Payroll Processing, Regulation, and Management in Singapore

Accounting services singapore

Payroll Processing, Regulation, and Management in Singapore

Gone are the days when payroll only focused on paying employees. In modern-day business world, payroll processing is a more complicated and vital administrative undertaking. As an employer in Singapore, you must familiarise yourself with a number of key regulations associated with payroll processing, regulation, and management to meet compliance requirements as stipulated in the Employment Act (EA). Oversights may lead to heavy penalties and also affect your reputation as an employer.

The Employment Act (EA) applies to all employees, regardless of their nationality, who are employed under a contract of service. It excludes seamen, domestic workers and individuals employed by statutory boards and government.

Payroll Processing in Singapore

Payroll processing in Singapore involves accurately calculating salaries of your staff on a monthly or weekly basis. The entire process takes account of salary credits, production of payslips and credits into the Contributory Provident Fund (CPF) or the Maturation-promoting Factor (MPF) accounts of your employees.

Why Outsource Your Payroll Processing?

Is your in-house payroll department consuming too much of your time and financial resources?

Tianlong Services is a trustworthy and professional payroll processing and outsourcing service provider you can rely on. We use the latest software for accurate payroll processing and assign an account manager for your company.

You should consider our services because outsourcing your non-core tasks to us will help you concentrate more on your core competencies. Benefits include:

  • Ensuring compliance with Singapore HR payroll and employment laws and rules
  • Maintaining payroll file for direct employees and outsourced contract staff
  • End-to-end payroll services including adjustments, overtime, and other variables
  • Providing e-payslips for all employees using cloud-based payroll software
  • Assurance to stay updated with legislative changes and statutory reporting requirements
  • Submission of annual employee income declaration tax file to IRAS.  

Payroll Regulation in Singapore

In Singapore, there is no minimum wage law. The following are the key regulations associated with payroll.

Salary

Salary describes payments agreed upon between employee and employer as stipulated in the employment contract. It includes:

  • Basic pay;
  • Allowances;
  • Bonuses;
  • Commissions; and
  • Incentives.

It does not include benefits provided by the employer, such as:

  • Housing;
  • Medical;
  • Travelling;
  • Utilities, etc.

The basic monthly pay is calculated as below:

(12 x Monthly Basic Rate of Pay) ÷ (52 x Average No. of Days per Week an Employee is required to Work)

The wages for an incomplete month is calculated as below:

(Monthly Gross Rate of Pay x No. of Days Employee Worked in that Month) ÷ No. of Working Days in Month

Even though there is no minimum wage legislation in Singapore, exceptions exist for foreigners who use Employment Pass, S Pass, and Work Permit, as they must meet minimum salary conditions. Similarly, cleaning, landscape, and security firms are earmarked to pay minimum salary to employees through the Progressive Wage Model by upgrading skills and improving productivity. 

Payment Frequency

Generally, employers must pay employees on a monthly basis, and not exceeding 7 days after the salary period. Furthermore, payments for overtime must not exceed 14 days after the salary period.

Exceptions include:

  • Employee dismissal/termination, which is paid on or within 3 days from date of dismissal/termination.
  • Employee resignation with notice, which is paid on the last day of employment.
  • Employee resignation without notice, which is paid within 7 days from the last day of employment.

Itemised Payslips

According to the Employment Act (EA), employers must give employees itemised payslips on the date of salary payment or within 3 days from the date of salary payment.

When it comes to dismissal/termination, employers must give employees itemised payslips in the company of the owed salary payment.

Even though it does not matter whether the payslip is hard copy, soft copy, or handwritten, the following details must be explicitly recorded on them:

  • Name of employer;
  • Name of employee;
  • Date of payment;
  • Basic salary;
  • Start and end date of salary period;
  • Allowances;
  • Other remunerations (bonuses, public holiday pay, rest day pay, etc.);
  • Deductions;
  • Overtime hours worked and corresponding pay;
  • Start and end date of the overtime pay period; and
  • Net Salary.

Payroll Management in Singapore

Managing your payroll can be a strenuous job, especially when your business is growing and your employee headcount is steadily increasing. As an employer, you should manage your payroll with extreme accuracy from processing and reporting components to ensuring compliance with the regulatory requirements to calculating and paying salaries.

In Singapore, in order to manage your payroll system efficiently, our experts at Tianlong Services have presented you with some key points that you must consider:

  • Salary includes basic pay and allowances (payment for work done under a contract of service), and excludes travel, food or housing allowances.
  • Salary must be paid at least once a month, and within 7 days after the end of the salary period.
  • Employers must give employees itemised payslips on the date of salary payment or within 3 days from the date of salary payment.
  • Employers must keep details of employees’ salary records, while former employees’ records’ should be kept for one year after their exit.
  • Salary for employees’ incomplete work months must be pro-rated
  • Employees can only work for a maximum of 72 overtime monthly hours, and payments made within 14 days after the last day of the salary period.
  • Employees must strictly comply with mandatory levies, contributions, and statutory requirements including Central Provident Fund (CPF), Skills Development Levy, Ethnic funds, and levies for foreigners with work permits.

Generally, a well-organized payroll management includes proper maintenance of the system in addition to the timely payout of salaries to all employees.

At Tianlong, we offer cost-effective and effective payroll management services for businesses. Contact us today to discuss your requirements.   

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