When an employee gets injured at work, the situation is immediately personal, but in Singapore it also becomes procedural. The country’s Work Injury Compensation Act, commonly referred to as WICA, sets out a structured way for injured employees to receive compensation without having to sue their employer in court. For entrepreneurs, this matters because it turns a stressful incident into a process with rules, deadlines, and defined payouts, as long as you respond correctly and keep clean records. WICA is designed to be a no fault pathway in most everyday cases. That means the focus is typically not on arguing who is to blame, but on whether the injury is work related and what compensation is due. This approach is meant to reduce legal friction and speed up support for the injured worker. It also protects businesses from the uncertainty of open ended civil claims by relying on standardised compensation formulas and caps.
To understand how work injury compensation works in Singapore, it helps to see it as a sequence. It starts with reporting the accident, continues with medical documentation and wage support while the employee recovers, and can end with a lump sum payment if the injury causes lasting incapacity or death. The Ministry of Manpower, or MOM, sits at the centre of this system, setting the rules and issuing key notices that guide when compensation becomes payable and when objections can be raised.
Coverage is broad for employees under a contract of service or apprenticeship, including both local and foreign staff. Where startups sometimes get caught off guard is around worker classification. If someone looks like an employee in practice but is labelled as a contractor on paper, the mismatch can create operational and legal complications when an injury occurs. WICA is not meant for genuine independent contractors and self employed individuals, but most founders know the reality is rarely neat when you are moving fast, hiring project based talent, or working with flexible arrangements.
The first rule of good WICA handling is speed. MOM sets clear reporting expectations for work related accidents. For fatal accidents, you should notify MOM as soon as possible and submit an accident report within 10 days of the accident. For non fatal accidents, you must submit an incident report within 10 days from the employer’s first notice of the accident. In practice, this means the clock often starts when your supervisor or HR team first becomes aware, not when someone decides the case is “serious enough.”
This reporting step is not paperwork for paperwork’s sake. It is the gateway into the compensation process, and late or sloppy reporting can slow everything that comes after. It can also damage trust. An injured employee who feels their employer is dragging their feet may be more likely to seek external advice early, which can make a straightforward claim feel adversarial. Entrepreneurs tend to think in terms of problem solving, but here the best problem solving looks like discipline: document the incident, report within the deadline, and keep your internal narrative factual and consistent.
Once an accident is reported, the next phase revolves around medical documentation. Medical leave, hospitalisation leave, and light duty status granted by a Singapore registered doctor or dentist shape the wage support that the employee receives while recovering. MOM treats this support as compensation, and the system focuses on working days rather than rest days or public holidays. This is one of those details that can create confusion if you do not manage expectations early, because employees often think in calendar days while payroll systems are built around work schedules.
The concept that anchors many calculations is Average Monthly Earnings, usually shortened to AME. AME is generally computed using the employee’s earnings over the 12 months before the accident date, averaged across that period. MOM guidance and common practice recognise that earnings can include items like overtime pay and bonuses, but exclude things like transport allowances and reimbursements, which are treated more like expense related support than wage. For employers, AME becomes a test of payroll hygiene. If your payslips, allowances, and bonus records are inconsistent, the compensation discussion becomes harder than it needs to be.
For many businesses, the most immediate compensation component is medical leave wages, which covers income loss during periods when the employee cannot perform normal duties. The structure is time based and deliberately steps down after certain thresholds. MOM guidance describes full AME payable for outpatient medical leave up to 14 days, and full AME payable for hospitalisation leave up to 60 days. After those thresholds, the rate shifts to two thirds of AME, up to a maximum period of one year from the accident date. The goal is to give strong support early in recovery while keeping the scheme financially sustainable over longer recovery periods.
Light duty cases can feel confusing because the employee may still be present at work, but not earning what they normally would. The principle MOM applies is that the employee should be supported for wage loss arising from light duty arrangements caused by the work injury. In real life, this usually means you need to compare what the employee actually earns during light duty with what they would be entitled to under the WICA framework, then address the shortfall where relevant. Entrepreneurs should see this as both a payroll and people management issue. Light duty is meant to help recovery and reintegration, so it needs to be handled with clarity and respect, not treated as a loophole or punishment.
Medical expenses are the second major pillar. WICA allows injured employees to claim medical expenses for treatment related to the work accident, subject to a cap and a time boundary. The current legal framework ties medical expense claims to treatment received within one year from the date of the accident, up to the specified maximum, whichever is reached first. As of accidents occurring on or after 1 November 2025, the medical expense cap is $53,000, reflecting an increase that MOM announced in early 2024 and implemented through updated limits. This cap matters for budgeting, but it also matters for how you think about insurance adequacy and claims management.
The third pillar is lump sum compensation, which applies when the injury results in permanent incapacity or death, or when the system recognises a form of incapacity that warrants a calculated payout beyond ongoing wage and medical support. MOM explains that permanent incapacity compensation is tied to a formula that uses AME, an age multiplying factor, and the assessed percentage of permanent incapacity. This is one reason why cases can take time. A permanent incapacity assessment often requires the medical condition to stabilise, which is not something you can rush by being impatient with paperwork.
For founders, the most practical numbers to understand are the minimum and maximum compensation limits, because they define the exposure your business faces and the level of protection your insurance must realistically cover. For accidents from 1 November 2025 onwards, the maximum compensation limit for death is $269,000 and the minimum is $91,000. For total permanent incapacity, the maximum is $346,000 and the minimum is $116,000, with partial permanent incapacity calculated proportionally based on the assessed percentage. These limits are published by MOM and reflect policy updates aimed at keeping compensation aligned with wage growth and cost of living shifts.
At this point, insurance becomes the conversation you cannot avoid. Singapore requires employers to buy work injury compensation insurance for all employees doing manual work regardless of salary, and for non manual employees earning $2,600 or less a month, with the salary threshold defined in MOM guidance. From 1 January 2021, MOM also requires WIC insurance policies to be issued by a designated insurer and to comply with compulsory policy terms. If you employ people in roles that fall under mandatory coverage and you fail to insure properly, it is not just a business risk, it is a compliance offence.
There is another line in MOM’s insurance guidance that entrepreneurs should read twice: for employees outside the mandatory insurance categories, employers can choose whether to buy insurance, but if those employees make a valid claim, the employer must compensate them regardless of whether they are insured. In other words, optional insurance never means optional liability. If you are building a business that hires higher earning non manual talent, the decision to insure them is less about legal obligation and more about protecting your balance sheet from a large, sudden payout.
From a workflow perspective, once a claim is moving through the system, MOM issues formal notices that matter. Notices such as a Notice of Assessment or Notice of Computation communicate the outcome of key calculations and assessments. If any party disputes a notice, there is a limited objection window. MOM indicates that objections to such notices must generally be made within 14 days from the date of the notice. This is a critical timing issue for entrepreneurs because it is where delays can become expensive. If you believe AME is wrong, or if there is a genuine disagreement about whether the injury is work related, you have to respond within the formal window rather than relying on informal back and forth.
When disputes arise, some cases may be reviewed through medical board processes for incapacity assessments. The larger point for employers is not to treat a dispute as the default strategy. Disputes should be reserved for real issues, supported by records. If your records are weak, arguing harder rarely improves your position. It usually lengthens timelines, strains the relationship with the employee, and increases the chance of secondary issues like reputational damage or staff distrust. WICA is built to reduce friction, but it cannot do that if the employer treats every claim like a courtroom fight.
There is also a strategic dimension to WICA that entrepreneurs should understand, especially when emotions run high. WICA is a compensation route that typically avoids litigation, while civil claims involve suing under common law principles. The system includes mechanisms and timelines that shape when a person can stay within WICA or attempt to pursue a civil suit. The practical takeaway is that your early handling influences the tone of the entire case. An employee who feels respected and supported is more likely to stay in the WICA process. An employee who feels dismissed may look for other avenues, even when WICA would have been sufficient and faster.
If you want to run your business like an adult company, not a frantic startup, you should treat WICA readiness as part of operational excellence. That means training supervisors to respond correctly after an incident, maintaining a clear internal checklist for reporting deadlines, and keeping pay records that can support AME calculations without arguments. It also means understanding what your work injury compensation insurance truly covers, and ensuring your insurer has accurate, up to date information about headcount and job scopes so there is no nasty surprise when you need the policy to perform.
Finally, remember that compensation systems are not just legal structures, they are trust structures. When someone gets hurt at work, they are worried about recovery, income stability, and whether their job is safe. A founder who communicates clearly, reports on time, and follows the compensation process properly is sending a message that the business is responsible and the employee matters. That kind of leadership does not just resolve a claim. It strengthens culture, reduces fear, and tells the rest of the team what standards you operate by when things go wrong.
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