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Employment Agency License

3 Things You Should Know When Applying For An Employment Agency License

Embarking on your new venture, or renewing the license for your booming agency? Congratulations! 

You’re here because you’re debating the options for your Employment Agency Bond, and cash flow is most often the deciding factor if a business makes or breaks – so here’s 3 things you should know.

Employment Agency License and Security Deposit

According to Singapore law, a Security Deposit is required for your application for an Employment Agency License with the Ministry of Manpower(M.O.M). The amount varies on the type of licence, years in operation, and the number of demerit points accumulated (if any).

Depending on the profile of your candidates, you can choose to apply for either:

  • Select License – for employment agencies placing local or foreign candidates who earn a monthly base salary of more than S$7,000.
  • Comprehensive License – for all other employment types.

Both types of agencies are required to furnish a Security Deposit to the M.O.M. The Deposit requirements will be either S$20,000, S40,000 or S$60,000 – the amount of which will be stated in the In Principle Approval Letter.

The security deposit is, by default, in the form of a Banker’s Guarantee.

What Is A Banker’s Guarantee

True to what it sounds like, a Banker’s Guarantee has the Bank acting as your guarantor, promising to cover any loss shall you default – but here’s the catch – to serve as collateral, you need to open a fixed deposit (FD) account for said full amount with the bank. And that’s on top of the prevailing fees!

One important thing to remember: your Employment Agency License is valid for 3 years – and because of that, your FD deposit must also be held to cover 36 months from your inception date, as well as a 6 months’ documentation process. 

That’s quite a chunk of change to take away from any new venture for 3.5 years.

How to Use Insurance, and Why It Might Work Better For You

As the mantra goes, Cash is King.

Instead of paralysing your cash flow, you may submit the Security Deposit in the form of an Insurance Bond, as an alternative to locking up your S$60,000.

The Approved Insurance Company will arrange a Banker’s Guarantee to M.O.M on your behalf, with its Directors signing to be the guarantors of the insurance company. For this service, the Insurer will simply charge a premium to serve as your Guarantor(premiums usually from S$1,250). Hence, you will be free to utilise your capital towards getting the agency off the ground, accelerating your business operations, and staffing etc.

While you can be earning a small amount of return with the locked capital, you need to weigh the options. Imagine a sudden cash flow crisis – are the returns worth the interest you’ll have to pay for a short-term loan, or worse, is it worth affecting your credit facilities?

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Do you have any questions about employment agency bonds? Let us assist with providing advices on the bond application process, as well as an affordable package to get the ball rolling. Leave a message below, or simply give us a call at 6294 6688!

 

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    AWG: Covid19 Announcement

    Dear Valuable Clients and Partners, 

    Following the suspension of activities at workplace premises under the elevated safe distancing measures announced by the Ministry of Health (MOH) on 3rd April 2020, we would like to announce the following changes to our work so as to continue our service to our customers. 

    AWG Insurance Brokers is a key member of the financial service industry and we are exempted from the suspension. We will continue to provide services to our customers, but with the following measures and changes. 

    Closure of Office to walk-in Customers. 
    We will no longer allow walk-in submission of documents. The office will not be opened to the public and you will need to submit any Original Documents to our Letter Box placed at our office. If Original is not required, we will encourage sending via email. This is to reduce human contacts and reducing the risk of infection. 

    Working from home
    Our staff and management will be taking turns to work at home. We will have a reduced workforce during this period. Many insurance companies also have their staff working from home. You may still contact your servicer at the DID in their email. 

    Premium Payment

    We will not be able to receive cash payment from customer and all payment is to be made via Paynow with UEN No : 199002234G, QR Code (reflected on our debit note) and Cheques. Please indicate the policy/policies number that you pay and email to dorcaschoy@awginsurance.com for any funds transfer 

    MAS has also announced recently on the availability of premium installment. We have not gotten any update from insurers as of today and will update you soonest once we have any information.  

    Claims 
    Claim function is probably the most important part of our existence. We continue to assist and advise you on any claims matter. For claims payment, we would advise that you opt for direct fund transfer to your designated account number if the option is available. 

    We apologize if there is any inconvenience caused and wish you good health amidst this difficult time. 

    Regards