4 Statutory Singapore Payroll Requirements You Need To Know
18 Feb 2021
In every country, employment laws differs. However, as a HR professional, are you aware of the basic statutory Singapore payroll requirements? Here are some critical payroll requirements that you need to know for Singapore.
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 Singapore 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 your company has 15 or more employees for the entire year or have received the “Notice to File Employment Income of Employees Electronically”, you must submit your 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.
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 legislative changes, so as to avoid costly mistakes.
Related article: What Does Payroll Management Mean In HR?