Payroll management is the salary or payroll administration of the employees under Singapore Employment Act. Managing the payroll can be efficient with the help of payroll system or outsource payroll services. Otherwise, employers are required to be familiar with payroll process, calculation and compliance with Singapore payroll regulatory. Employers under the auto-inclusion Scheme (AIS), must submit their employees’ income information to IRAS electronically for their income tax assessment.
What is Salary or Payroll?
Salary, payroll or wage refers to all remuneration that includes allowances payable to an employee in respect of work done under the contract of service but does not include:
- Value of house accommodation
- Supply of amenities
- Employer’s voluntary contribution to any pension or provident fund
- Travelling allowance or concession
- Reimbursed expenses
- Gratuity payment
- Retrenchment benefit
Monies earned by employee in the month has to be paid in a salary period.If he or she work for an incomplete month, the following formula is used: to determine daily pay:
- Daily Pay = Monthly Gross Rate of Pay/ Number of Days Employee Work in the Month
- Pro-rated Salary for Incomplete Month = Monthly Gross Rate of Pay/ Number of Working Days In the Month * Number of Days Employee Work In the Month
- 1 Hour OverTime Pay Calculation for Monthly Rated Employee = (12/52 )*(Monthly Basic Rate of Pay / 44)*1.5
- 1 Hour OverTime Pay Calculation for Daily Rated Employee = Daily Pay/Daily Hours of Work*1.5
Time of Salary Payment
The payroll period shall not exceed 1 month. There is only 1 agreed salary period for both salary and overtime payment. However, salary and overtime period can be different. The salary payment has to be within these time:
- Salary – within 7 days after the end of the salary period.
- Overtime – within 14 days after the end of the salary period.
Salary Payment on Resignation
Should your employees wish to resign, terminated, the salary or wage has to be paid as followed:
- With notice – salary has to be paid on day of termination of contract.
- Without notice – salary has to be paid within 7 calendar days of termination of contract from the last day of work.
- Dismissal and termination – salary has to be paid on the day of dismissal or termination. Otherwise, salary is payable within 3 working days.
Employees’ salaries in Singapore are protected from any deductions by employers other than those authorised under the Employment Act. The maximum amount of all deductions in respect of any one salary period is 50% of the employee’s salary. However, the following are excluded from the 50% cap:
- Deductions for absence from work.
- Deductions for income tax.
- Recovery of advances or loans.
- Payment to any cooperative society in respect of subscriptions, entrance fees, instalments of loans.
Examples of authorised deductions are:
- Deductions for damage or loss of goods entrusted to employee attributed to neglect or default.
- Absence from work.
- Cost of meals supplied by employer at the request of the employee.
- Accommodation, amenities and services which cannot exceed 25% of one month’s salary.
- CPF contributions.
- Contributions to superannuation or provident fund.
- Payment to cooperative societies.
- Any other purpose which may be approved by the Minister.
With effect from 1 April 2016 and enforced from 1 April 2017, all employers regardless of their staff strength, must provide itemised payslips and KETs to their employees. These arrangements will help to prevent any misunderstandings and minimise disputes between employers and employees. Non-compliance will be treated less severely as compared to non-payment of salary or other breaches of the Employment Act. Itemised payslips can be given in soft or hard copy. The employer should be able to produce it upon MOM’s request.
Statutory Requirements, Mandatory Levies and Contributions
Employers are required to make the following monthly contributions to your employees payroll in addition to CPF contributions:
- Ethnic funds such as CDAC, ECF, MBMF and SINDA.
- Skills Development Levy.
- CPF contributions for National Servicemen.
- Monthly levies for each worker with work permits.