As you expand your business, you’ll need to hire more employees. This means that you need to know how to manage your company’s payroll and align the payroll administration with the Singapore statutory requirements.
In this article, we will look into the details of salary and some of the basic requirements in managing your company’s payroll.
What Is A Salary?
According to the Singapore Employment Act, a “salary” or “wage” is defined as all remuneration, including allowances, paid for work done under a contract of service.
However, it does not include the following:
- Accommodation, utilities or other amenities;
- Pension or provident fund contribution (CPF) paid by the employer;
- Travel allowance;
- Expenses incurred during work;
- Gratuity payable on discharge or retirement; or
- Retrenchment benefits.
Unlike many developed countries, there is no minimum wage in Singapore. Salary here is negotiated and agreed upon between the employer and the employee.
How Often Should I Pay Salary to My Employees?
You need to pay your employee’s salary at least once a month or at shorter intervals within seven days after the end of the salary period. For instance, if your staff worked from 1 to 30 June, you have to pay his salary latest by 7 July. Overtime work must be paid within 14 days after the end of the salary period.
There are, however, exceptions to the rule, including:
- Employees who have resigned and served the required notice period should receive their final salary payment on their last day of employment.
- If your employee resigned without notice and didn’t serve the notice period, you need to make his final salary payment within seven days of the last day of employment.
- If your employee is dismissed on the grounds of misconduct, you have to pay his final salary on the last day of employment. If it is not possible to do so, you should then pay him within three working days from the date of dismissal.
- If you terminate your employee’s contract, his final salary should be paid on the last day of employment. If it is not possible to do so, you should then pay him within three working days from the date of termination.
How Do I Pay Commission?
If your employment’s remuneration includes commission, how and when the commission is paid is determined by the terms of your company’s employment contract or your existing company policies/practices.
Also, of your employee happens to be a foreign worker who has just left the employment of your company, you may withhold his salary for the last month until the IRAS clears his personal tax.
How, When & Where Do I Pay Salary?
This is how, when and where you should pay your employee’s salary:
How: Most companies pay salaries directly into their employees’ bank account.
When: Salaries should be paid on a working day and during working hours.
Where: Salaries should be paid at the workplace or at any other place that is mutually agreed on (although this is irrelevant if the salaries are transferred directory to your employee’s bank account).
What Is An Itemised Payslip?
Mandated by the Employment Act, you as the employer need to issue itemised payslips to your employees when salaries are paid. This is how, when and where you should issue payslips:
Payslips can either be in soft or hard copy (even handwritten copies are acceptable).
Payslips should be issued at least once a month, preferably with the salary payment. If you are unable to issue the payslip together with the salary payment, you must do so within three working days. In the case of termination or dismissal, the payslip must be given together with the outstanding salary.
What To Include
Your payslips must include the following items, where applicable (e.g., if your staff didn’t work overtime, his palip need not include items 9 to 11.):
- Full name of employer
- Full name of employee
- Date of payment (or dates, if the payslip consolidates multiple payments)
- Basic salary – For hourly, daily or piece-rated workers, indicate all of the following:
- Basic rate of pay, e.g. $X per hour
- Total number of hours or days worked or pieces produced
- Start and end date of the 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 the overtime payment period (if different from item 5 start and end date of the salary period)
- Net salary paid in total
If salaries are paid more than once a month, you can consolidate the payslips. However, the consolidated payslip needs to include details of all payments made since the last payslip.
What Payroll Records Do I Need To Keep & For How Long?
You must keep the following employment and payroll records:
- All payslips issued by your company
- The format can be in soft or hard copy (including handwritten copy);
- Two years for current employees and last two years for ex-employees, to be kept for one year after the employee left the job.
- Key employment terms in writing for all employees who:
- Entered into a contract of service on or after 1 April 2016;
- Are covered by the Employment Act;
- Are employed for 14 days or more.