Managing your company’s payroll in Singapore can be a tough job, especially when your business and team are growing exponentially. From processing and reporting to ensuring compliance with Singapore’s regulatory system, managing a payroll should be done accurately. Here are some elements involved when it comes to payroll services in Singapore.
The term salary refers to the basic wages and allowances paid to the employees for the services rendered. These wages do not include allowances for food, lodging, and travel.
Salaries should be settled once or twice a month or at shorter intervals, depending on the employer’s discretion. They should be paid out within 7 days after the end of the salary month. Any later than that would be considered an offence according to Singapore’s Employment Act
Employers should issue itemised payslips for all their employees as covered by the Employment Act, Appendix 8A and Appendix 8B. This should include:
Basic salary and allowances
Date of payment
The detailed employment, salary information and records of local and foreign employees should be kept for tax purposes. Records of any ex-employees should be kept for up to a year after leaving.
Overtime refers to any work that is done in excess of the normal working hours and employers are expected to be paid at least 1.5 to 2 times the hourly basic rate. Payment for overtime should be made within 14 to 18 days after the last day of the salary period and employees can work only up to 72 overtime hours in a month. Do note that not all companies in Singapore provide overtime payments.
For any incomplete work months, an employee’s salary will be prorated according to their employment contract.
An employee is entitled to 7 days of paid leave in a year which may gradually increase alongside their duration of stay in the company to up to 14 days a year. *Some companies provide their employees 14 paid days a year immediately but for any incomplete work months, the leaves will be prorated according to the months they worked.
Some companies provide their employees 14 paid days a year immediately but for any incomplete work months, the leaves will be prorated according to the months they worked.
In Singapore, there are normally 11 national holidays employees can enjoy but if anyone has to work on these days, they are entitled to an extra day’s salary.
For sick leaves, employees are entitled to a minimum of 14 days of paid sick leave (out-patient) and 60 paid days for hospitalisation. These leaves would have to be certified by the company or/and a government-accredited doctor.
Female employees are entitled to 16 weeks of maternity leave (4 weeks before the delivery and 12 weeks after the delivery). These leaves are only applicable if the child is a Singaporean citizen and the female employee has completed a minimum of 3 months of service. Male employees are entitled to 2 weeks of paid parental leave and the father should be married to the mother before childbirth to avail of these benefits.
Mandatory Levies And Contributions
An employer is required to make CPF contributions at monthly rates based on the employee’s annual salary as stated in the CPF Act. They can then recover the employee’s share of the contribution by deducting it from their salary.
1 The table below shows the percentage of wages contributed to CPF.
|Employee’s Age||Employer’s CPF Contribution||Employee’s CPF Contribution||Total CPF contribution rate|
|Up to 55 years old||17%||20%||37%|
|55 to 60 years old||14%||14%||28%|
|60 to 65 years old||10%||8.5%||18.5%|
|65 to 70 years old||8%||6%||14%|
|Above 70 years old||7.5%||5%||12.5%|
*Example of a CPF Contribution Calculation
You are a 25 years old individual earning $5,500 monthly. Your monthly CPF contribution will be 20% of your wage which is $1,100. Your employer would then make a contribution to your CPF account worth 17% of your salary which is $935. The total amount of CPF contribution in your account every month is $2,035.
Employers are required to pay CPF for employees who are Singapore citizens or Singapore Permanent Residents. (SPRs).
Employers are also required to make monthly contributions to
Skill Development Levy (SDL) for training grants when employees are sent for work-related training. The SDL also covers employees who are foreigners, casual, part-time and temporary employees.
Ethnic funds to help the less fortunate ethnic communities such as CDAC, MBMF, ECF, and SINDA.
Levies for foreign workers who are hired under Work Permits.
As payroll management consists of many considerations and documentation, there are bound to be challenges especially if the payroll service is manually performed. These concerns can be avoided entirely by hiring a professional payroll service provider that knows the demands and requirements of handling this process in Singapore. At Paul Hype Page & Co, we have just the service for you! Avoid payroll mistakes that might come your way by contacting Paul Hype Page & Co today to know more about our Singapore payroll outsourcing plans.
1 – https://www.cpf.gov.sg/employer/employer-obligations/how-much-cpf-contributions-to-pay