COUNTRY

Singapore

SINGAPORE PAYROLL OUTSOURCING SERVICE

It’s essential to keep track of and manage your employee’s Singapore payroll. Payroll administration for your employees is often straightforward. However, it needs to be managed cautiously because several laws need to be taken into account. Alternatively,  outsourcing to an experienced hr & payroll services specialist to assist with payroll services in Singapore can ensure your company remains compliant and that employees are paid on time every month.  

The monthly payroll compliance requirements depend greatly on the resident status of the employee. Inaccurate processing might lead to mistakes and have an effect on payroll compliance, which in turn would result in penalties to the Singapore company.

PAYROLL ADMINISTRATION IN SINGAPORE

The key points below explain all the important aspects of payroll administration as per Singapore rules and regulations.

Detailed Salary Computation

Pro-Rated employee salary computation

Employers must take note of the employee pro-rated portion. An employee is only entitled to the pro-rated amount of his compensation for the portion of the month if he/she worked for an incomplete month. The following formula can be used to compute the salary of an employee who did not work for a full month. 

Formula: Monthly gross rate of pay divided by working days in the given month and times by the number of days the employee worked in that month.

Overtime Calculation

Every employee is entitled to overtime. Any labor performed after regular working hours is considered overtime labor (excluding breaks). A worker is limited to 72 hours of overtime each month. You will be required to pay at least 1.5 times the hourly base rate of pay for overtime labor. After the wage period’s final day, payment for overtime must be given within 14 days. 

An employee who is protected by the employment act is not compelled to work more than 8 hours per day or 44 hours per week. Additionally, they cannot work for longer than 6 hours without a break, and the break cannot be less than 45 minutes.

You may be entitled to overtime pay if you fall under the below categories. 

  • a white-collar worker who earns up to S$2,600 (not in managerial or executive positions)
  • a blue-collar worker who earns up to S$4,500 (i.e: operates machinery and vehicles or is involved in manual labor)

Payment Frequency

As per the country’s regulations, every employer must pay wages or salaries at least once a month or more frequently by dividing and paying them at shorter intervals. Failure to pay for salary and wage can be considered an offense, and it must be resolved within 7 days after the end of the salary period. 

Failure to comply and pay for the employee’s wages for work performed within 7 days after the end of the employee’s pay period can result in an offense. 

A first-time Offender: Faces a maximum fine of $15,000, a maximum jail sentence of six months, or both. 

Repeated Offender:  Receive a fine of up to $30,000, a year in jail, or both.

Itemized Payslip

The Ministry of Manpower in Singapore has announced in 2016 that all companies must provide their employees with a written statement of salary is now mandated. The payslips can be in physical copy or electronic format and they must include information such as below. 

  • Payslip Item description
  • Full name of employer
  • Full name of the employee
  • Date of payment (or dates, if the payslips consolidate multiple payments).
  • Basic salary, allowances paid for salary period if any, and other additional payments such as bonuses and deductions made if any.

Employment Record

Employers are required to record data such as payslip records and the employment details for each employee. These data must be preserved for a minimum of 2 years. After a former employee leaves the job, their records must be preserved for 1 year. Employers are required to maintain payslip records in paper copy or electronic form. The following details must be included in the employee records.

  • Employee Address
  • NRIC of the employee / Work Pass and its expiration date 
  • Gender
  • Date of employment 
  • Departure date from employment
  • Working hours (including durations of breaks)
  • Dates of vacation/leaves taken and public holidays

Mandatory Annual Leave

Employees are eligible for yearly leave under the Employment Act. However, you must be employed for at least three months. 

The yearly leave that an employee is entitled to is 12 days. An employee may be eligible for annual paid leave, which is 7 days for those with 1 year of service or more depending on the length of the employer’s employment. Notably, years of employment with your company determines how much yearly leave you are entitled to. The service year officially starts on the first day of work with the employer.

EMPLOYER MONTHLY OBLIGATIONS IN PAYROLL SINGAPORE

In Singapore, each employer is obligated to fulfill certain statutory filing once they have recruited the company’s first employee. One of the most important compliance requirements for an employer is completing the monthly CPF filing.  

What is CPF in Singapore?

The Central Provident Fund (CPF) is a major social security savings program in Singapore. It provides lifelong income, healthcare financing, and house financing, providing many working Singaporeans with financial stability for their retirement years.

Who should get CPF in Singapore?

Under the CPF Act, individuals eligible to receive CPF contributions are as follows. 

  • Citizens of Singapore (minimum wage more than $50)
  • Singapore Permanent Residents who live in Singapore with a minimum of 3 years (minimum wage more than $50)
  • An employee who works either full-time, part-time, temporary, contract, or casual basis.

CPF Contribution Rate

All Singapore companies must deduct the CPF amount from the employee’s income. That amount will be deposited into the employee CPF accounts together with the employer’s contribution amount. 

You can refer to the CPF for the latest contribution rates. 

Aside from monthly contributions to Central Provident Fund (CPF) for Singapore and Singapore permanent residence employees. An employer must also contribute to ethnic organizations like CDAC, ECF, MBMF, and SINDA that work to aid the underprivileged in their particular ethnic communities.

Employers are also required to contribute to Skills Development Levy who in turn will provide employee training funds. 

Employers who hire foreign nationals with work permits or S Passes must also pay a monthly levy for each foreign employee.

Penalties for Non-compliance for CPF Contributions

Failure to timely pay an employee’s CPF payments will be subject to the following penalties.

  • First-time offender – Fine up to $5,000 or an imprisonment term of up to 6 months.
  • Repeated offender – Fine up to $10,000 or an imprisonment term of up to 12 months.
  • Deducted the employee payment for CPF contribution but failed to pay to the CPF Board – Fine up to $10,000 and/or imprisonment term up to 7 years.

EMPLOYER ANNUAL OBLIGATIONS IN SINGAPORE

IR8A

It is worth noting that employers must electronically submit their employees’ income information to IRAS (Inland Revenue Authority of Singapore) by the 1st of March annually if the employer falls under the following criteria. 

The employer has received notice to file their employment income electronically or 

The employer had 10 or more workers employed by them for the entire year.

IR21

Additionally, companies with international/foreign employees are required to file Form IR21, which functions as a request for tax clearance for foreign personnel. This filing must be done at least 1 month before the employee leaves Singapore for three months or longer, begins an overseas posting or terminates his job.

BENEFITS OF HIRING PAYROLL OUTSOURCING SERVICES IN SINGAPORE

  • Enhance security – By outsourcing payroll to a reputable business that invests in cutting-edge technology, has redundant backup, and has many server locations, employers can protect their confidential data.
  • Reduce payroll errors – Payroll companies automate many of the time-consuming parts of payroll, reducing the possibility of mistakes brought on by manual calculations and data entry.
  • Make employee self-service easier – Full-service Employees can often check their pay information, track their hours, and control their withholdings through payroll on a mobile device.
  • Maintain compliance – Employers don’t have to worry about keeping up with changing government requirements because payroll providers do, and they frequently take the initiative in filing all the documentation required for compliance.
  • Cut expensesPayroll service providers charge fees, but when compared with the cost of potential fines and penalties, outsourcing payroll may end up saving firms money.
  • Saving timeOutsourcing  Payroll management frees up time for employers to concentrate on other business-growth objectives like product development, customer service, and sales.

WHY CHOOSE RELIN CONSULTANTS AS YOUR SINGAPORE PAYROLL PROCESSING PARTNER?

  • Time SavingsPayroll processing may take more time and work for you as your company expands and your employee profile becomes more comprehensive. If your business is a small to midsize company that employs up to 50 people, outsourcing to a Singapore payroll services provider such as Relin Consultants may be more affordable and less stressful than attempting to perform this operation internally.
  • Avoid errors and non-compliance – Our specialist team of payroll experts has extensive experience in processing outsourced payroll, and our payroll software is ISO certified with a built-in error prevention/detection system. This will allow the reducing the mistakes that commonly result from manual calculations and data entry.
  • Confidentiality and privacy – Outsourcing payroll to a reputable provider that invests in state-of-the-art technology and has redundant backup and multiple server locations can help employers safeguard their confidential data.
  • Reduced costs – Payroll providers charge fees, but when compared to the cost of the fines and penalties that can result from mistakes, outsourcing payroll may save businesses money.

WHAT ARE THE SINGAPORE PAYROLL SERVICES RELIN CONSULTANTS PROVIDE?

  • Monthly salary computation of gross to net salary and employer CPF filing 
  • Submission of monthly and annual payroll reports to the management with detailed, variance reports, and payroll journals.
  • Initiate the monthly salary disbursement to employees and CPF payments to authorities
  • Issue confidential payslips to employees. 
  • Provide support to the client company auditors during the annual audit. 
  • Support the company in the annual preparation of year-end IR8A forms. 
  • Provide ad hoc support on the preparation of IR21, GML, NS MUP, CPF refund, government statistics forms, etc. per the Singapore Employment Act
  • Manage the employee’s leave and expense claims. 
  • Provide assistance with applying for work pass or employment pass for foreign employees. 

Relin Consultants is a payroll services provider in Singapore. If you require assistance with Singapore payroll matters, do reach out to us at enquiry@relinconsultants.com

FAQs

Does Singapore have a minimum wage?

There is no mandated minimum pay or salary requirement in Singapore for either domestic or foreign workers. Singapore company practices paying employees based on their talents, skills, and competencies. As a consequence, businesses can retain skilled workers and personnel.

How does payroll work in Singapore?

An employer must monthly make salary payments, distribute itemized payslips, and complete CPF filings and contributions to comply with local regulations.

Is there a payroll tax in Singapore?

No, Singapore does not impose any payroll tax. Individuals are expected to declare their income annually and pay personal income tax to IRAS directly.

What is CPF in the Singapore payroll?

CPF is a central provident fund in Singapore. All employers are obligated to contribute monthly to the provident fund at a certain percentage.

What are the types of payroll in Singapore?

Generally, there are two types of payroll in Singapore. 

  • In-house payroll: Such arrangement involves the payroll processed by the employer’s employees in-house. The company can either choose to process the payroll manually or by using the available payroll software. The person in charge usually will be appointed either from the finance department or the human resources department. 
  • Outsourced payroll: This arrangement involves a third party managing the payroll function on behalf of the company. The Singapore company will provide instructions on new joiners, leavers’ monthly salaries, etc. The third-party will ensure proper salary computation and fulfilling the statutory requirements.

Is salary tax-free in Singapore?

Individuals must declare their annual income from employment to IRAS before the stipulated deadline pay income tax at a certain rate. The income tax rate will depend on the annual income of the employee as Singapore adopts a progressive tax rate.

Is payroll outsourcing right for you?

Payroll outsourcing is a smart move if you want to minimize risk and guarantee dependable payroll delivery. There is no minimum headcount requirement or maximum headcount limitations, therefore outsourcing the payroll function can be advantageous for businesses of all sizes.

Does Relin Consultants payroll benefit my small business?

Yes. Relin consultants use the most updated technology for payroll management. They guarantee accuracy and assistance from their well experienced team giving you time to focus on the main operations of the business.

What information do I need for payroll in Singapore?

In simple terms, the payroll management process has to do with the management of financial information pertaining to employees. Included information would be specifics on the employee’s pay, incentives, bonuses, deductions, and net compensation.

An employer is obligated by law to keep these documents and maintain their accuracy.

Are payslips mandatory in Singapore?

The Employment Act mandates that detailed pay slips be provided to employees by all businesses. Payslips are available in hard copy (including handwritten) or soft copy formats. In Singapore, payslips are given out with the paychecks.

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