15 Questions to Ask a Recruitment Agency Before You Sign the Contract

Introduction

Engaging a recruitment agency is a key step for many employers and HR teams in Singapore, but signing the contract without asking the right questions can lead to compliance issues, unexpected fees or poor outcomes. This article, 15 Questions to Ask a Recruitment Agency Before You Sign the Contract, sets out the essential queries to protect your organisation and ensure alignment with Singapore laws and best practice.

Whether you are hiring for local roles or bringing in foreign talent on an Employment Pass, S Pass or Work Permit, the right questions help you assess capability, transparency and regulatory compliance under regimes such as the Employment Agencies Act, Employment Act, CPF Act and Employment of Foreign Manpower Act.

Who this applies to

This guide applies to employers, HR managers, hiring managers, small business owners and in-house recruiters in Singapore who are evaluating or renewing agreements with external recruitment agencies.

It is relevant for organisations recruiting for permanent, contract or temporary roles, and for those hiring foreign manpower where MOM approvals, work passes and cross-border processes are involved.

Key rules and requirements in Singapore

Before signing a contract, understand the regulatory framework that affects recruitment services in Singapore. Key statutory and regulatory considerations include:

• Employment Agencies Act , regulates licensed employment agencies and their conduct.
• Employment Act , covers basic employment terms for covered employees.
• CPF Act , employer CPF contribution obligations for Singapore citizens and PRs.
• Employment of Foreign Manpower Act and MOM rules , permits, quotas and employer responsibilities for Work Permits, S Pass and Employment Pass holders.
• PDPA and POHA , handling candidate personal data and privacy obligations.
• IRAS and ACRA compliance , proper invoicing, Reporting and corporate registration checks via ACRA BizFile+ and IRAS myTax Portal obligations (e.g. SDL, tax reporting).
• Work Injury Compensation Act and Workplace Safety and Health Act , employer liability for workplace injuries and safety standards.

Ensure any agency you engage demonstrates familiarity with these Acts and has processes that support your compliance obligations, including payroll, CPF contributions, SDL and record-keeping.

Step-by-step process

Use this practical sequence when evaluating and contracting with a recruitment agency.

• Initial screening: Confirm the agency holds a valid Employment Agency licence and check its reputation and references.
• Scope and services: Agree the roles, candidate sourcing channels, screening and assessment methods, and replacement guarantees.
• Compliance checks: Ask how the agency complies with PDPA, verifies candidate credentials via ACRA/IRAS checks (where relevant) and handles work pass application support for foreign hires.
• Fees and invoicing: Clarify fee structure (contingency vs retained), refund and replacement policies, GST treatment, and invoicing frequency for IRAS purposes.
• Contract review: Have the contract reviewed for terms on liability, indemnities, confidentiality, non-solicitation, payment terms and termination clauses.
• Onboarding and handover: Agree who is responsible for reference checks, offer management, payroll set-up, CPF calculations and reporting.

15 Questions to ask before signing

Ask these targeted questions during selection and contract negotiation.

• 1. Are you a licensed employment agency under the Employment Agencies Act?
• 2. What is your fee structure (retainer, contingency, percentage, flat fee) and when is payment due?
• 3. How do you calculate fees for foreign hires who may not serve a full probation period?
• 4. What replacement or refund policy do you offer if a placed candidate leaves early?
• 5. Do you charge any additional fees (advertising, background checks, skills testing) or pass-through costs?
• 6. How do you handle GST on fees and provide compliant invoices for IRAS?
• 7. How do you perform candidate screening, qualification and reference checks?
• 8. How do you manage candidate personal data in line with PDPA and secure consent for disclosures?
• 9. Do you assist with work pass applications (Employment Pass, S Pass, Work Permit) and MOM liaison, and what is the scope of that assistance?
• 10. How do you verify candidate eligibility to work in Singapore (ACRA checks for company directors, statutory declarations where relevant)?
• 11. Who handles payroll, CPF contributions and SDL, your firm or our HR team? How is responsibility allocated?
• 12. What contractual terms cover confidentiality, indemnity, liability caps and non-solicitation of placed candidates?
• 13. Can you provide client references and case studies in our industry?
• 14. How do you ensure workplace safety and compliance with the Workplace Safety and Health Act for contract placements?
• 15. What dispute resolution and termination procedures are in the contract?

Common mistakes to avoid

Avoid these frequent errors when engaging an agency.

• Signing a standard contract without legal or HR review, clauses on liability, fees and non-solicitation can be costly.
• Assuming the agency handles CPF or payroll without written agreement, clarify responsibilities.
• Not verifying licence status or checking for disciplinary history under MOM or other agencies.
• Failing to confirm PDPA consent and data-handling practices for candidate information.
• Overlooking GST, IRAS reporting and invoicing implications when budgeting recruitment costs.

Practical examples

Example 1: An SME hires through an agency that promises quick placements. The contract lacks a replacement clause, and the hire resigns within two weeks. The employer discovers the agency has no refund policy and limited liability protection. Asking about replacement policy (Question 4) would have prevented this.

Example 2: A company engages an agency to recruit foreign talent. The agency offers work-pass assistance but does not clarify who pays for relocation or medical examinations. Confirming scope of work-pass support (Question 9) and additional costs avoids disputes and IRAS/CPF misunderstandings.

How an experienced consultant can help

An experienced immigration and employment consultant can review agency contracts, advise on compliance with MOM, CPF Act, IRAS and PDPA, and help structure fee and liability terms that reduce risk.

Little Big Employment Agency can assist with due diligence, contract drafting suggestions, support for work pass applications and ongoing advisory to ensure your recruitment arrangements are compliant and fit-for-purpose. This support is particularly valuable where multiple laws intersect, such as Employment of Foreign Manpower Act obligations, payroll, CPF contributions and workplace safety requirements.

Frequently Asked Questions

Q: Should I always use a licensed recruitment agency?

A: Yes. Use an agency licensed under the Employment Agencies Act. Licensing helps ensure minimum standards of conduct and provides regulatory recourse if issues arise.

Q: Who is responsible for CPF contributions for new hires introduced by an agency?

A: Employers are responsible for CPF contributions for Singapore citizens and permanent residents under the CPF Act. Confirm who handles payroll and CPF in your contract, some agencies offer payroll services but responsibility must be clearly allocated.

Q: Can an agency charge fees to candidates and employers at the same time?

A: Under certain conditions, agencies may charge candidates and employers, but PDPA and Employment Agencies Act obligations require transparency and written consent. Confirm all fee recipients and obtain written agreements to avoid disputes.

Q: How do I check an agency’s track record and licencing status?

A: Ask for references, check past client testimonials, and verify licence status with the relevant regulatory body. You can also check corporate information through ACRA BizFile+ and review any public regulatory actions.

Key takeaways

• Ask direct, specific questions about licences, fees, replacement policies and compliance before signing.
• Clarify responsibilities for CPF, payroll, SDL and IRAS-compliant invoicing in writing.
• Ensure data handling meets PDPA standards and that candidate consent is documented.
• Confirm the agency’s capability to support work-pass applications and MOM interactions for foreign hires.
• Have contracts reviewed for liability, indemnity, non-solicitation and termination terms.

Requirements may change, so always check the latest guidance from MOM, or consult a professional adviser.

Contact and next steps

If you would like to find out more about how Little Big Employment Agency can assist with your employment and immigration requirements, please get in touch with the team at [email protected].

Yours sincerely,
The editorial team at Little Big Employment Agency

Disclaimer: This does not constitute legal advice. If you require legal advice, please contact a lawyer.