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.

UK - PAYROLL - FACT CARD (2020-2021)

Here You go! UK Payroll - Fact Card (2020-2021).....

SAUDI ARABIA – COMPENSATION & BENEFITS - SIMPLE GUIDE

BASIC FACTS ABOUT SAUDI ARABIA – C&B MANAGEMENT

Working Week in Saudi: The working week in Saudi Arabia is Sunday to Thursday from 9am to 6pm. Friday is the only official weekend day and Saturday is often a working day for the construction and service industries.

Date Format in Saudi: Dates are usually written in day, month & year format.

                                         (Ex: 23/09/2018, 23 Sep 2018)

Income Tax in Saudi: No income taxes are imposed at a local, state, or provincial level in Saudi Arabia. The Islamic Zakat tax is imposed on native Saudi citizens, and charged at a rate of 2.5% on capital assets.

Social Security in Saudi: Saudi Arabia’s social security system provides benefits for insurance, old age, injury and disability, and to survivors in the event of an employee’s death.

Female workers are entitled to 10 weeks of paid maternity leave, which may be extended for a further unpaid month. Contribution rates are as follows:

·         Employees contribute to social security at a rate of 10% (9% social insurance, 1% unemployment insurance).

·         Employers contribute at a rate of 12% (9% social insurance, 2% occupational hazard insurance, 1% unemployment insurance).

*Foreign workers are not entitled to statutory social security benefits and should make their own arrangements with an insurance organisation operating in Saudi Arabia.

New Employees in Saudi Arabia: Once an employment contract has been signed, new employees in Saudi Arabia must be registered with GOSI (General Organisation for Social Insurance), and inducted on to company payroll. Registration can take place online through the dedicated GOSI portal.

*Probation periods for new employees in Saudi Arabia are required by law to last no longer than 30 days - but can be extended up to 180 days in certain circumstances.

Exit Employees in Saudi Arabia: Employees who leave their positions in Saudi Arabia may also be de-registered from GOSI using the online portal. During notice periods, employees must receive up to 8 full-paid work hours per week, or alternatively, receive one full day per week to find new employment.

*Employers must be able to demonstrate justification for terminating employees. Valid reasons include misconduct, absence, or probationary issues.

Payroll in Saudi Arabia – Mandatory Deductions: Employers in Saudi Arabia have certain obligations during the payroll process, including withholding tax and social security contributions. While no income tax is generally due on employee wages in Saudi Arabia, social security contributions and nonresident withholding taxes (WHT) must be paid.

·         Social security contributions (GOSI) are charged at a rate of 10% to Saudi nationals.

·         WHT (Withholding Tax) is paid at a rate of 5-20%

*It is legally acceptable to issue employees with online payslips in Saudi Arabia, and payroll reports must be kept for a minimum of 7 years.

What is WHT?

Under the law & tax regulations of the Kingdom of Saudi Arabia (KSA) is an obligation for all clients to pay withholding tax (WHT) on all “Out of Kingdom” international payments to non-Saudi resident / registered parties / companies direct to the General Authority of Zakat & Tax (GAZT).

WHT will be deducted from payments made to the consultant/contractor in accordance with the law and tax regulations of KSA.

The client is required to declare and make payment of the relevant amount of WHT direct to the General Authority of Zakat and Tax (GAZT). The client is obliged to file and settle WHT monthly tax returns to GAZT within 10 days of the month-end in which the payment is made and is required to submit an annual WHT return at the fiscal year end. Failure by the client to withhold WHT or pay the WHT to GAZT timeously will result in the client being liable to pay ‘late submission fines’ in the WHT that was initially due.

The client whilst engaging with consultants/contractors should establish clear definitions of the payment terms within their contracts to ensure there is no dubiety when it comes to paying for services rendered in line with the WHT conditions. All service contracts with non-resident entities should be reviewed from a tax perspective before signing (ie, the wording and definition of the Scope of Services, the tax liability clause, etc).

If a supply contract includes a service portion, the value for the services should be stated clearly to avoid deemed taxable profit computation. The non-resident service provider maybe entitled to tax credits in their home countries against the WHT borne in KSA.

Method of Calculation & Deduction:

• The client will deduct and retain the ‘Withholding Tax’ WHT element of all international payments due to the consultant / contractor.
•    The client will pay the WHT payments directly to the GAZT and will supply the consultant/contractor with auditable document reports to confirm that the payments have been affected.
• Where specifically directed and authorised by the consultant/contractor, the client will make stage and interim fee payments directly to the appointed sub-consultants which are licenses within KSA – consequently these payments will be free of KSA WHT regulations. All direct payments will be made in full compliance with KSA Tax, applicable regulations and Laws.

Worked Example of Payment to ‘Out of Kingdom’ (non-resident/registered) consultants/contractors:

Consultant Contract	Wage (SAR)
Contract Sum	900000	A
Variations to Work Scope	55000	B
Variations for Reimbursable Expenses like flights, etc.,	45000	C
Total Wage (A + B + C)	1000000	D
Withholding Tax @ 5%	50000	E
Consultant Payment (D - E)	950000	F

Employee Rights / Compensation & Benefits:

Employees are protected from working more than 8 hours per day or 48 hours per week in Saudi Arabia.

Employees must take a break for rest, prayer and food after working 5 hours consecutively. This break must be at least 30 minutes. Because one day of rest is required per week, companies are usually pushed to require that day correspond with the Friday holy day.

Contracts are a huge part of the employer - employee relationship in Saudi Arabia. All part time workers must have a contract that states an official termination date. Part time contracts are renewable only one time. Foreign workers are required to have a fixed term contract. Contracts remain in force even if the ownership of the company changes hands. Any back pay owed to employees is also prioritized by law in the case of a company bankruptcy.

Employees have rights upon dismissal provided that they serve the employer with 30 days' notice under a monthly payment contract. Employees receiving payment under other types of contracts must provide 15 days' notice, if a specific period is not given in the employment contract.

Compensation, Bonuses & Severance Pay:

Overtime in Saudi Arabia is payable at 100% of the normal hourly wage of the employee. There is also a 50% bonus that must be paid to the employee as well. Any work that is done on Friday or any public holiday is paid at the overtime rate.

Severance pay is mandated by law to be 15 days of wages for an employee's first 5 years of employment. Employees receive a full month of wages for every year after the fifth year.

Saudi nationals have more rights to certain levels of compensation upon termination than do expatriates. Compensation, severances and bonuses are also usually detailed specifically in the employment contract. Labor unions are not a huge force in the country, but the court system to handle cases of compensation is quite robust.