In March 2025, the Ministry of Manpower (MOM) introduced a decisive change that reshaped the way foreign businesses must think about hiring staff in the city-state.
For years, many overseas companies relied on Employer of Record (EOR) services as a convenient shortcut. Through this model, third-party providers acted as the legal employer of staff, sponsoring work passes and allowing foreign firms to operate in Singapore without establishing a local company. That arrangement has now been banned. Only Singapore-registered entities may sponsor work passes for foreign employees. This signals the close of simplified outsourcing arrangements and the start of a more structured framework of corporate responsibility.
The Ban on EOR Sponsorship
Until recently, EOR providers allowed entrepreneurs and multinationals to employ staff in Singapore without incorporation. The EOR legally employed the worker, while the client company directed their work. For small startups or expanding firms testing the market, it was a cost-efficient way to gain access to Singaporean talent and presence without committing to full incorporation.
However, MOM judged this practice to be inconsistent with Singapore’s principles of governance and employment oversight. As of March 2025, EORs are no longer permitted to sponsor Employment Passes (EPs) or other work passes on behalf of overseas businesses. The employment relationship must now be genuine and rooted in Singaporean corporate law.
The immediate effect is clear: any foreign company that wishes to base employees in Singapore must incorporate a local entity. Remote oversight remains permissible, but the employment structure must rest on a Singapore-registered company.
Incorporation as the New Baseline
The practical implication of this shift is that incorporation is no longer optional. A Private Limited Company (Pte Ltd) is now the most common and recommended structure for foreign entrepreneurs. Incorporation requires at least one resident director, corporate secretarial services, and compliance with tax and regulatory frameworks.
For firms that only need a light footprint, alternative structures such as a branch office or representative office exist. Yet these options are restrictive: representative offices, for example, cannot conduct revenue-generating activities. For any company intending to hire foreign talent or build a scalable team, a Pte Ltd remains the most realistic path.
This structural requirement ensures that businesses establish accountability within Singapore. It also connects employment more directly to the obligations of payroll, tax, and social security reporting, reducing the risk of misclassification or avoidance.
The Role of Corporate Service Providers
Another important development in 2025 is the regulation of Corporate Service Providers (CSPs). With the introduction of the Corporate Service Providers Act 2024, which came fully into effect in June 2025, only firms registered with the Accounting and Corporate Regulatory Authority (ACRA) may provide incorporation, nominee director, or secretarial services.
This step tightens oversight of the very intermediaries that previously enabled fast and sometimes opaque entry into Singapore. For businesses, this means greater reliability but also a narrower field of legitimate providers. Companies must now ensure that any partner assisting with setup is properly accredited and compliant.
Employment Passes Under COMPASS
The end of the EOR shortcut coincides with new changes in Singapore’s work pass framework. Since 2024, the COMPASS (Complementarity Assessment Framework) system has governed Employment Pass eligibility, requiring companies to demonstrate both the qualifications of the candidate and the contribution to Singapore’s workforce diversity and skills base.
From January 2025, qualifying salary thresholds increased to SGD 5,600 for general sectors and SGD 6,200 for financial services, with higher benchmarks for older candidates. Renewal applications will also need to meet these thresholds from 2026.
At the same time, Singapore has created new pathways to attract high-value talent. A five-year Employment Pass is now available for experienced tech professionals in shortage roles, and the Overseas Networks & Expertise (ONE) Pass continues to provide a five-year, highly flexible option for senior executives and entrepreneurs. These measures show that while compliance has tightened, Singapore remains committed to competing for the best global talent.
Remote Management, Local Substance
One of the key concerns for international entrepreneurs is whether they must relocate physically to Singapore. The answer is no. Remote management remains entirely feasible. Founders and executives can remain abroad while directing Singapore-based operations digitally.
The critical difference is that the employment relationship must be anchored in a compliant Singaporean entity. Payroll, contracts, and work passes must all flow through that entity. A local resident director is required, and tax and regulatory filings must be completed in Singapore. The days of relying on an outsourced EOR provider are over.
For many startups, this will mean a shift in mindset. Incorporation is not merely a formality but a strategic investment in governance, accountability, and credibility. While it introduces costs and responsibilities, it also provides access to Singapore’s ecosystem on firmer and more legitimate footing.
Why Singapore Made the Change
The rationale for these reforms lies in governance and risk management. By requiring incorporation, Singapore ensures that:
These measures align with Singapore’s long-standing philosophy: openness to global business, paired with high standards of compliance and transparency. The city-state aims to attract entrepreneurs who are serious about building a real presence, not those seeking shortcuts.
Strategic Implications for Business Leaders
For companies, the new environment creates both challenges and opportunities. Incorporation adds upfront costs and obligations, but it also provides long-term stability. With a properly established entity, firms can more easily open bank accounts, access local financing, issue stock options, and expand operations across Asia.
Businesses must also adapt to rising employment costs. Salary thresholds for work passes are higher, and S Pass levies will increase from September 2025. Strategic workforce planning—balancing local hires, foreign professionals, and remote contractors—will become essential.
Ultimately, those who adapt quickly will maintain access to Singapore’s skilled workforce and global connectivity. Those who resist compliance risk exclusion from one of the world’s most attractive markets.
Conclusion: From Shortcuts to Substance
The end of the EOR model in March 2025 marks a turning point in Singapore’s employment landscape. What was once a flexible arrangement is now anchored in the need for a proper local presence.Incorporation, compliance, and governance are no longer optional; they are the baseline for doing business.
For business leaders, the message is unambiguous: to hire in Singapore, you must build in Singapore. Remote leadership is still viable, but only if employment structures rest on a real, locally registered entity. Far from being a barrier, this reform ensures that those who enter Singapore do so with credibility, commitment, and a foundation for sustainable growth.
NB! The information provided in this article is for general informational purposes only and does not constitute legal advice. While we strive to ensure the content is accurate and up-to-date, it should not be relied upon as a substitute for professional consultation. For personalized advice or assistance with legal matters, please contact our specialists directly.
For years, many overseas companies relied on Employer of Record (EOR) services as a convenient shortcut. Through this model, third-party providers acted as the legal employer of staff, sponsoring work passes and allowing foreign firms to operate in Singapore without establishing a local company. That arrangement has now been banned. Only Singapore-registered entities may sponsor work passes for foreign employees. This signals the close of simplified outsourcing arrangements and the start of a more structured framework of corporate responsibility.
The Ban on EOR Sponsorship
Until recently, EOR providers allowed entrepreneurs and multinationals to employ staff in Singapore without incorporation. The EOR legally employed the worker, while the client company directed their work. For small startups or expanding firms testing the market, it was a cost-efficient way to gain access to Singaporean talent and presence without committing to full incorporation.
However, MOM judged this practice to be inconsistent with Singapore’s principles of governance and employment oversight. As of March 2025, EORs are no longer permitted to sponsor Employment Passes (EPs) or other work passes on behalf of overseas businesses. The employment relationship must now be genuine and rooted in Singaporean corporate law.
The immediate effect is clear: any foreign company that wishes to base employees in Singapore must incorporate a local entity. Remote oversight remains permissible, but the employment structure must rest on a Singapore-registered company.
Incorporation as the New Baseline
The practical implication of this shift is that incorporation is no longer optional. A Private Limited Company (Pte Ltd) is now the most common and recommended structure for foreign entrepreneurs. Incorporation requires at least one resident director, corporate secretarial services, and compliance with tax and regulatory frameworks.
For firms that only need a light footprint, alternative structures such as a branch office or representative office exist. Yet these options are restrictive: representative offices, for example, cannot conduct revenue-generating activities. For any company intending to hire foreign talent or build a scalable team, a Pte Ltd remains the most realistic path.
This structural requirement ensures that businesses establish accountability within Singapore. It also connects employment more directly to the obligations of payroll, tax, and social security reporting, reducing the risk of misclassification or avoidance.
The Role of Corporate Service Providers
Another important development in 2025 is the regulation of Corporate Service Providers (CSPs). With the introduction of the Corporate Service Providers Act 2024, which came fully into effect in June 2025, only firms registered with the Accounting and Corporate Regulatory Authority (ACRA) may provide incorporation, nominee director, or secretarial services.
This step tightens oversight of the very intermediaries that previously enabled fast and sometimes opaque entry into Singapore. For businesses, this means greater reliability but also a narrower field of legitimate providers. Companies must now ensure that any partner assisting with setup is properly accredited and compliant.
Employment Passes Under COMPASS
The end of the EOR shortcut coincides with new changes in Singapore’s work pass framework. Since 2024, the COMPASS (Complementarity Assessment Framework) system has governed Employment Pass eligibility, requiring companies to demonstrate both the qualifications of the candidate and the contribution to Singapore’s workforce diversity and skills base.
From January 2025, qualifying salary thresholds increased to SGD 5,600 for general sectors and SGD 6,200 for financial services, with higher benchmarks for older candidates. Renewal applications will also need to meet these thresholds from 2026.
At the same time, Singapore has created new pathways to attract high-value talent. A five-year Employment Pass is now available for experienced tech professionals in shortage roles, and the Overseas Networks & Expertise (ONE) Pass continues to provide a five-year, highly flexible option for senior executives and entrepreneurs. These measures show that while compliance has tightened, Singapore remains committed to competing for the best global talent.
Remote Management, Local Substance
One of the key concerns for international entrepreneurs is whether they must relocate physically to Singapore. The answer is no. Remote management remains entirely feasible. Founders and executives can remain abroad while directing Singapore-based operations digitally.
The critical difference is that the employment relationship must be anchored in a compliant Singaporean entity. Payroll, contracts, and work passes must all flow through that entity. A local resident director is required, and tax and regulatory filings must be completed in Singapore. The days of relying on an outsourced EOR provider are over.
For many startups, this will mean a shift in mindset. Incorporation is not merely a formality but a strategic investment in governance, accountability, and credibility. While it introduces costs and responsibilities, it also provides access to Singapore’s ecosystem on firmer and more legitimate footing.
Why Singapore Made the Change
The rationale for these reforms lies in governance and risk management. By requiring incorporation, Singapore ensures that:
- Employers are subject to local corporate and tax obligations.
- Employment contracts meet Singapore’s standards for employee rights, data protection, and intellectual property.
- Authorities have clear oversight of who is employing whom, reducing risks of money laundering, payroll manipulation, or abuse of work pass privileges.
These measures align with Singapore’s long-standing philosophy: openness to global business, paired with high standards of compliance and transparency. The city-state aims to attract entrepreneurs who are serious about building a real presence, not those seeking shortcuts.
Strategic Implications for Business Leaders
For companies, the new environment creates both challenges and opportunities. Incorporation adds upfront costs and obligations, but it also provides long-term stability. With a properly established entity, firms can more easily open bank accounts, access local financing, issue stock options, and expand operations across Asia.
Businesses must also adapt to rising employment costs. Salary thresholds for work passes are higher, and S Pass levies will increase from September 2025. Strategic workforce planning—balancing local hires, foreign professionals, and remote contractors—will become essential.
Ultimately, those who adapt quickly will maintain access to Singapore’s skilled workforce and global connectivity. Those who resist compliance risk exclusion from one of the world’s most attractive markets.
Conclusion: From Shortcuts to Substance
The end of the EOR model in March 2025 marks a turning point in Singapore’s employment landscape. What was once a flexible arrangement is now anchored in the need for a proper local presence.Incorporation, compliance, and governance are no longer optional; they are the baseline for doing business.
For business leaders, the message is unambiguous: to hire in Singapore, you must build in Singapore. Remote leadership is still viable, but only if employment structures rest on a real, locally registered entity. Far from being a barrier, this reform ensures that those who enter Singapore do so with credibility, commitment, and a foundation for sustainable growth.
NB! The information provided in this article is for general informational purposes only and does not constitute legal advice. While we strive to ensure the content is accurate and up-to-date, it should not be relied upon as a substitute for professional consultation. For personalized advice or assistance with legal matters, please contact our specialists directly.
How we can help
- Business Relocation Assistance: We provide comprehensive support for relocating your business to Singapore, ensuring a smooth transition in line with local regulations and market requirements.
- Company Incorporation in Singapore: Our team guides you through the process of opening a company, handling all legal, administrative, and regulatory requirements to establish your presence quickly and efficiently.
- Visa and Documentation Support: We assist with visa applications, work permits, and other necessary documents, ensuring your employees and executives can move and operate in Singapore seamlessly.
- Regulatory and Association Liaison: We offer expert guidance when interacting with Singapore’s regulators and industry associations, ensuring compliance and fostering good relationships.
- Partner and Investor Sourcing: We help you connect with local partners and investors, leveraging our extensive network to foster growth and investment opportunities for your business.
- Employee Hiring and Onboarding: Our team supports recruitment and onboarding, ensuring you hire top talent in Singapore while adhering to all employment regulations and practices.