not integrate with existing HR platforms, creating duplicate data entry and reporting complications.
Choosing experienced EOR providers with strong communication systems and transparent pricing helps minimise these challenges.
What is the future of EOR in Singapore's global economy?
Singapore's position as Asia's business hub makes it a natural centre for EOR services supporting regional expansion. The government's pro-business policies encourage international companies to use Singapore as their Asian headquarters.
Technology integration.
Modern EOR platforms integrate with global HR systems, providing real-time payroll data, automated compliance tracking and seamless onboarding.
Regulatory evolution.
Singapore continues to update employment regulations to attract global talent. Recent changes to work permit categories and remote work policies reflect the government's commitment to remaining competitive.
Regional expansion support.
EOR providers are expanding capabilities to support companies using Singapore for broader Asian operations, including multi-country payroll services and regional compliance management.
Digital transformation.
Cloud-based EOR platforms eliminate manual processes, reduce errors and provide better visibility into employment costs and compliance status. The future of EOR services in Singapore will focus on technology-enabled solutions that support complex global employment arrangements while maintaining compliance expertise and local knowledge that are valuable for international expansion.
Workday provides HR software solutions to help you manage workforce policies, compliance and talent transitions seamlessly.