HR in Singapore’s digital economy

Benjamin Gaw
Drew & Napier, Singapore
benjamin.gaw@drewnapier.com

Cherlyn Seah
Drew & Napier, Singapore
cherlyn.seah@drewnapier.com

Tasha Wie
Drew & Napier, Singapore
tasha.wie@drewnapier.com

During the Covid-19 pandemic, the world was forced to rethink traditional models of employment and human resource frameworks. Since then, the evolution of how we picture a workplace has further accelerated. Employers must now grapple with rapid digital transformation and ever-changing employment models and arrangements to remain competitive, compliant and up to date. This article seeks to discuss key legal considerations under Singapore law relating to inter alia, hybrid work models, cross-border employment, digital monitoring, and the ethical use of artificial intelligence (AI) in human resource decision-making.

Key regulatory framework

Singapore’s employment regulatory legislation comprises a multi-layered framework of legislation, tripartite guidelines and administrative enforcement mechanisms.

The principal legislation is the Employment Act 1968, which establishes the fundamental employment standards, including contracts of service, overtime payment, annual leave, termination of employment, salary payments and more. This is complemented by: the Employment Claims Act 2016 on dispute resolution; the Retirement and Re-Employment Act 1993; and the Employment of Foreign Manpower Act 1990. The latter deals with matters involving the employment of foreign nationals in Singapore, including, among other things, matters relating to work passes.

The Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) is a collaborative initiative between the Ministry of Manpower, the National Trades Union Congress and the Singapore National Employers Federation. TAFEP administers the Tripartite Guidelines on Fair Employment Practices (TAFEP Guidelines), which promote merit-based recruitment and non-discrimination. Although these guidelines do not have the force of law, employers found to have engaged in discriminatory practices may face administrative consequences, including potential restrictions imposed on the hiring of foreign workers, and being placed on the Ministry of Manpower’s watchlist where employment practices may be scrutinised.

From 2027, Singapore’s new Workplace Fairness Act (WFA) and Workplace Fairness (Dispute Resolution) Act 2025 will come into effect, enshrining anti-discrimination protections into law, and setting out the process for individuals to make claims against firms if they experience workplace discrimination. The WFA bans discrimination in employment on prescribed grounds, including nationality, age, sex, marital status, pregnancy, caregiving responsibilities, race, religion, language and disability. It will also establish statutory mechanisms to allow employees to seek redress for discriminatory treatment. The WFA is significant as it indicates that the advisory model under TAFEP, as discussed above, will now move towards being afforded the force of law.

Evolving workforce models in the digital economy and legal considerations

Flexible work arrangements

During the Covid-19 pandemic, many non-essential sectors in Singapore were forced to implement remote working arrangements. When life gradually returned to normalcy, it became apparent that hybrid work arrangements were here to stay, with many employers choosing to continue with such arrangements. Singapore has also been exploring the concept of having employers introduce flexible work arrangements (FWA) in the workplace for several years, from as early as 2014. FWAs include flexi-place, flexi-time and flexi-load, where employees work flexibly with different workloads and with commensurate remuneration.

In 2024, the Ministry of Manpower released the Tripartite Guidelines on Flexible Work Arrangement Requests, which was intended to facilitate the uptake of FWAs by setting up the process for employees formally to request FWAs. It should be noted that these Guidelines are only for situations in which employees find the need to make formal requests. If informal arrangements have been effective for both employer and employee, there is no need for parties to follow this process. Generally, employers are not required to approve all FWA requests, but they must put in place processes to give such requests proper consideration. Employers can rely on ‘reasonable business grounds’ for rejecting employees’ requests, including the proposed arrangement leading to significant increase in cost burden to the employer, or that such arrangement is not feasible or impractical due to the nature of the job.

Cross-border, remote work arrangements and independent contractors

As the labour market shifts towards a hybrid work arrangement being the norm rather than the exception, many employers are seeing the benefit of working with cross-border and remote teams. This is to alleviate domestic manpower crunches in certain labour markets and reduce relevant costs, especially where operations are small. Employees are also increasingly exploring the possibility of international remote work for prolonged periods, whether for family, personal lifestyle or other choices.

Before considering the issues which may arise when faced with working remotely, the preliminary question is whether the arrangement reflects an employment relationship or an independent contractor engagement. This question is crucial as it determines what each party’s respective obligations are, and the applicability of local or foreign employment law and its corresponding protections. In this regard, Singapore courts have emphasised that the determination of whether an employer-employee relationship exists requires consideration of all relevant factors, including the degree of control exercised over the worker, integration into the business, and the overall working arrangements. Whether the contract itself states that a worker is an independent contractor or employee is of little significance to this analysis, as substance will prevail over form. Employment misclassification carries significant risk for employers, including fines and, where applicable, back-payment of Central Provident Fund (CPF) contributions and benefits. Where parties are unclear about the nature of their contracts and their rights and obligations, they may approach a legal professional for assessment, or approach the Ministry of Manpower directly for assistance.

Overseas employers looking to recruit an employee based in Singapore have previously considered either directly hiring the individual or doing so via an Employer of Record (EOR). Where a Singaporean or Singapore Permanent Resident employee is hired in Singapore, CPF contributions are required to be payable to the employees working in Singapore even if the employer is based overseas or the employment agreement is signed overseas. The direct employer will be responsible for the CPF contributions. Overseas employers with no local presence should however be careful about employing a foreigner who is to work in Singapore through an EOR, where such EOR applies for their work pass as their employer. The Ministry of Manpower has recently advised that such an arrangement is forbidden, and that overseas employers should instead first establish a local presence (eg, by incorporating a company or setting up a representative office in Singapore) before using such a local entity to apply for a work pass for the foreign employee.

Local companies who wish to hire employees based overseas face a different set of legal and practical considerations. Essentially, Singapore employers should carefully consider the choice of law in their employment contracts with overseas-based employees. While parties generally have the freedom to select the governing law of their contract, the enforceability of such a choice may be subject to the mandatory employment laws of the jurisdiction where the employee is physically located. The employee’s place of work often carries significant weight in determining the governing law of the employment relationship, particularly where disputes arise regarding statutory employment protections, termination rights or workplace safety obligations. Singapore employers may wish to consider conducting due diligence on the employment laws of the host jurisdiction as well as the risk of its potential applicability.

Additionally, Singapore employers must consider their potential tax and corporate presence implications in the overseas jurisdiction. Depending on the nature and extent of the employee’s activities, the arrangement could inadvertently create a permanent establishment or taxable presence for the Singapore company in that jurisdiction. The Singapore company may also be subject to certain regulations, as well as immigration and data protection obligations, depending on the employee’s place of work.

Data protection and digital monitoring

The Personal Data Protection Act 2012 (PDPA) governs the collection, use and disclosure of personal data by organisations in Singapore, including in the employment context where employers routinely handle substantial volumes of their employees’ personal data. From an employment law perspective, the key considerations are that employers should maintain transparent data handling practices, ensure the accuracy of records used in employment decisions, and implement appropriate security measures for personnel files and sensitive employee information.

Digital monitoring

Interest in employers’ use of digital workplace tools to conduct employee monitoring has increased in recent years, especially with the rise of hybrid work arrangements. This includes email and internet surveillance to GPS tracking, keystroke logging and screen capture software. Employers should ensure that such monitoring activities abide by both the PDPA’s requirements and employment best practices. For example, employers should put in place clear policies, notify employees of such monitoring activities, and obtain employee consent. In the recent case of Prashant Mudgal v SAP Asia Pte Ltd [2026] SGHC 15, the Singapore High Court has, in the strongest judicial endorsement to date, affirmed that the implied duty of mutual trust and confident exists in employment contracts under Singapore law. Accordingly, there is a risk that covert surveillance, monitoring of personal devices, or excessively intrusive tracking may expose employers to claims for breach of this duty that underpins the employment relationship. Before implementing such measures, employers should mitigate this risk by balancing legitimate business interests against the intrusiveness of the measure and employees’ reasonable privacy expectations, and by documenting such assessments together with clear and consistently enforced policies.

Ethical use of AI in HR decision-making processes

In addition to digital workplace tools, many employers are also exploring the deployment of AI to assist with human resource functions. This includes the screening of job applications, employee performance analysis and assessments, workforce planning, and decisions relating to promotions and contract terminations, including retrenchments.

Notwithstanding the benefits AI offers especially in terms of improving efficiency and productivity, employers should be careful to note that AI may, because of its algorithm, unintentionally perpetuate and amplify biases and discriminatory patterns in human resource practices. In 2018, news outlets reported that online giant Amazon had abandoned an AI recruitment tool it was testing. Based on the data the algorithm had accumulated through the resumes it was fed, it appeared to have been ‘taught’ that male candidates were preferable. This resulted in the penalisation, and therefore discrimination, of female candidates. The discrimination of protected characteristics during processes such as hiring, dismissal or disciplinary action may lead to employers finding themselves being non-compliant with the TAFEP Guidelines and the upcoming workplace fairness legislation. To guard against such risk, human oversight should always be maintained over such consequential determinations, and regular audits should be conducted to ensure fairness, accuracy and reliability of such tools for the uses they are deployed for. AI tools should facilitate, rather than completely replace human resource functions. For transparency, employees should also be informed when an AI tool has assisted in the making of decisions which affect them.

Conclusion

The rise of the digital economy has irrevocably reshaped traditional employment and human resource frameworks in Singapore. Remote work, cross-border teams, independent contracting arrangements and AI-driven processes offer unprecedented flexibility and efficiency. Yet these developments also heighten the importance of compliance with the Employment Act, the PDPA, Ministry of Manpower/TAFEP guidance, and the upcoming workplace fairness legislation.

Human resource functions must therefore evolve into strategic guardians of both innovation and integrity. By embedding fair employment practices, robust data protection measures and ethical AI governance into digital transformation efforts, organisations can harness technological advancement while sustaining trust. In Singapore’s innovation-driven economy, those who successfully integrate compliance with creativity and flexibility will not only mitigate risk but also enhance long-term growth and competitiveness