Managing your company’s payroll in Singapore can be tough, especially when your business and team are growing exponentially. From processing and reporting to ensuring compliance with Singapore’s regulatory system, payroll management should be done accurately. Here are some elements involved when it comes to payroll services in Singapore.
Employee’s Salary
The term salary refers to the basic wages and allowances paid to the employees for the services rendered. However, these wages do not include allowances for food, lodging, and travel.
Employers must pay salaries once or twice a month, or at shorter intervals, as they choose. Thus, payment should be within 7 days after the end of the salary month. Failure to do so is a violation of 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
Salary period
Overtime pay
Annual leave
Deductions
Employers must maintain detailed records of employment, salary information, and employee records for tax purposes. Additionally, records of former employees should be kept for at least a year after their departure.
Overtime is work done beyond regular hours. Furthermore, employers must pay at least 1.5 to 2 times the basic hourly rate for overtime. Overtime pay should be within 14 to 18 days after the last day of the salary period. Moreover, employees can work a maximum of 72 overtime hours in a month. Do note that not all companies in Singapore provide overtime payments.
For incomplete work months, employees will receive prorated salaries based on their employment contracts.
Employee’s Leaves
Employees earn 7 days of paid leave annually. Furthermore, this can increase over time, up to 14 days, depending on their length of service.
Certain companies offer 14 days of paid leave annually. However, for incomplete work months, leave entitlements are prorated based on the number of months worked.
Singapore typically has 11 national holidays. Hence, employees who work on these days receive an additional day’s pay.
Employees are entitled to at least 14 days of paid sick leave for outpatient care and 60 days of paid sick leave for hospitalization. However, these leaves would have to be certified by the company and/or a government-accredited doctor.
Female employees are entitled to 16 weeks of maternity leave, including 4 weeks before and 12 weeks after giving birth. 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
Employers must contribute to CPF at monthly rates based on the employee’s annual salary, as outlined in the CPF Act. They can then recover the employee’s share of the contribution by deducting it from their salary.
The table below shows the percentage of wages contributed to CPF. 1
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 must contribute to the Central Provident Fund (CPF) for Singapore citizens and permanent residents (SPRs).
Employers must also contribute monthly to:
Skill Development Levy (SDL) for training grants when employees attend 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 employed under Work Permits.
Payroll Outsourcing Services
Payroll management is complex and requires careful documentation. Manual payroll can be challenging. Professional payroll service providers can handle these tasks efficiently and avoid potential issues in Singapore. At Paul Hype Page & Co., we have just the service for you! Avoid payroll mistakes that might come your way by learning more about our payroll outsourcing plans and accounting services in Singapore.
1 – https://www.cpf.gov.sg/employer/employer-obligations/how-much-cpf-contributions-to-pay