SINGAPORE Law and Practice Contributed by: Terence Quek, Benjamin Cheong, Hoon Chi Tern and Favian Tan, Rajah & Tann Singapore
compensation or benefits linked to the dura- tion of service. • The terms and conditions of service for the employee will be the same as those enjoyed by them immediately prior to the transfer, but this does not preclude the buyer and the affected employees from negotiating changes to their contracts. If new terms are proposed by the buyer for the purposes of harmonisa- tion with other local employees, then the compensation and benefits offered must – on balance – be no less favourable than the terms of employment prior to the transfer. Due Diligence Given the transfer of liability to the buyer, it is imperative that due diligence in respect of employment matters is conducted thoroughly in order to uncover any related liabilities, and that appropriate indemnities are extracted from the seller where necessary. Duties to Employees and Their Union The affected employees and their union must be informed of the impending transfer of employ- ment within a reasonable time prior to the trans- fer of the business undertaking – unless the time- frame for the consultation process is otherwise stipulated in the existing collective agreement between the union and the seller. As a baseline, the buyer must notify the employ- ees and the trade union (if any) of: • the transfer; • the approximate date on which it is to take place; • the reasons for the transfer; • the implications of the transfer; and • the measures to be taken by the seller and the buyer (if no measures will be taken, this must be stated).
Where the target company has a unionised workforce, it would be prudent to analyse the union agreement in order to assess the impact of the transaction thereon. In transactions where there are intentions to make employees redundant, the retrenchment process should be carefully managed in line with guidance from the Singapore Ministry of Manpower (MOM) to minimise the impact on the future operations of the target company. It is mandatory for employers with at least ten employees to notify the MOM of the retrench- ment of any employee. Foreign Employees Post-acquisition, buyers should also be aware of the regulations concerning the hiring of foreign employees. There are specific quotas and lev- ies for the hiring of certain categories of work permit-holders (ie, semi-skilled migrant work- ers), which vary depending on the industry sec- tor involved. While the hiring of those who hold employment passes (generally professionals, managers and executives) is not subject to any specific quotas, businesses are expected to implement fair and progressive workplace policies and maintain a healthy balance of both local and foreign hires. As of 2024, the MOM has expressly stated that non-Singapore entities wanting to engage an individual in Singapore who is not a Singapore national or permanent resident may no longer engage an employer of record (EOR) to sponsor the individual for a work permit. Such a change indicates that non-Singaporean entities will have to venture into other options when employing and sponsoring foreign talent.
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