The guidelines were developed jointly by MOM, the National Trades Union Congress and the Singapore National Employers Federation "to give greater clarity" to employers, the three bodies said in an announcement.
Contract workers are entitled to statutory employment benefits after they work for three months without a break in service. These benefits include annual leave, sick leave, maternity, paternity and adoption leave, and leave for childcare.
Many employers have been offering contracts shorter than three months with a break between each. By doing so they avoid having to grant benefits, even to employees who may have worked for them for a long time, the statement said.
Under the new guidelines employers are encouraged to treat contracts of 14 days or more, and renewed within one month, as continuous. They are also asked to calculate leave benefits based on the total length of employment.
Employers should give "sufficient" notice of the end of a contract, the guidelines said. If no notice period has been agreed then the guidelines suggest a sliding scale from one day's notice for cumulative employment of less than 26 weeks to four weeks' notice for employment of five years or more.
Although most Singaporean workers are on permanent contracts, term contract employees "form a small but important part of our workforce", the statement said.
According to a labour force report by MOM there were 202,400 term contract employees in Singapore in 2015, or 11.3% of the resident workforce.
Zainal Sapari, NTUC Assistant Secretary-General said: "Employers are strongly encouraged to adhere to these guidelines. The Labour Movement will work closely with our family of unions, associates, partners, social enterprises and related organisations, to ensure that employment practices are aligned with the guidelines."
Bryan Tan of Pinsent Masons MPillay, the Singapore joint venture partner of Pinsent Masons, the law firm behind Out-Law.com said: "These developments are not surprising given the growing size of the term contract workforce. The push to give such employees more rights will cause employers to re-calibrate their views on these contracts."