Transfer of Employment in Singapore: What Happens to Staff When a Business Is Sold Under Section 18A

Short answer: When a business or part of it is sold as a going concern in Singapore, section 18A of the Employment Act moves its employees to the buyer automatically. Contracts continue on the same terms, service stays unbroken, and the seller must notify staff before the transfer. A sale of shares is not a transfer of employment.

Selling a business usually means selling its people as well. A transfer of employment in Singapore is governed by section 18A of the Employment Act 1968, which decides who moves to the buyer, on what terms, and what staff must be told before completion. This guide is for owners on either side of an asset sale, merger or group restructuring, and covers the CPF, tax and work pass steps that follow.

Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.

What does section 18A of the Employment Act do?

Section 18A stops a business sale from ending the employment of the staff who work in that business. Their contracts carry on with the buyer as if the buyer had made them in the first place.

The text of section 18A sets out several effects that apply on completion:

• Contracts continue. The transfer does not terminate the contract of service of anyone employed by the seller in the business or part transferred (s 18A(1)(a)).
• Service is continuous. Time worked for the seller counts as time worked for the buyer (s 18A(1)(b)).
• Rights and liabilities pass. The seller’s rights, duties and liabilities under those contracts transfer to the buyer, and acts before the transfer are treated as the buyer’s (s 18A(2)).
• Terms stay the same. The employee’s terms and conditions are the same as those enjoyed immediately before the transfer (s 18A(3)).
• Criminal liability stays put. The section does not transfer anyone’s liability to be prosecuted for an offence (s 18A(4)).

For a buyer, the third point matters most: the seller’s employment liabilities, such as unpaid salary, can follow the staff, so they belong in due diligence and the price.

Which deals count as a transfer of employment, and which do not?

A transfer under section 18A is a change of employer that happens because a business, or part of it, passes to a new owner. If the employing company stays the same, there is no transfer.

The Act defines “transfer” to include the disposition of a business as a going concern and a transfer effected by sale, amalgamation, merger, reconstruction or operation of law, and “undertaking” to include any trade or business. MOM’s guidance on transfer of employment adds a list of situations that are not transfers.

If you are still choosing the deal structure, our buyer’s guide to share purchase or asset purchase sets out how employees, contracts and stamp duty differ between the two.

Which employees are covered?

Section 18A applies to employees covered by the Employment Act who are employed in the business, or part of it, being transferred. Staff who work elsewhere in the seller’s company are not moved.

MOM states that the Act covers all employees under a contract of service, local and foreign, including part-time, temporary and contract staff. It does not cover seafarers, domestic workers, or statutory board employees and civil servants. For anyone outside the Act, moving to the buyer depends on the contract and on the employee agreeing to a new one.

Draw up an accurate list of who works “in the undertaking or part transferred”. Shared roles, such as a clerk supporting two divisions, need a clear decision.

What must the seller and buyer tell employees, and when?

The seller must notify affected employees, and any trade union of affected employees, as soon as reasonable and before the transfer, so that consultations can take place. The buyer must give the seller the information needed to complete that notice.

Under section 18A(5), the notice must cover:

1. the fact that the transfer will take place, its approximate date and the reasons for it;
2. the implications of the transfer and any measures the seller envisages taking in relation to affected employees, or a statement that none are envisaged; and
3. the measures the buyer envisages taking in relation to the employees who will join it, or a statement that none are envisaged.

“Affected employee” is wider than the people who will move. It covers any employee of the seller who may be affected by the transfer or by measures taken in connection with it. If the Commissioner for Labour considers there has been an inordinate delay by the seller in notifying, or by the buyer in supplying information, the Commissioner may direct compliance within a set time (s 18A(7)).

Can the buyer change terms after the transfer?

Not on its own. The buyer must keep the transferred employees’ terms unchanged unless an employee agrees to a change, although section 18A(12) allows the buyer and the employee, or their union, to negotiate and agree different terms.

MOM’s guidance on disputes is:

• the employee and employer should first negotiate the terms of the transfer;
• if they cannot agree new terms, either party can end the employment by giving notice; and
• either party can refer the disagreement to the Commissioner for Labour, who can delay or prohibit the transfer of the employee, or order the transfer on terms the Commissioner considers just (s 18A(9) and (10)).

In a unionised business, the seller’s collective agreement continues for 18 months after the transfer or until its stated expiry, whichever is later (s 18A(8A)).

A buyer that plans to cut roles soon after completion should treat that as a separate exercise with its own rules, not as part of the transfer. Our guide to retrenchment in Singapore covers notice, retrenchment benefit and MOM’s notification requirement. Remember that the transferred employees’ service with the seller counts as service with the buyer.

Transfer of employment in Singapore: what happens to CPF, tax and work passes?

The employment contract moves automatically, but the government records do not. Each agency needs its own step.

MOM’s work pass restructuring FAQ sets conditions worth planning around:

• the new company must declare a business activity in the same sector as the previous company;
• neither company may have an adverse record with MOM at the point of transfer, and all outstanding levy must be paid;
• MOM can transfer all pass holders, or only Employment Pass holders, their dependants and Letter of Consent holders; S Pass and Work Permit holders left out of a partial transfer need new passes from the new company;
• the request should go in 1.5 to 2 months before the intended date, and most cases take up to 2 months; and
• the previous company should keep paying CPF for its local employees during the process, because MOM will not adjust a higher levy bill caused by a drop in local workforce.

Our guide to transferring work pass holders during a restructuring covers the related-company and quota questions in more detail.

Do employment contracts need to be novated?

Not for employees covered by section 18A. The section itself carries the contracts across, so no three-party novation is needed to make the transfer effective.

A letter to each transferring employee confirming the new employer, the effective date and that terms and service are unchanged is still good practice. Customer, supplier and lease contracts are a different matter and do need assignment or novation; our guide to assignment and novation explains the difference. If the deal is a GST-registered business sale, check whether it qualifies as a transfer of a going concern for GST.

What steps should the seller and buyer follow?

Agree the employee plan in the sale agreement and work backwards from the completion date.

1. Confirm the structure: section 18A applies to a business transfer as a going concern, not a share sale.
2. List the transferring employees with their contracts, salary, leave balances and length of service.
3. Check for unpaid salary, CPF arrears and pending claims, and agree in the sale agreement who bears them.
4. Issue the section 18A notice to affected employees and any union, and allow time to consult.
5. Submit the MOM COBE request 1.5 to 2 months ahead if work pass holders are moving.
6. Before the first payroll, set up the buyer’s CSN, notify IRAS through myTax Mail, and agree who reports which months on Form IR8A.
7. Send confirmation letters and update HR, payroll and leave records from the effective date.

Frequently asked questions

Can an employee refuse to transfer to the buyer?

MOM’s guidance is that if the employee and employer cannot agree on terms, either can end the employment by giving notice, and either can refer the disagreement to the Commissioner for Labour, who can delay or prohibit the transfer or set just terms.

Does the buyer have to recognise the employee’s years of service with the seller?

Yes. Section 18A(1)(b) treats service with the seller as service with the buyer and provides that the transfer does not break continuity of employment.

Do we need to notify staff if we are only buying the shares?

No. MOM lists a transfer of shares as not being a transfer of employment, because the employer stays the same company.

Is tax clearance needed for foreign staff who move to the buyer?

Not where a non-Singapore Citizen employee moves to another company in Singapore because of a merger, takeover or restructuring within a group. The employer notifies IRAS through myTax Mail, and both employers report the year’s income on Form IR8A.

Last reviewed: 10 November 2026. The Editorial Team, Raffles Corporate Services.