Contingent worker guide for employers in Singapore
Hiring contingent workers can provide significant flexibility and cost savings for employers in Singapore. However, it is crucial to have clear agreements and understand the legal entitlements and obligations to ensure a smooth and compliant working relationship. By following the guidelines outlined in this guide, employers can effectively manage contingent workers and leverage their skills to meet business needs.
What is a contingent worker?
A contingent worker is an individual hired by an organisation on a non-permanent basis. These workers are typically engaged to meet short-term business needs and can include freelancers, independent contractors, consultants, and part-time employees. Contingent workers offer flexibility, enabling companies to scale their workforce up or down based on demand without the long-term commitment associated with permanent employees.
What are some common situations where contingent workers are hired?
Employers may choose to hire contingent workers in various scenarios:
Project-based work: For specific projects that require specialised skills not available within the existing workforce.
Seasonal demands: During peak seasons when there is a temporary increase in workload, such as the holiday season in retail.
Cost management: To manage costs, as contingent workers may not receive the same benefits as full-time employees.
Business expansion: When expanding into new markets or launching new products where long-term success is uncertain.
Skill gaps: To fill temporary skill gaps within the organisation without the need for long-term hiring.
What should be included in the agreement for a contingent worker?
When drafting an agreement for a contingent worker, it is crucial to include specific terms to protect both the employer and the worker. Key elements to include are:
Scope of work: Clearly define the tasks and responsibilities expected of the contingent worker.
Duration of engagement: Specify the start and end dates of the engagement.
Compensation: Detail the payment terms, including rates, payment schedules, and any additional expenses covered.
Confidentiality: Include clauses to protect the company’s confidential information and intellectual property.
Termination conditions: Outline the conditions under which the agreement can be terminated by either party.
Compliance: Ensure the agreement adheres to local labour laws and regulations.
Performance expectations: Set clear expectations for performance and deliverables.
Dispute resolution: Define the process for resolving any disputes that may arise during the engagement.
How to calculate the salary for contingent workers?
A contingent worker salary should be proportionate to that of a full-time employee with similar duties and skills, and the hourly and daily pay rates can be determined using the following formula:
Hourly basic rate of pay
(12 x Monthly basic rate of pay) / (52 x Number of hours worked in a week)
Daily basic rate of pay
(12 x Monthly basic rate of pay) / (52 x Number of days a part-time employee is required to work in a week)
Examples:
Hourly pay rate
Marvin works 15 hours per week, and the monthly basic salary is $2,500.
Hourly basic rate of pay = (12 x $2,500) / (52 x 15) = $38.46 / hour
Daily pay rate
Eunice works 3 days per week, and the monthly basic salary is $3,000.
Daily basic rate of pay = (12 x $3,000) / (52 x 3) = $230.77 / day
Contingent workers are entitled to overtime pay if they work beyond their scheduled hours. The overtime pay of contingent employees is calculated as follows:
If Hours Worked
Overtime Pay Calculation
Exceed daily working hours but less than a full-time employee's normal hours
At your basic hourly rate of pay
Exceed a full-time employee's normal hours
At your basic hourly rate x 1.5
Examples:
Jayson is a contingent worker who works for 5 hours a day, and the daily working hours for a full-time employee are 8 hours. The basic hourly rate of pay for Jayson is $15 per hour.
If Jayson works for 8 hours on a particular day, he has exceeded his daily working hours but hasn't exceeded the full-time employee's normal hours. Therefore, he is entitled to overtime pay for the additional 3 hours worked at his basic hourly rate.
Overtime pay = 3 hours x $15 per hour = $45
However, if Jayson works for 9 hours that day, he will work overtime for a total of 4 hours and exceed a full-time employee’s normal hours by 1 hour.
Total overtime pay = 3 hours x $15 per hour + 1 hour x $22.5 per hour = $67.5
Are contingent workers entitled to public holiday pay?
Contingent workers are entitled to public holiday pay if they work on a public holiday. The pay is calculated:
(No. of working hours per year of a contingent worker / No. of working hours per year of a similar full-time employee) x No. of days of public holiday of a similar full-time employee with equal length of service x No. of working hours in a day of a similar full-time employee
Example:
Caroline is a contingent worker who works 15 hours per week, which adds up to 780 hours per year (assuming she works all 52 weeks). Denis, a full-time employee in the same role, works 40 hours per week, which adds up to 2,080 hours per year.
Assume both Caroline and Denis have the same length of service. Denis is entitled to 11 public holidays per year, and each of his workdays consists of 8 hours.
The calculation would be as follows: (1,040/2,080) * 11 * 8 = 33 hours.
Caroline would therefore be entitled to 33 hours of public holiday pay per year.
Are contingent workers entitled to a bonus or variable payment?
Bonuses and other variable payments are not required unless they are written into the employment contract. Even though they are not mandatory, employee bonuses are a great way to say thanks to your staff for their hard work. Read more about the most common types of bonuses in our “Bonus Guide for Employers in Singapore”!
Are contingent workers entitled to leave benefits in Singapore?
Contingent workers are covered by the Employment Act and are therefore entitled to leave benefits, such as annual leave, sick leave, and other statutory leaves, as long as they have completed at least 3 months of service. The amount of annual leave they get will be based on how many hours they work compared to a full-time employee of the same job.
Find out all you need to know about leave guide policy in Singapore in our wide range of leave guides.
Why use HR software to manage your contingent workers?
A contingent workforce often appeals to younger generations, like Generation Z or some millennials, who have a different approach to work. This workforce shift demands more flexible work options and has led to an increase in people choosing freelance or contract-based careers, giving them more freedom and control over their work lives.
Here's how HR software can be used to support different types of work arrangements:
Streamlined Onboarding: HR software simplifies the onboarding process for contingent workers by automating paperwork, compliance checks, and training modules, ensuring a smooth and efficient start.
Centralised Data Management: With HR software, you can keep all employee records, contracts, and performance data in one place, making it easier to track and manage your contingent workforce.
Compliance and Risk Management: HR software helps ensure that your contingent workers comply with local labour laws and company policies, reducing the risk of legal issues and penalties.
Efficient Scheduling and Time Tracking: Managing work hours, shifts, and availability for contingent workers becomes seamless with HR software, which offers tools for real-time scheduling and accurate time tracking.
Enhanced Communication and Collaboration: HR software facilitates better communication and collaboration between your contingent workers and core team through integrated messaging, notifications, and task management features.
How does Payboy HR software meet your HR needs to manage contingent workers?
As we move towards a more flexible and adaptive work environment, using advanced technology will be key to staying ahead in Singapore’s dynamic business landscape. Payboy HR and Payroll Software offers a robust solution to optimise your operations. Here’s how Payboy can help you manage contingent workers:
Integrate shift scheduling and attendance data into payroll processing to eliminate errors, save time, and ensure accurate and timely employee payments.
By leveraging Payboy HR and Payroll Software, you can streamline contingent workforce management processes and ensure smooth operations in compliance with Singapore’s employment laws.
Streamline your HR processes with Payboy today!
As a PSG-approved HRMS, Payboy provides a robust system to help you manage your HR tasks so that you can focus on your business and people!
With our wide range of modules, you can customise a solution to meet the specific needs of your business:
Reach out to us if you are keen for a free demo on how we can help you save hours and give you some peace of mind on payroll and other HR matters so that you can focus on your business and people.
