Engaging an Employer of Record (EOR) is a brilliant strategy for foreign companies looking to hire talent in Singapore quickly and compliantly. However, the benefits only materialize if you choose the right partner. A non-compliant or unreliable EOR exposes your company to significant legal, financial, and reputational risks.
Due diligence isn’t a formality; it’s your frontline defense. Here is a breakdown of the critical factors you must scrutinize when selecting an EOR provider, particularly in the highly regulated market of Singapore.
1. In-Country Legal Presence and Deep Expertise
This is the non-negotiable cornerstone of a compliant EOR relationship. You need a partner, not a middleman.
Look for a Direct Entity, Not an Aggregator: Many EOR providers are “aggregators” that rely on a network of local partners. A reputable provider will have its own registered legal entity in Singapore. This means they are the true, accountable legal employer with direct control over local payroll and compliance processes. An aggregator adds layers of complexity and risk of miscommunication.
Verify Compliance History with Local Authorities: Inquire about their track record. Ask directly about any past compliance issues, fines, or legal disputes. A clean record demonstrates a serious commitment to regulatory standards.
Demand In-house Local Experts: The best providers invest in dedicated, in-house HR, and payroll teams based in Singapore. This ensures they are constantly up-to-date on the latest changes to the Employment Act, CPF contribution rates, and other mandatory regulations. A generic, one-size-fits-all approach is a major compliance red flag.
2. Transparent Pricing and Clearly Defined Service Scope
Unclear costs can quickly turn a cost-effective solution into a financial headache, eroding the core value of the EOR model.
Clarity on Fees is Essential: Ask for a clear, itemized breakdown of every single cost. This must include the base service fee, any setup or onboarding fees, and potential termination or offboarding charges. Be extremely wary of providers offering unusually low flat rates, which often conceal a long list of add-on fees.
Understand Total Employment Cost (TEC): Your quote must clearly separate the EOR’s monthly service fee from the Total Employment Cost. The TEC includes the employee’s gross salary, mandatory CPF contributions, and any statutory or additional benefits (like insurance). Knowing this distinction prevents shocking payroll surprises.
Pinpoint What’s Included: Get a precise service agreement. Does the fee cover benefits administration, compliant expense reimbursement, or assistance with drafting country-specific employment contracts? Never assume a service is included; get it in writing.
3. Employee Experience and Support Quality
The EOR is the legal face of your company to your new hire. Their service quality reflects directly on your employer brand.
Evaluate the Onboarding Journey: Is their process seamless, professional, and welcoming? Do they provide a comprehensive welcome package that clearly explains the employment relationship, benefits, and local employment regulations?
Demand Responsive, Local Support: How are employee queries handled? A slow or generic response can lead to immense employee frustration and disengagement. Confirm they have a dedicated, local support team that can respond in a timely manner and speak to local nuances.
Ensure Direct Communication Channels: While the EOR handles administration, you must maintain a strong operational and cultural connection. Ensure the EOR model permits and encourages direct communication between your managers and your employee.
By performing rigorous due diligence across these areas, you can select an EOR partner that not only simplifies your entry into the Singapore market but also guarantees compliance, mitigates risk, and ensures a positive, professional experience for your local team members.
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For more information of ACHIEVE EOR services or have a chat on how EOR can facilitate your business operations, write to us at enquiries.sg@achievegroup.asia