REPUBLIC OF SINGAPORE - COMPENSATION & BENEFITS NORMS

SINGAPORE  - PAYROLL & STATUTORY NORMS

Payroll Concepts & Definitions:

Gross Monthly Income From Work refers to income earned from employment. 

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For employees, it refers to the gross monthly wages or salaries before deduction of employee CPF contributions and personal income tax. It comprises basic wages, overtime pay, commissions, tips, other allowances and one-twelfth of annual bonuses. The concepts and definitions used conform to international guidelines recommended by the International Labour Organisation. What constitutes a salary? Singapore is one of the few countries that do not have a minimum salary requirement. Based on the Employment Act of Singapore, salary refers to all remuneration, including allowances payable to an employee for work done under the basis of contact of service. This is typically based on a mutual agreement between the employer and the employee. Statutory Payroll Contributions: The Central Provident Fund (CPF) is a mandatory contribution by the employer and employee. An employee, who is Singaporean or Permanent Resident (PR) of Singapore, and employers are obliged to make CPF contributions based on the rates set by the CPF board. The rates differ based on the employee's age, and also the number of years after obtaining PR status. Employers are required to pay the employer's and employee's share of CPF contribution monthly for all employees within a time frame of 14 days after the end of the month. Employers who fail to do so might face penalties or fines.  Income Reporting and Taxes If a company has 15 or more employees for the entire year or have received the "Notice to File Employment Income of Employees Electronically", company must submit employees' income information to IRAS electronically by 1st March every year under the Auto Inclusion Scheme. This information will be used by IRAS for their assessment of employees' tax liability. Additionally, if your company hires foreign workers, you must notify IRAS and seek tax clearance for the foreign employees by filling Form IR21 at least one month before the employee ceases employment in Singapore, is on an overseas posting or leaves Singapore for a period that exceeds three months. This is to ensure that all foreigners working in Singapore duly fulfills their tax liabilities. Mandatory Itemised Payslips With effect from 1 April 2016, the Ministry of Manpower has mandated that all employers are required to issue itemised payslips with a list of key employment terms (KETs) to all employees covered under the Employment Act. The payslips must include key items such as the full name of employer and employee, date of payment, basic salary etc. A full list of the KETs can be found on the MOM website. Employers must also keep a record of all the payslips issued for at least two years for current employees, and one year after the employee leaves the company. Companies who fail to comply with this new legislation will be liable to a fine between S$100 to S$200 per employee per occurrence. (Click here to know more about the itemised payslip.) KETs must include the items below, unless the item is not applicable. For example, if the employee is a PME and overtime pay does not apply, the KETs issued do not need to include items 11 to 12. No   Item description 1 Full name of employer. 2 Full name of employee. 3 Job title, main duties and responsibilities. 4 Start date of employment. 5 Duration of employment (if employee is on fixed-term contract). 6 Working arrangements, such as: ·         Daily working hours (e.g. 8.30am - 6pm). ·         Number of working days per week (e.g. six). ·         Rest day (e.g. Saturday). 7 Salary period. 8 Basic salary. For hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay (e.g. $X per hour, day or piece). 9 Fixed allowances. 10 Fixed deductions. 11 Overtime payment period (if different from item 7 salary period). 12 Overtime rate of pay. 13 Other salary-related components, such as: ·         Bonuses ·         Incentives 14 Type of leave, such as: ·         Annual leave ·         Outpatient sick leave ·         Hospitalisation leave ·         Maternity leave ·         Childcare leave 15 Other medical benefits, such as: ·         Insurance ·         Medical benefits ·         Dental benefits 16 Probation period. 17 Notice period. 18 (Optional) Place of work. Used if the work location is different from the employer's address. Although optional, you are strongly encouraged to include this info. There are many other considerations and statutory requirements that one needs to be aware of. Always ensure that you are kept up-to-date with the latest legislatives changes, so as to avoid costly mistakes. Mandatory levies, contributions and statutory requirements: Besides Central Provident Fund (CPF) contributions, employers are also required to make the following monthly contributions: Ethnic funds such as CDAC, ECF, MBMF and SINDA, which aim at helping the less privileged in the respective ethnic communities; Skills Development Levy (SDL), which provides you training grants when you send your employees for training; CPF contributions for National Servicemen even if they undergo periodic NS trainings. Employers, however, do not have to pay NS men for the days they are away. In addition, employers hiring foreigners with Work Permits of S Passes will have to pay monthly levies for each worker. Statutory reporting requirements: From Year of Assessment 2017, IRAS requires that employers who have (i) received notice to file their employment income electronically or (ii) 10 or more workers in their employment during the entire year must submit their employees’ income information to IRAS electronically by 1st Mar each year. In addition, employers with foreign employees must seek tax clearance for their foreign employees by filing Form IR21 at least one month before such employee ends his employment, commences an overseas posting, or leaves Singapore for three months or more.