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Fresh Graduates: Here’s What You Need To Know About Employment Terms Before Taking Up A Job

Read this before you accept and sign any job offer.

Getting an official offer for your first job feels like a first step into the working world. While this exciting transition calls for a celebration, it can be overwhelming to take in all at once. From salary remuneration to annual and sick leaves, we explain the key employment terms for new graduates to take note of before signing on the dotted line.

#1 Salary And Bonuses

When it comes to salary, one might tend to think about negotiating a higher salary. But what is equally important is understanding the terms that come along with it.

Your basic salary refers to the remuneration paid for work done under a contract of service. It does not vary from month to month, regardless of the company’s or your performance, or whether medical or personal leaves are taken.

This basic salary does not include your employer’s CPF contribution. It also does not include fixed allowances (monthly allowances that do not vary monthly, e.g. fixed food and housing allowances) and fixed deductions (e.g. unpaid leave, employee’s CPF contribution).

Other salary-related components such as your 13th month bonus or Annual Wage Supplement (AWS) are not compulsory, unless stated otherwise in your contract.

Some companies might also include a Monthly Variable Component in part of your basic monthly salary. This gives employers the flexibility to make quick adjustments to your wages during sudden business downturns and save jobs, much like the COVID-19 pandemic. The recommended MVC is 10% of your monthly wages.

Read Also: Know Your Rights: Here’s What You Can Do If Your Company Withholds Or Pays Your Salary Late

#2 Probation Period

It is standard practice for employers to put employees under a period of probation. Typically, it lasts from 3 to 6 months. The probation terms should be stated clearly on your employment contract. Upon completing your probation period, you should not just assume that you are a confirmed employee. Ideally, your employer should issue you a written confirmation, appointing as a permanent employee. Otherwise, you might wish to raise up this issue to your HR department.

In the event that you wish to leave the company during probation, you must serve the required notice period for employees on probation. If it is not stated on your contract, the notice period will be the same as after probation period.

The probation period should not affect your annual and sick leave entitlement. When annual leave is pro-rated according to the number of completed months, it is inclusive of the months you have served during probationary period. As for your AWS eligibility or bonus, whether your probation period is included will depend on the terms specified on your contract.

Lastly, under the Employment Act, you are entitled to paid annual and sick leave after working for 3 months, even if you are still on probation period.

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#3 Leave Entitlement

There are various types of leave entitlements, such as annual leave, sick leave, maternity leave and childcare leave. For these types of leaves listed, you are eligible once you have worked for the company for at least 3 months.

You are entitled to a minimum of 7 days of paid annual leave, for the first 12 months of continuous service at the company. With each additional year that you are with the company, you get an additional day of annual leave.

For sick leave, you must inform your employee within 48 hours of your absence. You are entitled to up to 14 days of paid outpatient sick leave, and 60 days of paid hospitalisation leave (inclusive of the outpatient sick leave). A medical certificate by a registered practitioner must be produced to certify that you are unfit for work.

You are also eligible for 6 days of childcare leave and 16 weeks of paid maternity leave per year or 2 weeks of paid paternity leave.

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#4 Non-Statutory Employee Benefits

Larger companies may provide certain employee benefits beyond what the Employment Act states, such as health insurance. Most healthcare benefits provide reimbursement for your medical consultation fees, beyond the paid sick leave that you are entitled to. Other healthcare insurance schemes may even cover your dependents.

Other types of employee benefits could include personal and well-being benefits, sponsored employee training programmes, paid corporate memberships, gym or club memberships, and paid sabbaticals.

Read Also: Here Are The Pros And Cons Of Making Voluntary CPF Top-Ups In 2020

#5 Type Of Employment

Are you an employee or an independent contractor? Employees have a contract of service — an agreement between an employer and an employee. On the other hand, an independent contractor, such as a self-employed person or vendor, has a contract for service, where they are engaged for a fee to carry out an assignment or project.

This distinction is important because as an independent contractor, you are not entitled to statutory benefits such as leave entitlements. There are various factors to identify if it is a contract of service (employee):

Control: The employer can exercise control over how work is done, and what work is to be done. A breach of the employer’s rules may be subject to disciplinary actions.

Ownership of tools or equipment used: An employer typically supplies the tools and equipment required for work, while an independent contractor relies on their own equipment to complete the task.

Method of remuneration: An employee is typically remunerated on a regular basis, compared to being paid through commissions or lump sum payments.

Whether you are an employee or an independent contractor, it is important to be aware of the rights and responsibilities before you begin work. Getting your first job offer is an exciting milestone worth celebrating, but you don’t have to rush to sign it. Take your time to read through the terms and conditions of your contract, and to clarify the terms that you are unsure of before accepting the offer. aims to provide interesting, bite-sized and relevant financial articles.

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