Traditionally, companies offering ESPP participation to employees in Singapore have needed to obtain approval from the Singapore Ministry of Manpower (MOM) to take payroll deductions from employees who are subject to the Singapore Employment Act (Employment Act). From a procedural perspective, companies first would obtain the required MOM approval and then would commence the offering of ESPP participation to employees in Singapore. Since our last update regarding MOM approval in the September 2015 Clients & Friends Newsletter, the MOM has again changed the process to obtain approval for payroll deductions by now requiring a signed employee acknowledgement form (EAF) and a representative employment agreement to be submitted before it will even begin to consider an application for approval. Specifically, the MOM now requires companies to provide, as part of the application for approval, an EAF that is signed by the lesser of:
- 50% of all employees covered under the Employment Act, or
- 10 employees covered under the Employment Act for each participating entity in Singapore.
Because of this process change, which effectively requires employee action prior to the time that they are eligible to enroll in an ESPP, (which is problematic, particularly from a legal and regulatory perspective) companies effectively are left with the decision of either not offering ESPP participating in Singapore, excluding employees covered under the Employment Act or trying to come up with some type of creative work around.