An employment agency assists other businesses with their staffing and recruitment needs. In other words, they serve as intermediaries between employers and potential employees. Such firms specialize in the placement of both foreign and domestic candidates in positions ranging from entry-level to executive.
Foreigners have long been in high demand in Singapore, not only for executive and managerial roles but also for manual labour occupations. As a result, numerous large and small employment placement companies have sprung up in the little red dot.
The Employment Agency License, which is controlled by the Ministry of Manpower, is necessary for all such agencies in the country (MOM). Anyone or any organization that promotes an unauthorized employment agency could face serious consequences as a result of the crime. If you are hiring employees for your own business, you do not need an employment agency license.
This article delves deep into how you can start an employment agency in Singapore and the processes you need to go through to obtain an Employment Agency License.
Who Requires a License for an Employment Agency?
The Employment Agency License is required of all businesses and people involved in employment agency activities in Singapore. This is true regardless of whether the agency is based in Singapore or elsewhere, and whether it works in Singapore or elsewhere. The following are examples of employment agency activities:
- Keeping in touch with potential applicants about their job applications
- Obtaining the resumes of potential applicants for employment
- submitting Singapore Work Visa applications on behalf of businesses or candidates to the authorities
- Facilitating applicant placement with employers
Agencies that do not actively place candidates with employers or have a significant influence on the outcome of employment terms and conditions are not required to get an Employment Agency License. These are some examples of such entities:
- Individuals who make sporadic, informal, or infrequent job referrals
- Clients are matched with tutors through agencies or centres
- Job boards and job portals on the internet
- Courier services used in the recruitment or job placement process
- Singapore’s autonomous universities’ campus placement divisions
An employment agency can apply for either a Comprehensive License or a Select License depending on the type of candidates it works with. The Select License is for recruitment agencies that place local or international candidates with a monthly base wage of more than S$4,500. All other employment agencies that do not qualify for the Select license should apply for the Comprehensive License.
Step By Step Procedure to Start an Employment Agency in Singapore
Register Your Employment Agency Company
You must first form a Singapore company and choose a business activity code that corresponds to the type of recruitment operations you will be conducting.
Establish Your Company’s Business Office
A functioning business office must be established for the company. Depending on your business goals and budget, you can choose from a variety of office space options. If you want to make additions or changes to a conservation building, you’ll need to get permission from the Urban Redevelopment Authority of Singapore (URA).
To install signage on your conservation building, you’ll need to get permission from the Building and Construction Authority (BCA). If you want to do any fire safety work, you’ll need to get permission from the Singapore Civil Defence Force.
Submit Your Application for an Employment Agency License
The organization must get an Employment Agency License from the Singapore Ministry of Manpower, either a Comprehensive License or a Select License. Individuals are not permitted to obtain the license because it is only provided to legal businesses.
To acquire or renew an employment agency license, the major player must submit an application form along with a $400 application fee to the Commissioner (Ministry of Manpower) (this can be performed online). You will be notified of an in-principle acceptance or rejection within 7 working days.
Which Category of License Is the Best Fit for Your Employment Agency?
If your organization intends to engage in activities that necessitate an employment agency license, you can choose from one of the following categories of licenses, depending on the circumstances:
The Comprehensive License (For All)
Covers the employment of job seekers from any country
The Comprehensive License (Non-Foreign Domestic Worker)
Covers employment of job seekers of any nationality, but excludes foreign domestic workers, i.e. foreigners whose occupation on their work visa application is “domestic worker.”
The Comprehensive License (For Local)
Covers only the employment of Singaporeans and Singapore Permanent Residents, not foreigners
The Select License
Covers employment of anyone earning more than SGD 4,500 per month.
The Most Important Requirements for Obtaining an Employment Agency License
Who Is Qualified to Submit an Application for an Employment Agency License?
Only important company individuals who meet the qualifications below may apply for a license on behalf of a corporation under Singaporean law. The following are examples of qualified individuals:
- The owner (in the case of a sole proprietorship or a partnership)
- Managing director and company director
- Partner (in a limited liability company)
- The general partner(In the case of a limited partnership)
In addition, the applicant must:
- Be a Singaporean or a permanent resident of Singapore
- Not be a bankrupt who hasn’t been discharged
- Have no prior convictions for dishonesty or human trafficking wherever
- Being involved in the management of an employment agency whose license has been cancelled is prohibited
Finally, in its ACRA profile, the applying company must list one of the following activities as its primary activity;
- The Maid Agencies
- The Employment Agencies
- The Executive Search Agencies
Procedure for Obtaining an Employment Agency License
The application process entails submitting an application form together with a license application fee to the Ministry of Manpower.
The time it takes to process an application for an employment agency license is about 1-3 weeks. You will be notified by email, and if your application is granted, you will receive an in-principle-approval (IPA) letter. You must provide the following papers after obtaining the IPA letter for the license to be issued:
- Request a Security Bond from a Singapore bank in the form of a Banker’s Guarantee. You must first create a fixed deposit (FD) account with the bank for the specified amount for the bank to issue you a Banker’s Guarantee. The Banker’s Guarantee must last for 15 months from the start date.
- The following documents, in addition to the Security Bond, will be required:
- A clear copy (both sides) of your Singapore ID or Employment Pass (for Singapore Citizens and Permanent Residents).
- ACRA’s most recent copy of your company’s business profile
- A passport-sized image taken recently
- A copy of your letter of In-Principle-Approval
- If you’re using the HomeOffice plan, you’ll need a copy of the applicable authority’s authorisation letter.
- A copy of your Certificate for Employment Intermediaries (CEI) course certificate.
- A checklist form that has been completed
- Any other documentation asked in your letter of In-Principle-Approval.
You should receive an email message confirming that your application has been approved within 7 days after submitting the appropriate paperwork if all documents are in order. You will be required to pay S$100 for the license to be issued at this time. The license will be mailed to the address specified on the application. The license is valid for three years from the date of issuance and can be renewed after that.
Invest in a Security Deposit
You must make a security deposit. That is to purchase a security bond and submit the relevant papers and documentation to the Commissioner within four weeks of receiving the aforesaid approval.
The Commissioner determines the amount of the security deposit as follows:
For all Comprehensive Licenses holders:
- $60,000 in the first year of business;
- From the second year of operation, depending on the number of Work Permit and S pass holders placed and previous demerit points earned, from $20,000 to $60,000.
For all select license holders;
- $20,000 in the first year of business;
- Depending on the number of demerit points previously accumulated, from $20,000 to $60,000 in the second year of operation.
You will receive information that your application has been granted, pending payment for the license to be issued, within 7 working days.
Personnel From All Employment Agencies Must Be Certified
All personnel (whether permanent, temporary or on a contractual basis), including key appointment holders (e.g. CEO, CFO, COO, General Managers), must be qualified under the Certificate for Employment Intermediaries (CEI) course to operate in an employment agency with a Comprehensive License.
Before acquiring an employment agency license, certification is required. The 40-hour course is required for key appointment holders, whereas the 32-hour course is required for other employment agency staff.
It’s worth noting that essential appointment holders must be certified, regardless of whether they work for an employment agency or not. All other employees must be certified only if they work for an employment agency.
Personnel From All Recruitment Agencies Must Be Registered
Regardless of whether they work for Comprehensive licensed agencies or Select licensed agencies, all employment agency personnel, including key appointment holders, who perform employment agency related work must register with the Singapore Ministry of Manpower and be issued a standardised registration card.
At any given moment, an employee can only work for and be registered with one employment agency. Each registration is subject to a non-refundable, one-time cost of S$160. It is not possible to transfer the registration from one employer to another.
If an employee of one recruitment firm wishes to change employers and work for another, he or she must de-register and re-register with the new firm. If key appointment holders and other agency staff do not do employment agency-related work, they are not needed to register.
Registration Cards Must Be Issued to All Employment Agencies Personnel
Upon the registration of any employment agency personnel, the agency must issue the personnel a registration card in the prescribed format. Any client who is an applicant for work must be shown their registration cards if requested, and that individual must be allowed to record information from the registration card.
Criteria for Employment Agency Employees’ Eligibility
Personnel working with employment agencies, including key appointment holders, must be Singapore citizens, permanent residents, or foreigners with a valid Singapore work visa. She also needs to be certified (if applicable). In addition, the individual should be clear of bankruptcy and criminal offences.
License Validity, Suspension, and Revocation
The license is valid for a set amount of time, which is normally three years and is chosen for each case individually. It is possible to renew the license. To do so, you must submit a renewal application to the Commissioner at least three months before your license expires, together with a $400 application cost and a $100 renewal fee when the renewed license is awarded to you.
The Commissioner has the authority to suspend or revoke the license at any moment if the licensee:
- Is breaking the law; has failed to adhere to the license’s terms and conditions
- Acts in a way that is damaging to his client’s interests
- Has ceased to operate as a recruitment agency
- Has not operated an employment agency for six months in a row
- Has acted in the public interest’s detriment
- Has been charged with a crime
- Is no longer appropriate and proper to continue holding the license.
It’s important to note that the license can be revoked for any of the reasons listed above. At the licensee’s request, the Commissioner may also revoke the license (upon a revocation application).
You may continue any previously initiated employment agency activities while your license is suspended, but you must refrain from entering into new recruitment or placement agreements.
When your license is cancelled, on the other hand, you must immediately discontinue all employment agency activities, whether you started them before or not. When your license is revoked, on the other hand, you must immediately discontinue all employment agency activity, whether already launched or new.
What Are the Available Options When the Application for Employment Agency Licenses Is Rejected?
There should be no cause for your application to be rejected under normal circumstances provided you have appropriately submitted your employment agency licensing application. However, if your application is turned down for some reason, everything is not lost.
You have 30 days to submit an appeal letter. Your appeal will be considered by a senior official, and it could take up to two weeks to process. On a case-by-case basis, you may be asked to submit extra papers in support of your application.
What Are the Available Rules for All Employment Agencies?
The updated Employment Agency Rules must be followed by employment agencies. Modifying price caps and creating a new fee refund procedure are among the changes. The following are the details of the changes:
- Fee cap: Employment agencies may charge a fee to their clients (both the employer and the selected candidate) if the fee does not exceed the fee cap. The amount charged to employers for services delivered will not be capped.
However, for the term of the approved work pass or employment contract, whichever is shorter, the cost charged to the candidate who is selected for employment shall not exceed one month’s worth of income every year. This is limited to a maximum of two months of salary.
The fee cap will apply to all employment agency fees received in Singapore, including those collected from candidates via an overseas intermediary recruitment agency. Fees collected and kept by international intermediary employment agencies are not subject to the fee cap.
Certain goods, such as training fees incurred abroad, medical check-ups incurred abroad, and travel expenses to Singapore, are exempt from the fee cap. Candidates are not responsible for fees incurred in Singapore, like training, medical examinations, and so on, as these are covered by the business or employment agency.
- Fee refund: If an employer (who was a customer of the employment agency) fires a candidate (who was employed through the employment agency) within the first six months of work, the employment agency must restore half of the agency fees obtained from the candidate.
If a candidate initiates an employment termination, this regulation does not apply. The payments must be refunded within 7 working days after the termination of the job or before the foreign worker is repatriated, whichever comes first.
Errant and unregistered employment agencies are subjected to stricter enforcement and sanctions. From April 1, 2011, several changes took effect, including the creation of new offences, the addition of more enforcement methods, and the enhancement of punishments for existing offences.
If you intend to start a business that assists other businesses with their recruitment and staffing needs, you will almost certainly need an Employment Agency License.
This license is also known as a Recruitment agency license, Staffing agency license, Placement agency license, or Manpower agency license in various countries. It is critical to secure such a license before beginning your business.
While the above stages to establishing an employment agency may appear straightforward, they entail a significant amount of effort and communication with a variety of federal departments. Any hiccup can cause substantial delays in the implementation of your desired project.
So why not make HeySara your go-to company compliance service provider to guide you through the process? We will be there for you from the first to the last step. You may also count on us to take care of the legal obligations once your company is up and running.
