As Singapore is a hub of corporate activities, employment agencies are becoming quite famous in the country. These companies help prospective employees, ranging from executives to manual labours in hunting their desired jobs. Similarly, companies wanting to fill their vacant positions can meet their staffing needs by working with employment agencies. But how can you find the right employment agency to work with?

We answer this question and provide a complete overview of the employment agencies in the following blog:

What is an employment agency in Singapore?

An employment agency in Singapore refers to a company supporting and assisting companies in fulfilling their recruitment requirements. In other words, recruitment agencies serve as a middle man between the employees and employers, ensuring talented candidates can find relevant jobs while employers can fill the vacant positions.

Accordingly, employment agencies deal with everything from interview to the selection process, ensuring that the most competent individuals can be brought forward. An employment agency can also deal with staff management processes, such as medical insurance, payroll, and work-pass application. A typical employment agency supports the placement of both foreign and local candidates in wide-ranging roles.

Why work with an employment agency?

In Singapore, employment agencies are liable to the regulations set by the Ministry of Manpower (MOM). According to the Ministry, all the employment agencies in Singapore are required to attain the Employment Agency License (EAL) before starting any business operation. You may ask the agency to show their license, ensuring that they are certified to provide recruitment services in the country.

An employment agency is helpful for both the hiring company and prospective employee. Companies can hire competent individuals by working with an employment agency while a talented candidate can find a suitable job as per their qualifications. Here are some reasons why agencies will be useful.

1. Time efficient

The hiring process can be quite time-consuming, especially when the company is searching for a talented individual to fill a superior vacant position. The HR department in any company already has various responsibilities. Spending time researching, interviewing, and selecting relevant candidates may take a lot of time and efforts.

But when this responsibility is left on a recruitment agency, companies and especially, the HR manager can have more time on their hand to deal with other jobs. Instead of sifting through hundreds of CVs and applications, employment agencies can speed up the process as they have their own talent pool in place. They can match the requirement of the companies with the skills and qualifications of the candidates they have. They also rely on their extensive database and connections to source for the right candidates in an efficient manner. This significantly lowers the time required to find the ideal candidate.

2. Enhanced quality of hire

Another reason why companies may choose to work with recruitment agencies is the quality of hire they promise. Employment agencies specialize in particular roles or field of work. They have an extensive talent pool, as well as in-depth knowledge of the market, ensuring that there are greater chances of hiring a qualified market.

They also find candidates according to the culture of the company. In this way, companies can make sure the people they hire can fit in the company instead of having clashes with their aspirations and goals. On the other hand, these companies usually have an extensive database built over a couple of years. Accordingly, they are able to reach passive candidates that the company might not contact otherwise.

3. Market knowledge

In Singapore, the recruitment regulations and work-pass application process are changing from time to time. For companies, it can be difficult to keep track of these changes. This is where a recruitment agency can further help. With industry expertise and extensive market knowledge, a recruitment agency can work as specialist consultants to the company and make it easier to comply with relevant legalities.

They can also review job descriptions, current hiring process, and salary rates in accordance with the industry requirements. This information is crucial to attract the best available talent and ensure a fair process.

4. Reduce risks

Majority of the employment agencies work on long-term employment contracts. In this way, the contract between the company and the employment agency does not end once the individual is hired. Instead, additional security is a guarantee when the matter is concerned with hire retention. Guarantee periods serve as a safety period when the new employee transitions into the company.

This period ranges anywhere from 3 to 6 months. Within this time, if the employee decides to leave the company or the employer is not satisfied with the work, then a new candidate is referred to the company to refund the cost of hiring a replacement.

Employment agency setup requirements

Willing to start your very own employment agency? Here are some essential requirements that you need to take into account:

1. Registering the company in Singapore

The process of setting an employment agency starts with company registration in Singapore. You need to select a business activity code that is appropriate according to the recruitment activity you will be providing.

2. Setting up a business office

Once you have registered the company, you are then required to set up an operating business office. There are various office spaces available in the country that you can choose according to your budget and needs. However, before choosing a space for the business office, you need to get approval from the Urban Redevelopment Authority of Singapore (URA) if you are willing to make any sort of alterations or additions to a building.

Similarly, if you want to place signs on the building, then you will need approval from the Building and Construction Authority (BCA). An approval from the Singapore Civil Defence Force will be further required to execute fire safety works.

3. Applying for an employment agency license

Your company is required to either obtain a Select License or a Comprehensive License, both of which comes under the Employment Agency License. These licenses are issued by the Singapore Ministry of Manpower. It should be remembered that these licenses are only issued to legal entities but not individuals.

4. Payment of security deposit

Companies that manage to attain the Select License have to pay a security deposit of S$20,000 as a Banker's Guarantee. On the other hand, companies that are provided Comprehensive License have to pay S$60,000 as a security deposit.

5. Certifying employment agency personnel

For the employment agency to attain the Comprehensive License, it is crucial that all the employees, be it permanent, contracting, or temporary has to be certified under the Certificate for Employment Intermediaries (CEI) course. The certification should also be available with the key appointment holders, including the COO, CFO, CEO, and General Managers, whether or not they perform work related to the employment agency. These individuals are also required to attend a 40-hour course while all the other personnel have to appear for a 32-hour course.

6. Registering employment agency personnel

All the employment agency personnel and critical appointment holders need to have a standardized registration card, provided that they perform work related to the employment agency. This card is compulsory regardless of whether the employees work for the Select Licensed agencies or the Comprehensive Licensed Agencies.

This card ensures that the employees are registered with the Singapore Ministry of Manpower. An employee is allowed to work for and be employed by only one employment agency at any given time.

The employee can also be registered under one employment agency. Upon every registration, a one-time, non-refundable fee of S$160 is payable. The registration cannot be transferred to another employee. In this way, if the employee of one recruitment firm has to switch jobs or join a different company, then the employee will have to de-register themselves and register again for the standardized registration card under the new company. It also needs to be noted that registration is not needed by any key appointment holders or other agency personnel if they do not undertake any work related to the employment agency.

7. Complying with the eligibility criteria for employment agency personnel

All the employment agency personnel, as well as the key appointment holders, should be the citizen or permanent resident of Singapore. They can also be foreigners if they have a valid Singaporean work visa. It is also essential that these employees are free from any sort of court convictions and bankruptcy

Procedure for employment agency license protection

In Singapore, employment agencies have to follow an appropriate application procedure for submitting an application form to the Ministry of Manpower, together with a license application fee. It takes about 1 to 3 weeks for the entire application process to complete. You will be notified through email if your application has been approved. The email with come with an in-principle-approval (IPA) letter upon approval.

After receiving the letter, you will have to submit the following documents for the license to be issued:

• A security bond in the form of a Banker's Guarantee issued by any bank in Singapore. For the Banker's Guarantee to be issued, you will have to open a fixed deposit (D) account for the required amount. The Banker's Guarantee should cover a period of 15 months.
• Besides the Security Bond, you will have to submit an exact copy of your Singapore ID (in case you are a Permanent Resident or a Citizen in the country) or an Employment Pass (if you are a foreigner)
• You will also be required to submit a recent passport size photography and the latest copy of your business profile available from ACRA.
• The in-Principle-Approval letter should also be printed, together with the copy of an approval letter from the relevant authority in case you are operating under the Employment Intermediaries (CEI) course.
• A completed checklist form
• Any additional documents as requested in the in-principle-approval letter

Once all the documents are submitted in a particular order, you will get an email notification within seven days of submission confirming that your application is accepted. At this stage, you will have to pay a payment of S$100 in order for the license to be issued. The license will be to your address mentioned in the original application.

The license will be valid up to three years since the date of issue. After three years, you can renew it again. Employment agencies also need to ensure they are in compliance with the Employment Agency Rules. These rules have been recently revised, which include modifications in the refund policy and the fee caps.

According to the new fee cap, employment agencies can charge their clients (be it the employer or the selected candidate) a particular fee if it is within the designated fee cap. There will be no particular fee cap on the fees charged to the employers in lieu of the service provided. However, the fees charged by the employed candidate cannot be more than one month's worth of salary annually in accordance with the duration of the approved employment contract or work pass. This fee cap is supposed to cover all the agency fees. However, certain items such as overseas medical check-ups, training expenses, and travel expenses are not applicable within the fee cap.

If the fee refund is considered, then in case the employer who was the client of the employment agency terminates the candidate within 6 months of the employment, then the agency will have to refund fifty per cent of the amount that was collected from the candidate. This rule is not applicable if the termination has occurred on the choice of the candidate. The employment agency is supposed to refund this amount within seven working days of employment termination or before the repatriation period of the foreign worker ends.

In the end

An employment agency in Singapore can help both the employers and prospective candidates in fulfilling their goals. Opening your own employment agency will also be beneficial in the long run since more and more people now rely on such agencies to find suitable candidates.