How to Open a Singapore Recruitment Company
An employment agency is a company that helps individuals and other companies with their hiring and recruitment requirements and acts as the negotiating party between the employing company and its potential employee. An employment agency is usually deals with placing both local and foreign candidates right from the starting or junior level openings to the top or executive-level jobs.
Singapore has been inviting foreigner nationals from middle-management and executive level to manual laborers to come and work in the country, there are now various placement agencies of all sizes and also big head-hunting companies, which are helping the Singapore companies recruit and manage their staffing requirements.
Any employment agency in Singapore would require an Employment Agency License (EAL) before starting their business operations. This is the basic license that is needed for all types of recruitment agencies and is governed by Singapore’s Ministry of Manpower (MOM). The employment agency licenses in some other countries are often referred to as:
- Recruitment agency license
- Placement agency license
- Staffing agency license
- Manpower agency license
This article would help to provide you with the necessary information on how you can set up an employment agency and obtain the required license. Remember that you would not need an employment agency license if you intend to hire people under your organization’s direct employment.
Who all would require an Employment Agency License?
All companies and individuals who are involved in employment agency work in Singapore have to mandatorily apply for the Employment Agency License. This rule applies irrespective of the fact that the agency is located in Singapore or in a foreign country and regardless of which jobs it deals in – be it in Singapore or overseas. The activities of an employment agency include the following:
- Getting in touch with the potential candidates regarding their job applications;
- Collating the Curriculum Vitae (CVs) of all potential candidates who might be seeking employment;
- Filling and submitting the applications for Singapore Work Visa to the relevant authorities on behalf of the employers or candidates; and
- Facilitating the recruitment of candidates with the employers.
But there is an exemption for the agencies, which are not involved actively in the placement of candidates with employers or who do not significantly influence the conclusion of the employment terms and conditions. These agencies are exempt from having an Employment Agency License. Some examples of such kinds of entities include:
- Some individuals or professionals who do informal or ad-hoc job referrals;
- Agencies or companies, which match tuition teachers with customers;
- Online job portals and also job bulletin boards;
- The courier services that are used in the activities of recruitment and job placement; and
- The divisions of campus placement in Singapore’s autonomous universities.
Depending upon the profiles that an employment agency handles, it can opt to apply for a Comprehensive License or a Select License. The Select License is meant for the employment agencies, which do placements of local or foreign candidates who are earning a monthly salary of more than S$4,500. The Comprehensive License is designed for all other types of employment agencies, which do not fit the bill for the Select License.
Requirements to set up an Employment Agency
The following are the main requirements to apply for starting an employment agency in Singapore:
Register a company in Singapore
The first step is to incorporate a company in Singapore and select the appropriate business activity code suitable for the type of recruitment services you will be providing. For details on company registration in Singapore, refer to our guide.
Establish a business office
The company should set up a functional business office. There are various options for office or commercial space you can select from depending on the business requirements and your budget. Remember that you would require approval from the Urban Redevelopment Authority of Singapore (URA) in case you are going for some additions or modifications to a conservation building. In addition, a prior approval is needed from the Building and Construction Authority (BCA) so that you could display the signs on the conservation building. If you plan to undertake any fire safety work, a prior approval from the Civil Defence Force of Singapore should be obtained.
Apply for a License for an Employment Agency:
Your company should get an Employment Agency License; it could be a Comprehensive License or a Select License, which is issued by the Singapore Ministry of Manpower. The license is strictly issued to only legal entities and no individual persons.
Pay the applicable security deposit
Companies that have obtained the Select License should first submit a Security Deposit of S$20,000, only in the form of Banker’s Guarantee, whereas the companies that have obtained a Comprehensive License would have to shell out more and furnish a security deposit of S$60,000.
Certification of the personnel in the employment agency
In case your employment agency is issued with a Comprehensive License, all its employees (be it permanent, or contractual or temporary), including key appointment holders such as CEO, COO, CFO, and General Managers should be duly certified under the Certificate for Employment Intermediaries (CEI) course. This certification is needed before applying for an employment agency license. Key appointment holders would also need to attend this 40-hour course whereas other personnel of the employment agency is required to attend the 32-hour course. Remember that the certification of key appointment holders is compulsory, whether they carry out or do not carry out the employment agency-related work. All other staff needs to be certified only in case they carry out the employment agency-related work.
Registration of the personnel of the employment agency
All employment agency staff, including key appointment holders, who execute or carry out employment agency-related work, whether they are employed with a Comprehensive licensed agency or Select licensed agency, should be registered with the Singapore Ministry of Manpower and get a standardized registration card issued for themselves. A staff member is allowed to work for and be registered under only one employment agency at a single point in time. A non-refundable, one-time payment or fee of S$160 is to be paid for every registration. This registration cannot be transferred from one employer to another. If the staff member of one specific recruitment company decides to change a job and join another agency (s), he or she would have to de-register first and then re-apply for the registration process under the new organization. However, registration is not needed for key appointment holders and other agency staff if they are not going to perform any employment agency-related work.
Eligibility criteria for the personnel of the employment agency
Employment agency employees including the key appointment holders should either be a Singapore citizen, a Singapore permanent resident or a foreigner with a valid Singapore work visa. In addition, he or she should be certified (in case applicable). The candidate should also be free of any bankruptcy and court convictions in the past. If you have any questions about visa services in Singapore, look no further. Contact us at IMC and we will assist you.
What is the License Application Process for an Employment Agency?
To apply for a license, one needs to submit a duly filled application form to the Ministry of Manpower along with the required license application fee.
The usual application processing time for an employment agency license application is about one to three weeks. You would be informed via email about the status and if your application has been approved, an in-principle-approval (IPA) letter would also be attached in the email. After receiving the IPA letter, you have to submit the following documents so that the license can be issued:
- Get a Security Bond in the form of Banker’s Guarantee from a Singapore bank. The bank would issue you a Banker’s Guarantee only when you open a fixed deposit (FD) account for that same amount with the bank. The Banker’s Guarantee should cover 15 months from the starting date.
- T following documents are also required along with the Security Bond:
- A clear and properly-visible copy (of both sides) of your valid Singapore ID (applicable for Singapore Citizens and Permanent Residents) or your EP or Employment Pass. To know everything about your employment pass, contact us at IMC.
- The latest copy of the organization’s business profile from ACRA
- A recent passport size photograph
- A copy of your In-Principle-Approval letter
- A copy of an approval letter from authorities if you are going to operate under the HomeOffice scheme
- A copy of the certificate proving that you have passed the Certificate for Employment Intermediaries (CEI) course
- A duly-completed checklist form
- Any additional or special documents requested in your In-Principle-Approval letter.
After the required documents are submitted and assuming that all the documents are correct and in order, you should ideally get an email notification within a week of submitting your documents informing that your application has been approved. Now, you have to make a payment of S$100 so that the license can be issued. The license would come in the mail at the address indicated in the original application. This license is valid for up to three years from the date it is issued and can be renewed thereafter.
Employment agencies must comply with the revised Employment Agency Rules. The revisions comprise amending fee caps and announcing a new fee refund policy. Details of the amendments are as follows:
- Fee cap: Employment agencies are permitted to charge their customers (the employer as well as the selected candidate) a pre-decided fee, as long as it is within the fee cap. There would be no cap on the fee that is charged to the employers for the staffing services provided. But the fee charged to the candidate who is placed cannot be more than his/her one month’s worth of salary per year for the time period of the approved work pass or the job contract, whichever ends earlier. This is subject to up to two-month salary. The fee cap covers the entire agency fee that is collected by employment agencies in Singapore, including the fee collected from candidates through an overseas agent or mediating employment agency. However, the fee cap is not applicable to the agency fees collected and kept by the overseas mediating employment agencies. There are some items, which are not subject to the fee cap; for example, training expenses incurred abroad, overseas medical check-ups and also travel expenses to Singapore. Candidates are not supposed to pay fees on training, medical check-ups, etc. in Singapore as this expense need to be borne by the employer’s company or the employment agency.
- Fee refund: If the employer (which is a client of the employment agency) gives notice of the end of employment to the candidate within the first six months of employment, then the employment agency has to refund half of the agency fee collected from the employee or candidate. However, this is not applicable if the candidate quits the job. The employment agency has to refund the fee within seven working days after the employment termination or before the foreign employee is repatriated, whichever happens, earlier.