As soon as a business transits from being a one-person affair to one that hires people for different services in the production process, the owner must pay the employees’ wages or salaries as and when due. Unlike other countries, Singapore has no minimum wages for workers, and people can typically work more than the standard 40 hours per week.
Nonetheless, there are strict rules governing how companies manage their payroll in Singapore. The Internal Revenue Authority of Singapore (IRAS) has guidelines that employers must follow regarding how they pay their workers. Contravening these guidelines may mean that the company’s growth may shrink rather than flourish. Apart from seeking to meet IRAS instructions, you may not be doing enough to motivate your workers if you fail to follow these guidelines.
Below are verifiable truths you need to take cognisance of to achieve a successful payroll regulation in your business in Singapore.
Keeping Employees’ Records
It is mandatory in Singapore for employers to keep their employees’ comprehensive salary and employment records, local or abroad. In addition, the company is still expected to have the records maintained for employees that have stopped working, for at least a year after they’ve left.
When Should the Salaries be Paid?
Employers are expected to pay salaries at least once monthly, as defined by the Employment Act. Salaries must be paid within seven days following the end of the salary period; even if the employee has chosen a shorter interval, the policy remains so. Non-payment of salary is a breach of the Employment law.
Salary Payment Mode
Before salary payment is made to the individual employee, payslips must have been generated; hard or soft copy. Employees’ salaries can be paid in cash on working days at work or any other agreed place or to the individual’s bank accounts.
Expected Items On a PaySlip
Every payslip given to individual employees must comprise the following vital information;
- Employer’s full name
- Basic salary and allowances of each employee
- Date of payment
- Overtime payment
- Employee’s full name
- Date of overtime payment
- Salary period, and other crucial information.
What is Excluded from the Salary?
Salary is a fixed compensation paid regularly for service(s) rendered. It does not include accommodation, feeding, transport, pension, retirement benefits, and others.
Employee’s Salary for Incomplete Work Months
An employee who cannot work for a whole month is entitled to only a pro-rated salary ratio for the number of days such an individual has worked that month. Therefore, you can get an accurate estimate of an employee’s pro-rated fraction of his salary by multiplying the number of days by the daily basic pay rate of the employee.
Accurate Estimation of Overtime Payment in the Payroll
Any task carried out after the agreed working hours, excluding breaks, is termed overtime labour. Employers are mandated to pay at least 1½ or double the hourly basic pay for such employees as overtime payment. An employee can only work for not more than seventy-two hours in a month for an overtime task.
Strict Adherence to the Payment of Obligatory Excises
In Singapore, employers must make monthly contributions for the following levies;
- Central provident fund (CPF) contributions to the CPF board:- This is an obligation of every Singapore citizen or permanent resident, either as an employee or an employer. Both employees and employers make contributions based on their age and income earned. CPF is not paid for foreign workers.
- Skills Development Levy:- This payment is an obligation of every employer on behalf of their employees in reciprocity for training grants given to employees when sent for work-related training.
- Ethnic fund:- This payment is intended to serve as an aid to the less privileged in ethnic communities.
- Foreign Workers Levy:- Employers must pay foreign workers levies if they employ foreign workers with work permits or S passes.
Adherence To The Statutory Reporting Requirements
Employers with at least seven or more employees must submit their employees’ accurate income information electronically to IRAS. To be eligible for this, the company must be registered with IRAS on my Tax Portal for the Auto Inclusion Scheme (AIS) with their Corp pass.
Payroll Management Mistakes to Avoid
To subject your business to further growth and development, you should steer clear of the following mistakes when preparing payroll for your employees in Singapore.
- Fluctuating Salary payment schedule: – It is vital to ensure that your payroll management system can meet deadlines, perform detailed estimations, and pay out your employees’ salaries to facilitate happy working conditions.
- Erroneous Employee details:- Accurate and up-to-date employee details are essential for every organisation’s data processing. However, incorrect information can lead to mistakes that may take a long time to amend, which could confuse an employee.
- Human Errors:- Humans cannot produce a 100% error-free management system, either payroll or any other. A simple mistake can waste so much time and effort before it is amended. However, it is better to avoid such by investing in a payroll system that guarantees a better management system.
To completely avoid these errors, one should consider outsourcing payroll management to a professional payroll service provider. They would not only ensure everything is error-free but also save your valuable time and money. They would also make sure all the statutory requirements are met on time.
Frequently Asked Questions About Payroll Management System in Singapore
What salary payments are not imperative in Singapore?
The payment of the thirteenth-month salary, bonuses, and AWS (Annual Wage Supplement) are not mandated for employers unless it is included in the employment agreement.
Are there benefits embedded in outsourcing payroll services in Singapore?
Outsourcing payroll services in Singapore proffers numerous benefits to the company. It saves time and resources and guarantees regulatory compliance, accurate payroll reporting, and many other massive benefits.
There you have it! Everything essential things you need to know about the payroll system in Singapore. To achieve unbeaten payroll management, as an employer, you must use accurate processing for wages, timely payment of salaries, and proper maintenance of the payroll system.
The more your business expands, the more payroll management seems challenging and more technical to handle, which will require more time, effort, and technical know-how to effectively manage your payroll. You can ease stress by outsourcing a payroll service provider that provides a problem-free and efficacious payroll management system.
Timcole is one of the leading company incorporation and accounting firm based in Singapore. Our wide range of professional services serves as a one-stop solution for your business, offering you the most affordable price for services conducted with the highest level of excellency.
Contact us to find out more on how we can help you with your company today.