Understanding Payroll Obligations In Singapore
Payroll obligations in Singapore are governed by the Employment Act, Singapore’s main employment law. As Employment Act violations come with hefty penalties (up to S$5,000 fine and 6 months imprisonment, or both), it is important that employers get familiar with their payroll obligations to avoid contravening the act. In this blog post, we highlight some of the important components of the Employment Act that will help you fulfill your payroll obligations as an employer in Singapore.
Employment Act
Anyone who is an employee working under a contract of service with an employer is covered under the act. It covers both local and foreign employees, and the employee can be employed in the following terms:
Full-time
Part-time
Temporary
Contract
A person is not covered if he/she is employed as a seafarer, domestic worker, or statutory board employee or civil servant.
An important point to note is that Part IV of the Employment Act (which regulates employees’ rest days, working hours, etc) only applies to workman (performing manual labour) drawing a basic salary S$4,500, and below, or an employee, who is covered under the Employment Act, is not a workman, and draws a salary S$2,600 and below. It does not cover all managers or executives.
Paying Salary
In accordance to the Employment Act, employers must pay salaries at least once a month, and within 7 days after the end of the salary period. For overtime pay, the employee must be paid within 14 days after the end of the salary period.
Itemised Pay Slips
It is mandatory for all employers to provide itemised pay slips to employees under the Employment Act from 1 April 2016. The items to include are as follows:
Full name of employer
Full name of employee
Date of payment
Basic Salary
Start and end date of salary period
Allowances paid for salary period, such as transport allowances or uniform allowances.
Other additional payments, such as bonuses, rest day pay, etc
Deductions made for each salary period, such as employee CPF contribution, contributions to Self-Help Groups (CDAC, SINDA, MBMF, EA)
Overtime hours worked and overtime pay
Start and end date of overtime payment period (if different from start and end date of salary period)
Net salary paid in total
Salary Records
From 1 April 2016, all employers must keep detailed employment records, including salary records (see itemised pay slips above) of employees covered by the Employment Act.
Employee records include the following:
Address
NRIC number. For non-citizens, work pass number and expiry date.
Date of birth.
Gender.
Date of starting employment.
Date of leaving employment.
Working hours, including duration of meals and tea breaks.
Dates and other details of public holidays and leave taken.
Annual Leave
Under the Employment Act, employees are entitled to paid annual leave if they have worked for their employers for at least 3 months. Employees can apply for annual leave after working for 3 months.
CPF Contributions
CPF contributions are required if your employee:
is a Singapore Citizen or Singapore Permanent Resident employed in Singapore,
is employed under a contract of service, and
earns more than $50 per month.
Your employees can include:
Company directors
Employees on concurrent employment
Family workers
NSmen on in-camp training
Part-time employees
Temporary/casual employees
CPF contributions are payable on your employee’s total wages for a calendar month. This includes basic wages, overtime pay, cash incentives (such as good service awards), allowances (meal, transport, laundry, etc), bonuses and commissions.
Please visit CPF website for details on contribution rates.
It is important to note that the due date for CPF contribution falls on the last day of the calendar month, and payment is due by the 14th of the following month.
Penalties For Not Paying CPF
If you don’t pay by 14th of the following month, you may be liable to:
Late payment interest charged at 18% per annum (1.5% per month), starting from the first day of the following month after the contributions are due. The minimum interest payable is $5 per month.
A fine of up to $5,000 and no less than $1,000 per offence, up to 6 months jail, or both.
For repeat offenders, a fine of up to $10,000 and no less than $2,000 per offence, up to 12 months jail, or both.
A fine of up to $10,000, up to 7 years jail, or both if you deduct your employee’s share of CPF contributions but fail to pay the contributions to CPF Board.
Skill Development Levy (“SDL”)
SDL is a compulsory levy that you have to pay for all your employees working in Singapore, on top of CPF contribution and Foreign Worker Levy. CPF Board collects SDL on behalf of the SkillsFuture Singapore Agency (SSG). Please visit SSG website for details on contribution rates.
Contributions to Self-Help Group Funds
CPF Board helps to collect contributions to self-help group (SHGs) funds and SHARE donations. Along with the employee’s share of CPF contribution, these contributions and donations are deducted from the employee’s wages. It is a standard practice for employers to deduct the Self-Help Group (SHG) contributions from their employees’ wages. Employees who do not wish to contribute can contact the respective SHGs for more information. Please visit CPF website for the contribution rates.
Penalties For Employment Act Violations
Employment Act violations attracts a fine of $5,000 or imprisonment for a term of 6 months or both. Repeat offenders will be subject to a fine of S$10,000 or imprisonment for a term of 12 months, or both.
Speak To Us
We understand that understanding payroll obligations on top of juggling your daily business operations can be overwhelming at times. We are proud to be a SimplePay Partner who can help fulfill your payroll obligations with their sophisticated cloud-based software solution. Feel free to drop us a message or email us and let us know how we can assist you. Our general response time is one business day.
Sources:
“Employment Practices”, Ministry Of Manpower website, accessed on 23 June 2021.
