A security bond/immigration bond, also known as foreign worker bond, is a legally binding contract to pay MOM (Ministry of Manpower) if the employer or work permit holder violates any of the Work Permit Conditions.
Performance bonds are a type of security that is typically used in building and construction contracts, installation and servicing contracts, or other physical works, usually provided by a bank or an insurance company to the developer or contractor.
A performance bond guarantees the contractor completes a designated project within the specific period as well as to meet obligations specified in the contract. If satisfactory work is not completed, the insurer will compensate the client.
Credit bond enable companies to transfer credit risk to insurance companies that provide the products.
Credit insurance, which applies exclusively to trade receivables, that is, invoices sent to customers after a sale. It is offered by insurance companies and indemnifies the policyholder if a client does not pay. Insurance companies also offer surety bonds. Their role is to provide a payment if counterparty fail to perform a contractual, legal, or tax obligation. There are two applications of surety bonds: contract bonds in the construction industry and commercial bonds in many industrial sectors. In addition, the letters of credit offered by banks are used to support transactions entered into by their clients, wherein, if counterparty does not perform on its obligations, the letter of credit is drawn, that is, the issuing bank pays on behalf of its client thereby reducing the losses.
Employment Agency Bond
Employment agencies in Singapore are required to have an employment agency (EA) license. Before the EA license can be issued, a security bond (in the form of banker’s guarantee) is made payable to the Commissioner for Employment Agencies. It ensures that EAs conduct their business in accordance with the conditions imposed by the EA license and comply with the provisions of the Employment Agencies Act.
It is a security deposit paid by the tenant to the landlord at the start of the tenancy. A security deposit is around one or two months’ rent for every one month’s worth of rent for every year of the lease. The bond is refunded to the tenants when the rental period expires, provided that the property is vacated, and no money is owed for rent, damages or other costs.