Payroll Specifications - Singapore

Analyzed Topics:
 Payroll processing cycle
 Employment Act
 Contract of service
 Salaries Payment process
 Wage definition
 Hours of Work
 Overtime
 Leave and Holidays
 Termination
 Central Provident Fund (CPF)
Employment Act cont..
 Statutory Donations
 Employment of Foreign Manpower
 Tax Reporting for Employee’s Remuneration
 Other Regulations
 Skills development Levy(SDL)
 National Service Make Up Pay(MUP)
Contract Service
 A contract of service is defined by Ministry of Manpower (MOM)
 The MOM is a Ministry of the Government of Singapore.
 It is responsible for the formulation and implementation of labour
policies related to the workforce in Singapore.
Salary Payment
Frequency of Salary Payment
 Normal - Within 7 days after the end of the salary period.
 OT - If employee worked as OT, salary will be paid within 14
days after the end of the payment.
 Dismissal/Terminate by Employer: Last day of the
employment or 3 working days from the termination.
 Terminate the contract by resigning: Last day of the
employment.
 Leaving without Notice: Within 7 working days.
Salary Payment Cont..
Authorized Salary Deductions
 Absence
 Damage of company products
 Cost of meals
 Accommodation
 Recovery of loans, advances
 Tax and CPF contributions
Salary Payment Cont..
Monthly Variable component(MVC)
 MVC is a flexible and performance-based wage system, like an
incentive amount to increase productivity.
 Its not compulsory.
 It is part of monthly basic salary and should be included in
computing overtime payment and CPF contribution.
 Purpose
 If company doing well option to give rewards to the employee
 If company business downturns that can be used to bring down wage
costs in order for the company to survive and save jobs.
Ex:
Monthly Basic Salary(%) = Monthly Fixed Component(%) + Monthly
Variable Component(%)
 Wages Calculation
 For wages payment includes work on holiday and rest of the day
 Basic rate wages and also OT wages, Bonus and Annual Wages
Supplements
 Productivity incentive payments
 For gross wages Allowances (Medical, Mobile, Food and Travelling
allowances) also added.
 If employee worked at least 3 months, entitled to claim medical
reimbursements.
12∗𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑏𝑎𝑠𝑖𝑐 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑝𝑎𝑦
Monthly Wages = 52∗𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑜𝑓 𝑛𝑜 𝑜𝑓 𝑑𝑎𝑦 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑤𝑜𝑟𝑘 𝑖𝑛 𝑎 𝑤𝑒𝑒𝑘

if employee Mid-join or Mid-tem

𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑏𝑎𝑠𝑖𝑐 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑝𝑎𝑦
Monthly Wages = 𝑇𝑜𝑡𝑎𝑙 𝑛𝑜 𝑜𝑓 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑡ℎ𝑎𝑡 𝑚𝑜𝑛𝑡ℎ* No of days worked
Hours of Works
 Ministry of manpower defines working period for an employees
excluding rest breaks and lunch breaks.
 Employees not allow to work 12 hours per day or more than 44
hours a week.
 If the number of hours worked is less than 44 hours every
alternate week, the limit of 44 hours a week may be exceeded in
the other week
 Employees are not required to work more than 6 to 8 consecutive
hours without a break
 Breaks should be not less than 45 minutes
Hours of Works (Conti…)
Maximum hours of works continued only for
 Accident or threat of accident
 Specified work is based on community, national defense or
security.
 Urgent work to be done to machinery or plant
 An interruption of work that was impossible to foresee.
 More than 72 hours of overtime in a month. For work done on
rest days or public holidays, it is not included in the 72 hours’ limit
for overtime.
 If an employee works beyond his normal daily working hours on
his rest day or public holiday, the extra hours of work will be
included in the 72 hours’ limit.
 If employer wants to work an employee more than 72 hours,
employer should apply for an Overtime Exemption to the
MOM(Ministry of Manpower).
Overtime Computation
 For the monthly rated employee, his basic rate pay is
12∗𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑏𝑎𝑠𝑖𝑐 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑝𝑎𝑦
Monthly Wages = 𝑂𝑡 𝐻𝑜𝑢𝑟𝑠 ∗ 52
 For the daily rated employee, his basic rate pay is
𝑑𝑎𝑖𝑙𝑦 𝑏𝑎𝑠𝑖𝑐 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑝𝑎𝑦
Monthly Wages = 𝑂𝑡 𝐻𝑜𝑢𝑟𝑠 ∗ 8
Leave and Holidays
 Public holidays
 Unpaid public holiday
 Work in public holiday
 Annual Leave
 Encashing annual leave
 Unpaid leave
 Sick leave
 Government paid leave schemes
Leave and Holidays Cont..
Public Holidays
 From the Employment Act., 11 paid public holidays in a year.
 The employer and employee may mutually agree to substitute a
public holiday for any other day. Following are the public holidays
 New Year’s Day
 1st Day of Chinese New Year
 2nd Day of Chinese New Year
 Hari Raya Puasa
 Hari Raya Haji
 Good Friday
 Labour Day
 Vesak Day
 National Day
 Deepavali
 Christmas Day
Leave and Holidays Cont..
Public Holidays Cont..
Unpaid public holiday
 Public holiday pay not eligible for the below categories,
Unauthorized leave on the day immediately before and
after the public holiday
Approved no pay leave immediately before and after a
holiday.
Work in public holiday
 If employee work on holiday means, he has to get one
extra holiday wage.
 Employee will get extra wage if he worked more than a
actual working hours.
Annual Leave Eligibility
 Employee has to work at least three months in that organization.
 An employee’s year of service begins from the day he/she started work
with the employer
 Employee service less than a year, we have to calculate
 Leave eligible is, 𝑁𝑜 𝑜𝑓 𝑚𝑜𝑛𝑡ℎ𝑠 𝑖𝑛 𝑠𝑒𝑟𝑣𝑖𝑐𝑒
7∗
12
Year of Service Annual Leave
1 7
2 8
3 9
4 10
5 11
6 12
7 13
8 and above 14
Annual Leave Encashment
Annual leave may be encashed under the following circumstances
1. Termination of employment by either the employer or the
employee
2. At the discretion of the employer
3. Contractual agreement between employer and employee
Formula to calculate annual leave:

12 ∗ 𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝐺𝑟𝑜𝑠𝑠 𝑟𝑎𝑡𝑒 𝑝𝑎𝑦 ∗ 𝐴𝑛𝑛𝑢𝑎𝑙 𝑙𝑒𝑎𝑣𝑒 𝑏𝑎𝑙𝑎𝑛𝑐𝑒

52 ∗ 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑜 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 𝑤𝑜𝑟𝑘𝑒𝑑 𝑖𝑛 𝑎 𝑤𝑒𝑒𝑘
Unpaid Leave
If employee not having any annual leave to take, in that cases
the employee possible to take unpaid leave, employer will allow to
take.

𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝐺𝑟𝑜𝑠𝑠 𝑟𝑎𝑡𝑒 𝑝𝑎𝑦 ∗ 𝑁𝑜 𝑜𝑓 𝑢𝑛𝑝𝑎𝑖𝑑 𝑙𝑒𝑎𝑣𝑒 𝑡𝑎𝑘𝑒𝑛

𝑁𝑜 𝑜𝑓 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑎 𝑚𝑜𝑛𝑡ℎ
Sick Leave:
If employee service more than 3 months means, employer
have to for an sick leave. A sick leave should be certified by a
company approved doctor or government doctor.

Eligibility:
 Employee have served the employer at least 3 months
 You have informed or tried to inform your employer within
48 hours of your absence
 Your sick leave is certified by the company's doctor, company-
approved doctor or a government doctor.

As long as you are certified by a doctor to be in need of

hospitalization, you do not necessarily have to be warded in a
hospital to be eligible for paid hospitalization leave.
 Sick Leave Cont…
 Sick Leave availability:
 Employees who have worked more than 6 months will get the
full entitlement. If the employee has worked less than 6 months,
the entitlement is,
No of months Paid Outpatient non- Paid hospitalization
service completed hospitalization leave leave (Days)
3 5 15
4 5+3=8 15+15
5 8+3=11 30+15=45
6 11+3=14 45+15=60
Above 6 14 60

If you have already taken 14 days of outpatient sick leave in a year,

the number of days of hospitalization sick leave that you can take
is 46 days.
Sick Leave Cont…
Employee have worked for at least 3 months, you have rights to apply
for an medical reimbursement,
 Employer must to pay medical consultation fee.
 Employee reimbursement for other medical costs, such as
medication, will depend on the medical benefits in your
employment contract or the company's collective agreement
with its union.
 If employee fall sick during public holidays, annual leave, rest
days or non-working days, you will be able to claim
reimbursement for medical consultation fees.
Sick Leave Cont…
Sick Leave in Special Situations:
During Non-working days, holidays and annual leave:
If employee fall sick while on annual leave, it is up to
your employer whether you can cancel your annual leave and take
sick leave instead.
During a half working day
Sick leave taken on a half working day (e.g. Saturday) should
be considered as one day's sick leave.
Sick Leave Cont…
Sick Leave in Special Situations:
If employee run out of sick leave
 Allow you to go on extended no-pay leave for an agreed period.
 Make other working arrangements that are acceptable to both of
you, such as re-assigning your duties.
 Obtain a medical assessment of whether you can continue working.
If employee unfit to work
If a doctor certifies that you are unfit to continue working, your
employer can terminate your services.
 Government Paid Leave
 Government-paid leave schemes were introduced under the
Child Development Co-Savings Act to cover parents of
Singapore Citizen children, including managerial, executive and
confidential staff.
 For example.,

Type For Must be taken Duration

Childcare Leave Both Child > 7 year 6 days
Maternity Leave Mother Within 12 months 16 weeks
after the birth
Unpaid infant leave Both > 2 year 6 days
 Termination Process
 Termination will be effected by the employer or employee, employer
can’t reject resignation of the employee, they having rights to apply
any time.
 Employees have to give notice to an employer.
 The notice period will depends on the agreement in contract. Else
following periods should be applicable,

Length of service Notice period

> 26 weeks 1 day

26 weeks to less than 2 years 1 week
2 years to less than 5 years 2 weeks
5 years and above 4 weeks
 Annual Leave and Payments
 Employer can’t force the employee to go leave during the notice
period.
Notice payment will calculate,

12 ∗ 𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝐺𝑟𝑜𝑠𝑠 𝑟𝑎𝑡𝑒 𝑝𝑎𝑦 ∗ 𝑆ℎ𝑜𝑟𝑡 𝑛𝑜𝑡𝑖𝑐𝑒𝑑 𝑑𝑎𝑦𝑠

52 ∗ 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑛𝑜 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑎𝑛 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒 𝑟𝑒𝑞𝑢𝑖𝑟𝑒𝑑 𝑡𝑜 𝑤𝑜𝑟𝑘 𝑖𝑛 𝑎 𝑤𝑒𝑒𝑘
References
 http://www.mom.gov.sg/
 http://www.payrollserve.com.sg/
 http://www.help.sap.com/saphelp/
Thank you