Singapore payroll guidelines and regulations are relatively transparent when compared with that of neighbouring countries. However, managing and understanding Singapore payroll can still be difficult, especially for small to mid-sized Singapore based companies trying to process payroll in-house when there is limited manpower.
Here's the top 5 questions about payroll in Singapore, giving you a quick overview.
1. Am I legally required to pay overtime?
Employers are legally required to pay overtime to employees if they are either:
- A non-workman earning up $2,600 SGD
- A workman earning up to $4,500 SGD
Overtime payments need to be made within 14 days after the last day of the salary period. The pay for overtime work in Singapore must be at least 1.5 times the hourly rate of the employer’s pay.
2. What am I allowed to deduct from an employee’s salary (e.g., CPF)?
Salary deduction in Singapore is only allowed under the following reasons:
- For an absence of work (for monthly-rated employees).
- For damage or loss of money or goods.
- Deductions need to be made as a one-time lump sum payment and should not exceed 25% of the employee’s monthly salary.
- For supplying accommodation that has been accepted by the employee.
- For supplying amenities and services that has been accepted by the employee AND authorised by the Commissioner for Labour.
- Salary deductions in Singapore for amenities and services should also not exceed 25% of the employee’s salary for the salary period.
- For recovering advances, loans, overpaid salary or unearned employment benefits.
- Salary Advances:
- Deduction for salary advancements can be deducted in installments spread over a period of no more than 12 months. Each installment should not exceed 25% of the employee’s salary for that salary period.
- Salary Advances:
- Employers can make deductions for loans in installments. Each installment should not exceed 25% of your salary for the salary period.
- Overpaid Salary and unearned employment benefits:
- For overpaid salary and unearned employee benefits, employers are allowed to recover the amount in full.
- Overpaid Salary and unearned employment benefits:
- For CPF contributions.
- For payments to any registered co-operative society, given that there is a written consent from the employee.
- For other purposes.This is only if the employee has provided written consent with the option to withdraw consent at any time.
An employer cannot make a salary deduction that exceeds 50% of the employee’s total salary payablein any one salary period aside from deductions made for:
- Absence from work.
- Recovery of advances, loans, overpaid salary or unearned employment benefits.
- Payments, with your consent, to registered co-operative societies for subscriptions, entrance fees, loan installments, interest and other dues payable.
However, employers are authorised to make salary deductions exceeding 50% of the employee’s final salary payment once the contract of service is terminated.
3. How often should I pay employees?
Employees covered by the Employment Act must be paid a salary at least once a month. It is also possible to pay in shorter intervals if you so choose.
Salary must be paid:
- Within 7 days after the end of a salary period
- Within 14 days after the end of the salary period for overtime work
4. What kind of records does the government require I keep?
As of 1 April 2016, all employers are required to keep detailed employment records of employees covered by the Employment Act as well as salary records.
Records can be in soft or hard copy, including handwritten. The length of time for which employers need to keep these records differ depending on the nature of relationship.
- For current employees: Latest two years
- For ex-employees: Last two years, to be kept for one year after the employee leaves employment
5. Do I have to give employees pay slips (and what information is required on payslips)?
All employers are required by the Employment Act to issue itemised payslips to their employees. Payslips can be in either soft or hard copy (including handwritten).
Payslips in Singapore are issued alongside the payment to employees. If you are unable to provide them together, they need to be given within three working days of payment. In the case of termination or dismissal, employers must give the payslip together with any outstanding salary.
Employers may choose to consolidate payslip if payments are made more than once a month. Consolidated payslips must contain details of all payments made since the last issued payslip.
Required information on itemised payslips
Payslips in Singapore must include the following items unless it is not applicable to the employee.
- Full name of employer
- Full name of employee
- Date of payment (or dates, if payments are consolidated on the payslip)
- Basic salary
- Basic rate of pay, e.g. $X per hour
- Total number of hours or days worked or pieces produced
- For hourly, daily or piece-rated workers, the following needs to be included:
- Start and end date of salary period
- Allowances paid for salary period, such as:
- All fixed allowances, e.g. transport
- All ad-hoc allowances, e.g. one-off uniform allowance
- Any other additional payment for each salary period, such as:
- Rest day pay
- Public holiday pay
- Deductions made for each salary period, such as:
- All fixed deductions (e.g. employee’s CPF contribution)
- All ad-hoc deductions (e.g. deductions for no-pay leave, absence from work)
- Overtime hours worked
- Overtime pay
- Start and end date of overtime payment period (if different from item 5 start and end date of salary period)
- Net salary paid in total
Since the 1st April 2016, the Singapore Employment Act mandates that employers must maintain employment records detailing on both employee and salary records. This is sometimes overlooked when payroll is carried out in-house which can lead to legal consequences.
Automating payroll processing
While employers are legally allowed to issue handwritten payslips, many businesses will find that they can greatly optimise the payrolling process by simply automating this process. With auto-generated payslips standardising the process, HR managers can effectively minimise inaccuracies due to human error.
Local knowledge and expertise
If you’re looking to outsource your payroll, make sure to find a vendor with local understanding. Though Singapore payroll guidelines are fairly transparent, a payroll service provider with in-country support and knowledge of various nuances will be able to better serve you.
The information above can be found in the Singapore Ministry of Manpower website. Don't forget to consult an HR payroll specialist for more in-depth assistance.
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