(Image Source: AI-generated image, for illustration only)
(Image Source: AI-generated image, for illustration only)When a company issues an offer and the candidate decides to accept the position, signing the employment contract becomes the final step in the family office recruitment process.
For many, signing the contract means the recruitment process is complete. In practice, however, the value of an employment contract lies not only in confirming the employment relationship, but in helping the company and the employee reach a shared understanding of job responsibilities, compensation arrangements, and expectations before the employee formally starts work.
Under the requirements of Singapore’s Ministry of Manpower (MOM), an employment contract should set out the key employment terms, such as salary, working hours, leave, and notice period. These terms establish the basic employment framework between the company and the employee. In practice, however, we have found that whether a working relationship goes smoothly often depends not on whether these clauses exist, but on whether both parties have fully understood and agreed on them.
So, before signing an employment contract in Singapore, what easily overlooked details should companies pay attention to?This is a step we see often in our work — for more on how we help family offices find the right hires, see our guide on family office recruitment in Singapore.
The 3 Most Commonly Overlooked Details
When it comes to compensation and benefits, the following three areas are, in our experience helping companies recruit, where misunderstandings are most likely to arise — and where details are most easily overlooked:
Annual Leave
Under MOM’s requirements, any employee covered by the Employment Act who has served for at least 3 months is entitled to statutory annual leave. However, this is only the “baseline” requirement that companies must comply with, not the only standard to reference. On this basis, companies can further enhance leave benefits according to their own talent strategy and market positioning, rather than stopping at the statutory minimum.
The statutory minimum for annual leave under MOM is 7 days, increasing by one day per year of service up to a maximum of 14 days. However, based on our observations, many companies in the market today already offer more than the common 14-day level, with some offering as much as around 20 days, as a competitive edge in attracting talent. Beyond the number of annual leave days, some companies have also begun introducing non-statutory leave items such as birthday leave, marriage leave, and mental health leave, to build a more attractive employer image in the talent market.
While these types of leave arrangements fall outside what MOM mandates, as long as the company clearly communicates them to the candidate before signing, they can serve as a value-add beyond compensation and benefits, helping the company stand out from others competing for similar roles.
Beyond annual leave, Singapore law also entitles employees to a number of other statutory benefits, including outpatient sick leave, hospitalisation leave, maternity leave, paternity leave, and childcare leave, though the scope of some benefits may vary depending on the employee’s pass type (such as Singapore Citizen, Permanent Resident, or Work Pass holder). While these benefits are generally not a source of dispute, if a company omits the applicable conditions in the contract — for example, that sick leave typically requires at least 3 months of service before it can be claimed — this can still create a gap in understanding when the employee applies for it. Companies are advised to note the relevant conditions in the contract.
Medical Benefits
Many companies simply write “medical benefits provided” in the contract without specifying the exact form or scope, and in fact there is no single standard for this — the specific arrangement is usually tied to the company’s size, industry norms, and internal benefits policy:
Smaller companies typically provide outpatient coverage on a reimbursement basis, with the specific limit depending on company policy.
Larger companies or multinational corporations more commonly offer comprehensive group medical insurance, combining outpatient, specialist, and hospitalisation coverage under a single plan, which is also more convenient for employees to use.
Even when the contract says the same thing — “medical benefits provided” — the actual level of coverage and how it is used can differ significantly, and this is also one of the areas candidates most often have questions about when comparing job offers.
Year-End Bonus
In terms of compensation arrangements, the year-end bonus is another area where practices vary widely across companies and misunderstandings can easily arise. We have observed that different companies take different approaches: some provide an Annual Wage Supplement (AWS), commonly known as the “13th month payment,” while others prefer to keep things flexible and handle year-end rewards as a discretionary performance bonus.
Which approach a company takes largely depends on the nature of the role, industry norms, and the company’s own compensation structure and talent strategy. For example, companies may be more inclined to use performance bonuses as an incentive for roles that are more results-driven, while a relatively fixed AWS is more common in certain industries or functions.
Companies are advised to clearly state the specific year-end bonus arrangement in the contract, whether it is an AWS or a performance bonus, including the conditions for payment — for example, whether it is tied to individual or company performance — to avoid candidates using “whether there is a 13th month payment” as the sole benchmark for judging overall compensation.
A Well-Drafted Employment Contract: Building a Clear Employment Relationship
A well-drafted employment contract is not only an important document that protects the rights of both employer and employee, but also reflects a company’s level of human resources management. Beyond complying with Singapore’s relevant regulations, whether the contract’s content is complete and its terms are clear also affects the employee’s first impression of the company, and can reduce future communication costs and potential disputes.
In terms of compensation arrangements, companies are advised to clearly state the components of compensation and related arrangements, so that employees have a consistent understanding of their overall compensation package. At the same time, the method of salary payment and other related terms should also be clearly specified, to improve the transparency of the contract.
Beyond compensation arrangements, the work location, working hours, and other work arrangements should also be fully communicated with the candidate before signing and clearly stated in the employment contract, to ensure both parties have a consistent understanding of job requirements and arrangements.
In addition, the probation period, notice period, and other key employment terms should likewise be properly planned according to the company’s management system and business needs, and the contract’s content should be kept clear and consistent. While these terms may appear standard, different companies often handle them differently, which is why it is especially important to draft appropriate employment terms.
Finally, before formally signing the employment contract, companies are advised to reconfirm that the contract’s content and related information are complete and accurate. Many companies see this as merely an administrative step, but in practice, much of the follow-up communication cost often stems from details that were overlooked before signing.
SMTP Consult’s Practical Experience
At SMTP Consult, we help companies find talent that fits their business needs, while also placing importance on communication and expectation management between companies and candidates.
We have found that many overseas companies, when recruiting in Singapore for the first time, are prone to leaving ambiguity in compensation structure, benefits arrangements, or contract terms simply because they are unfamiliar with local market practices. These seemingly minor gaps often only become apparent after the candidate has started work, which in turn affects the working relationship between both parties.
Our recruitment practice focuses not only on a candidate’s professional ability and experience, but also on whether key matters — job responsibilities, compensation arrangements, employee benefits, and working arrangements — have been fully communicated. This is also something we pay particular attention to in our long-standing work helping companies recruit.
If your company is hiring for a key role, or would like to learn more about employment terms and market compensation and benefits practices in Singapore, we welcome you to connect with the SMTP Consult team — we are happy to share our experience through real-world case studies.