The legality of Employer of Record arrangements in Singapore for expatriates And Some Anomalies

Singapore has long been a favored hub for multinational employers deploying international talent into Southeast Asia.  Employer of Record (EOR) structures—under which a third-party provider becomes the legal local employer of personnel while the provider’s client directs day-to-day work—had been widely used to test the market, accelerate hiring, and manage compliance without establishing a local entity. 

That landscape materially shifted in 2024.  On 9 July 2024, Singapore’s Ministry of Manpower (MOM) clarified that EOR providers are not permitted to apply for work passes for foreign nationals to be based in Singapore where those individuals will be working for an overseas company without a local presence.  This clarification had immediate consequences for expatriate hiring strategies and it placed Singapore at the forefront of a global trend of closer regulatory scrutiny of EOR and similar “labor supply” models.

Even more recently, a Singaporean (Leong Kwai Tong) was jailed for 40 months and fined S$3,000 for setting up shell companies to obtain work passes for foreigners in exchange for money.  He was also ordered to pay S$105,000 for proceeds of his crime.

Model A above illustrates the scenario envisaged in the Ministry of Manpower’s announcement of 9 July 2024.  Model B illustrates the structure that Leong Kwai Tong, with others, set up.

At first glance, the 9 July announcement and the recent case above might seem to sit on the same continuum of “misuse of work passes”.  In reality, they concern fundamentally different problem statements, risk profiles, and legal consequences. This analysis explains Singapore’s current stance on EOR for expatriates, then contrasts it with the conduct at issue in the Leong prosecution to highlight where policy non-compliance ends and criminal fraud begins. 

Singapore’s Position on EOR for Expatriates

Singapore’s current policy is straightforward: work passes may only be issued to individuals employed by a Singapore-based company that itself sponsors the pass, and that company should be the genuine beneficiary of the individual’s work in Singapore. By extension, EOR providers in Singapore are not permitted to sponsor work passes for foreign nationals who will, in substance, be working for overseas companies with no local presence. This closes a historical practice in which an EOR’s local entity nominally employed a foreign national on a pass but assigned the individual’s services to an offshore client that directed day-to-day work. 

The clarification does not restrict EOR models for Singapore citizens and permanent residents. It targets expatriate work authorization where the legal employer/work-pass sponsor is divorced from the true economic beneficiary and supervisor of the work. The compliance message is to align immigration sponsorship with the actual employing entity and locus of control. Consequences for breaching this policy include enforcement under the Employment of Foreign Manpower Act, potential fines, debarment from work pass privileges, and reputational damage for all parties involved, including possible abetment exposure for the offshore end-client. 

What Remains Permissible

It remains compliant to hire expatriates directly through a Singapore-based employer that sponsors the work pass and is the genuine recipient of services in Singapore. EOR engagements for Singapore citizens and permanent residents also remain permissible, subject to ordinary employment and payroll compliance.

The Leong Kwai Tong Case: A Different Category of Wrongdoing

The Leong Kwai Tong matter sits in a distinct category from the EOR policy clarification. Whereas the EOR clarification addresses a compliance boundary—i.e., the impermissibility of EOR-sponsored expatriate work passes tied to offshore end-users—the Leong case involves alleged criminal conduct of a qualitatively different kind: the creation and use of shell companies, fabrication of corporate and employment records, inflation of foreign worker quotas through phantom local hires, staging sham operations to evade detection, and collecting ongoing payments from foreign nationals to maintain their passes without any real employment. 

These facts reflect intentional deception of authorities, structural abuse of the work pass system, and exploitation of foreign nationals. The misconduct is not a policy gray area about who should sponsor a pass; it is the orchestration of sham enterprises and falsified documents to manufacture eligibility, thereby undermining the integrity of the work pass regime. Unsurprisingly, the legal consequences were correspondingly severe, including a custodial sentence, fines, and confiscation of criminal proceeds. This falls squarely within illegal labor importation and fraud against the regulatory framework, rather than a misinterpretation or misapplication of sponsorship rules. 

Key Differences Between the EOR Clarification and the Leong Case

The first difference lies in intent and structure. EOR non-compliance arises when a legitimate local employer-of-record model is misapplied to expatriates whose true employer and day-to-day controller sit offshore with no Singapore presence. It is a compliance mismatch between the legal sponsor and the actual beneficiary of work, not an attempt to fabricate corporate existence or employment volumes. By contrast, the Leong case involves the deliberate construction of shell companies and false records to generate pass eligibility that would not exist under any compliant model. 

The second difference concerns the underlying activity of the foreign nationals. In an EOR misalignment scenario, expatriates typically perform real work—albeit for an offshore entity—and are paid genuine salaries. In Leong, foreigners were allegedly released into Singapore with no intention of working for the sponsoring companies at all; monthly payments were extracted to maintain the veneer of lawful stay, and phantom local employees were enlisted to inflate quotas. The latter is the hallmark of pass-farming schemes rather than a mislabeled employment arrangement. 

The third difference is the enforcement gradient. MOM’s stance on expatriate EOR sponsorship is a bright-line policy that can carry meaningful penalties, but the pathway to remediation is fundamentally administrative and structural: align sponsorship with a Singapore entity, adjust roles so the legal employer is the beneficiary of services, or cease onshore work. The Leong conduct draws penal consequences for fraud and illegal importation of labor, including imprisonment and disgorgement of illicit proceeds. It signals that MOM targets both policy contraventions and, with greater severity, schemes that corrupt the work pass framework through deception. 

How does the above sit with Remote Work arrangements in Singapore aka Digital Nomads?  

Singapore’s authorities have confirmed that remote work performed in Singapore for an overseas employer with no Singapore nexus is permitted.  To put things in perspective, this is a diagram.

Remote Work, EOR Sponsorship, and Visitor Status in Singapore: Reconciling MOM and ICA Positions

Might it be possible that not getting any work pass at all is legal?  But getting a work pass could be illegal?  

As strange as this may seem, it is possible to find a coherent position on these 3 adjacent issues.  A foreign national physically present in Singapore may, on visitor status, perform remote work exclusively for an overseas employer where no services are rendered to any Singapore party and no employment is sought in Singapore—without triggering a work pass requirement.  This sits alongside, not in tension with, the bright-line policy that bars EOR entities in Singapore from sponsoring expatriate work passes when the overseas end-client is the true employer and beneficiary of services. 

Foreign nationals in Singapore require a work pass when they work for or provide services to a Singapore-based organisation or client (i.e., an entity registered with ACRA), including activities done for gain.  Conversely, where an individual is in Singapore and works solely for an overseas-based organisation or client which has no dealings with any Singapore company, a work pass is not required.  Under the Employment of Foreign Manpower Act 1990, he is neither engaging in nor providing services to any person in Singapore and is not seeking or being offered employment in Singapore.  On those facts, it was double and triple confirmed – no work pass is required.

The Immigration & Checkpoints Authority (ICA) has aligned with MOM’s assessment, reiterating that STVP holders cannot engage in employment, business, profession or occupation in Singapore unless they hold a valid work pass or fall within a work-pass-exempt activity.  Because the remote work in question does not involve engagement with or services to any person in Singapore, ICA confirmed that the individual would not breach STVP conditions.

These clarifications reconcile the statutory definitions with practical scenarios: “employment in Singapore” turns on the locus of the beneficiary and the engagement of services in Singapore, not merely the physical location of the worker.  Where Singapore is only the place from which work is performed remotely for an offshore employer with no Singapore client, counterpart, or beneficiary, there is no work pass requirement and no breach of STVP terms.

How this sits with Singapore’s EOR policy for expatriates

This policy does not conflict with MOM and ICA’s remote-work position. In the EOR context, a work pass is required because services are rendered in Singapore for the benefit of an employer or client that is, or should be, locally present and responsible for sponsorship. In a true digital nomad context, the individual is not employed in Singapore, is not providing services to any Singapore person, and is not seeking local employment; accordingly, there is no Singapore sponsor and no work pass requirement. The two positions address different fact patterns and preserve a coherent boundary: when Singapore is the market, beneficiary, or place of engagement, sponsorship is required; when Singapore is merely the physical location from which a foreign employee continues to serve an entirely offshore employer with no Singapore nexus, a work pass is not required. 

Practical implications and risk boundaries

The unified guidance yields clear operational rules. First, a foreign national present in Singapore may, while on visitor status, perform remote work for an overseas employer provided that no services are rendered to any Singapore entity or client, no commercial dealings occur in Singapore, and the individual does not seek or accept Singapore employment. In that scenario, there is neither an EFMA-triggered work pass requirement nor a breach of STVP conditions. Second, where services in any way connect to a Singapore company, client, or market—whether through delivery, supervision, or control—a work pass will be required and must be sponsored by the genuine Singapore employer that benefits from the work. Third, the prohibition on EOR sponsorship for expatriates serving offshore end-clients remains in force; it targets structural misalignment between sponsor and true beneficiary, not legitimate remote work for an offshore employer with no Singapore nexus. 

Finally, these compliance boundaries should be distinguished from criminal pass-farming or sham-employment schemes, such as those involving shell entities, fabricated records, or monetised pass maintenance. The latter occupy a separate category of intentional deception and draw penal consequences. The MOM/ICA remote-work position and the EOR sponsorship policy together police the lawful perimeter of expatriate work in Singapore; sham schemes fall well outside that perimeter. 

For more information on this article, please contact Jennifer Chih

“The information provided in this page is for general informational purposes only and is not intended to constitute legal advice. We do not warrant its accuracy or completeness or accept any liability for any loss or damage arising from any reliance thereon. While we strive to provide accurate and up-to-date information, the legal landscape is constantly evolving, and the details of any given case may change over time.”

“The information provided in this page is for general informational purposes only and is not intended to constitute legal advice. We do not warrant its accuracy or completeness or accept any liability for any loss or damage arising from any reliance thereon. While we strive to provide accurate and up-to-date information, the legal landscape is constantly evolving, and the details of any given case may change over time.”