Singapore’s payroll system is governed by a robust framework of laws and regulations, primarily overseen by the Ministry of Manpower (MOM), the Central Provident Fund (CPF) Board, and the Inland Revenue Authority of Singapore (IRAS). Employers must adhere strictly to these guidelines to ensure compliance and avoid penalties. Here’s a breakdown of key aspects for 2025:
1. Salary Payments and Payslips:
Timely Payments: Employers must pay salaries at least once a month, no later than seven days after the end of the salary period. Overtime wages must be paid within 14 days.
Itemized Payslips: All employers covered by the Employment Act must issue detailed, itemized payslips (hard copy or soft copy) to employees. These must clearly break down salary components, allowances, bonuses, deductions (like CPF), and any other payments.
Key Employment Terms (KETs): Employers must provide written KETs or employment contracts to employees within 14 days of commencing employment, outlining job scope, salary, work hours, and leave entitlements.
2. Central Provident Fund (CPF) Contributions:
Mandatory Social Security: CPF is a comprehensive social security savings scheme for Singaporean citizens and Permanent Residents (PRs). Both employers and employees contribute monthly to three accounts: Ordinary Account (housing, education, investments), Special Account (retirement, long-term needs), and MediSave Account (healthcare).
Contribution Rates: Rates vary based on the employee’s age and citizenship status (first, second, or third year PR status). For 2025, the CPF Ordinary Wage (OW) ceiling increased to S$7,400.
Timely Submission: Contributions are due by the last day of each month, with a grace period until the 14th of the following month.
3. Skills Development Levy (SDL):
Workforce Development: Employers are required to pay the SDL, which contributes to the Skills Development Fund to support workforce training and development.
Calculation: The SDL is 0.25% of the employee’s gross monthly salary, with a minimum payment of S2andamaximumofS11.25 per employee per month.
4. Income Tax (IRAS):
No Monthly Withholding: Unlike many countries, Singapore generally does not require employers to withhold monthly income tax from employee salaries (with exceptions for foreign employees undergoing tax clearance upon cessation of employment or departure). Employees are responsible for paying their own income tax directly to IRAS.
Annual Reporting (AIS): Employers participating in the Auto-Inclusion Scheme (AIS) must submit employees’ income details digitally to IRAS by March 1st annually.
Tax Clearance for Foreign Employees (Form IR21): When a foreign employee ceases employment or leaves Singapore for an extended period, employers must file Form IR21 one month before their departure and withhold monies owed until tax clearance is obtained from IRAS.
5. Other Key Considerations:
No National Minimum Wage: Singapore does not have a universal minimum wage. Instead, it utilizes a Progressive Wage Model (PWM) for specific sectors (e.g., cleaning, security, retail) to uplift wages for lower-wage workers.
Overtime Pay: Overtime pay is typically 1.5 times the hourly basic rate for eligible employees (non-workmen earning up to S2,600andworkmenuptoS4,500), capped at 72 hours per month.
Leave Entitlements: The Employment Act specifies entitlements for annual leave, sick leave, public holidays, and maternity/paternity leave, among others.
Record Keeping: Employers are mandated to keep detailed employment and salary records for at least two years for current employees and one year for former employees.
Corporate Service Providers (CSP) Act (Effective June 2025): This act requires payroll vendors to be registered with ACRA, comply with anti-money laundering (AML) and counter-terrorist financing (CTF) regulations, and maintain transparent systems. Businesses must ensure their payroll vendors meet these standards.
Navigating Singapore’s payroll system requires diligence and staying updated on regulatory changes. Many businesses opt for payroll software or outsourcing services to ensure compliance and streamline their processes.
For more details Visit us:https://mobiworkforce.com.sg/products/singapore-payroll-system/
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