Security bond for Work Permit holders: banker’s guarantee or insurance guarantee?
By the TRS broking team24 Oct 20264 min read
The short answerEmployers must post a S$5,000 security bond to MOM for each non-Malaysian Work Permit holder before the worker arrives. It can be a banker’s guarantee or an insurance guarantee. An insurance guarantee avoids tying up cash; the insurer pays MOM if the bond is forfeited and recovers it from the employer.
What is the bond for?
The bond secures the employer's obligations to MOM, such as paying the worker and sending them home when employment ends. It can be forfeited if those obligations are breached.
Banker’s guarantee or insurance guarantee?
A banker's guarantee usually needs cash or a facility held against it. An insurance guarantee is bought for a fee and does not lock up working capital.
| Banker’s guarantee | Insurance guarantee | |
|---|---|---|
| Issued by | A bank | An insurer |
| Cash tied up | Usually yes | No |
| If forfeited | Bank pays MOM | Insurer pays MOM, recovers from employer |
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When is it needed?
Before the worker arrives in Singapore. It stays in place for the duration of the Work Permit.
Frequently asked questions
Is the bond needed for Malaysian workers?
MOM does not require the bond for Malaysian Work Permit holders.
Does the bond protect the employer?
No. It protects MOM. The employer remains liable to repay the insurer if a claim is paid.
Related cover
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Sources
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.