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Who should foot the bill for Covid-19 costs?



Singaporean businesses rely on foreign manpower to fulfill their staffing needs. In addition to making sure that the company fulfills the local-foreign staff ratio and that the foreign staff is granted a Work Permit, companies now need to ensure that their staff undergoes testing, and if necessary, quarantine to avoid the incoming employee being a Covid-19 carrier. However, can the employers pass on these additional Covid-19 costs to such foreign employees?


From general legal principles, it is open for the employer to state in the contract of employment that the employee must foot these costs, as a pre-condition or consideration (providing value to the other party) of the contract. However, such general principles have been overridden by the specific guidelines laid down by the Ministry of Manpower which state that

  1. Employers must buy Covid-19 medical insurance before such employees (excluding Employment Pass holders and their dependents) arrive in Singapore, and such insurance must provide at least $10,000 in cover.

  2. Employers must bear costs of Covid-19 tests, transport and Stay Home Notice accommodation for Work Permit holders.

So on the surface, it seems that employers have no choice but to bite the bullet when it comes to bringing in new Work Permit employees. However, if one looks closer at the guidelines, it contains an exception:


"However, to protect yourself against Work Permit holders who job-hop shortly after starting work, you can review the contractual terms of new Work Permit holders who have yet to come to Singapore to include certain conditions [which] should be:

  • Mutually agreed between you and your workers

  • Reasonable in duration, e.g. 3-6 months for minimum employment period

  • Tied to only the costs of Covid-19 entry requirements [...]

If your Work Permit holders breach these conditions, they will have to reimburse you. The reimbursement can be partial or full, depending on their length of service."


Therefore, it is possible to pass on such Covid-19 costs to foreign employees who terminate their employment shortly after entering Singapore, as long as the employee signs the employment contract with the permitted clauses. Such costs could possibly be deducted from the last salary paid, subject to the various restrictions found in the Employment Act. Of course, such deductions would also be limited by other contract law principles, such as penalty clauses.


While these rules are accessible to the public, it may be necessary to obtain professional advice in order to ensure that the clauses in the employment agreement remain enforceable, so that the employer's interests can be protected.


Need advice on or a review of your employment contract framework to keep up with Covid-19 rules and regulations? Email me at boongan@lawfirm.com.sg or send me a LinkedIn message.

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