While remote working is not a new type of work arragement, it has been elevated into the mainstream. Today, many employers have hybrid and flexible work arrangements, and some even full remote working arrangements.
With this flexibility, individuals may start considering the attractiveness of working from Malaysia instead. This may even seem the logical choice as they will enjoy a lower cost of living while retaining a “Singapore” pay packet.
Since many employees can already work remotely and employers are more confident in managing them outside of a physical office, there’s a case to be made for work-from-home in Malaysia instead of Singapore.
From an employer’s perspective, however, if they are going to manage someone in Malaysia, then why not just pay a “Malaysia” salary then.
There are many considerations in the argument to work-from-home from Malaysia instead of Singapore, and we look at some things both employers and employees need to mutually work out.
Read Also: How Much Does It Cost To Set Up A Company In Southeast Asia?
Is This A Mutually Agreed Work Arrangement?
The first question is obviously whether employers know that their employees are working from outside of Singapore. Even if such an arrangement may not cause employers any constraints, it may not be fair or ethical for them not to know.
On a working level, employers may want to retain the flexibility of calling employees back to the office or to go for meetings/events at any moment. Just because they are working from home does not mean the company cannot direct them to head out to do work. In fact, Singapore’s Employment Act explicitly states that “hours of work” means the time during which an employee is at the employer’s disposal and is not free to dispose of his or her own time and movements exclusive of any intervals allowed for rest and meals.
There could also be other considerations for data flow and security reasons.
Of course, there may also be more formal and regulatory reasons and obligations that they may have – some of which are detailed in the following points.
Read Also: I Tried Work-From-Anywhere: It Was Great, But It’s Definitely Not WFH
Will Employees Be Covered Under The Employment Act?
Employees who are not employed in Singapore will generally not be covered under Singapore’s Employment Act. Thus, both employer and employee may want to come to an agreement whether an employee is considered a Singapore employee.
Alternatively, companies with a Malaysian presence may prefer to hire the employee under their Malaysia entity. It makes it clearer for both the employer and the employee, as the person is now an employee in Malaysia – and there may be regulatory requirements on the company to provide employment benefits and protections in accordance with Malaysia’s Employment Act.
A freelance working arrangement may also be suitable in this case. It gives the employee the flexibility in managing their own movements, while employers (or in this case clients) simply base the arrangement on the workscope – rather than an employee-employer relationship.
The chosen working arrangement can have big implications as employees in Singapore are entitled to employment protection under the Employment Act. Some of these include protection for pay (overtime pay, CPF contributions, and others), entitled leaves (Maternity/Paternity leave, Childcare leave, Annual leave, and others), medical benefits (Sick leave, hospitalisation leave, and others) and more.
Read Also: Singapore Employment Act: 10 Statutory Requirements To Pay Employees
Paying CPF Contributions
The CPF website clearly explains that “CPF contributions are not payable on wages given to your employee who is employed to work overseas”.
Again, this goes back to the point that the work arrangement has to be mutually agreed by both employer and employee. Staying in a grey area will not benefit either employer or employee in the long-run.
Obviously, while the CPF website states that employers may not be obligated to pay CPF to their employees if they are employed to work overseas, there’s nothing to stop them from agreeing to continue CPF contributions. Though, this will obviously be an added cost for the business.
Read Also: Do You Need To Pay CPF For Your Singapore Employees Based Overseas?
Where Do Employees Pay Their Income Tax?
For a start, IRAS requires employers to submit Form IR8A for their employees in Singapore. This means the employer has to understand whether their employee is based in Singapore or Malaysia in the first place.
For individuals, it may not matter if you are doing your work outside of Singapore for an extended period. You may still be required to pay taxes in Singapore. Conversely, you may not be required to pay taxes on overseas-derived income.
For employees living in Malaysia, they may also have tax obligations there, especially if they are there for 182 days or more in a year.
Working-From-Anywhere Is Not Difficult In The Short-Term, But More Tricky In The Long-Term
The reality is that the modern working environment has evolved – aided by technology. Employers and employees may have to adapt to the flexibility and constraints it brings.
The problem is that labour laws may not be able to keep up with changing work arrangements, and as such, there may be grey areas.
As you can tell, the information that we can find online may not be comprehensive. This means disagreements when trying to adhere to current requirements may similarly arise.
Further adding to the flexibility and grey area is that employees want to work in another country. This would have implications for both employees and employers, and worse still, some of these implications may not become apparent until a problem arises.
For employees who want to work-from-anywhere in the short-term, such as on a holiday or visiting family, it can be a benefit that both employers and employees enjoy. Employers do not have to lose the employee’s output just because they want to travel for several weeks. On the employee’s part, they can also work during working hours, while enjoying the company of friends and family or sightseeing after work hours and on weekends.
The real problem is when this becomes a prolonged and even permanent work arrangement – the potential for problems arising may outweigh the benefits that employers and employees may enjoy.
Read Also: Working From Anywhere: Things You Need To Know Before Working Remotely Overseas
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