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Payroll in Singapore

Introduction

Singapore is known for being one of the cleanest and most stable places to live. No wonder plenty of the business world’s top talent chooses to settle there! And if your business wants to secure some of that top talent for itself, then you’ll need stellar payroll.

Luckily, there are options available to make managing payroll services in Singapore easier for you. To simplify the process and save you from stress later down the line, a payroll company can make hiring, managing, and paying employees outside of your HQ country as easy as a few clicks of a mouse.

What does the payroll process in Singapore involve?

Never handled payroll internationally before? No problem, you’re in the right place. 

Let’s get you up to speed on the steps of a payroll workflow in Singapore, as it will be applicable whether you are hiring an employee or a contractor in that market.

Starting with the basics, payroll in Singapore will need to cover:

  • Onboarding employees. Integrate new employees into the company, familiarize them with the products and/or services and have them sign a legally binding contract.
  • Defining payroll policy. A payroll policy covers salaries and schedules and informs employees of payment dates, benefits, how much to expect, and attendance policies.
  • Calculating gross pay. This is the amount that you’ve agreed to pay a worker before any deductions such as taxes.
  • Calculating hours worked. The responsibility for tracking time (as in the number of hours worked) falls both on the company and the employee.
  • Calculating overtime pay. In the US, an employee is entitled nonexempt employees to earn 1.5X their hourly rate for hours worked in excess of 40 hours a week — this is the same in Singapore.
  • Determining contributions and reimbursements. These include the likes of paid leave and health insurance, which are deducted from wages and then reimbursed.
  • Managing taxes. Income tax is measured individually, based on specified tax brackets, the most notable being that the first $20,000 (~$15,000 USD) an individual makes is not taxed.
  • Maintaining record. The most important step of the payroll workflow is maintaining accurate and detailed records to protect your business.

There are important differences between the payroll workflow in Singapore compared to in the US. In Singapore, salary proportion is, by default, calculated by the number of working days.

Interestingly, there are also no payroll taxes in Singapore, contrasting with the 6% Federal Payroll Tax in the US. If you’re looking for a reason to build a team in Singapore, that might well be it!

<< Speak to one of the Skuad team about hiring in Singapore today >>

What do you need to know about payroll in Singapore?

Now that we know what payroll calculations include — and don’t include — in Singapore, let’s look at the specifics of getting it right. Consider the following tips and tricks your comprehensive payroll guide for working in Singapore.

Currency

The national currency of Singapore is the Singapore Dollar, equal to 74¢US, and is shown as S$ or SGD. Chances are, a team member living in Singapore will want to be paid in SGD, however some might be open to USD or other legal tenders.

According to the Currency Interchangeability Agreement between Singapore and Brunei, the Brunei Dollar is accepted and considered interchangeable with the Singapore Dollar as legal currency in Singapore. USD, Euros, GBP, and other major currencies are also accepted in many shopping malls and hospitality venues in Singapore, which is why some local workers may be open to them.

It’s here that partnering with a payroll company is advised, as they will not only provide the optimal exchange rate but can manage the various currencies you’re paying out in too.

Minimum wage

Singapore is one of the few developed countries in the world that doesn't have a minimum wage. Singapore’s Employment Act does not set a minimum standard to which all workers must be paid — instead, it falls on the company or the sector to employ such standards and consider the statutory cost of pay when calculating payroll.

With the exception of cleaners and security guards who recently acquired a minimum wage, Singapore’s wages and salaries are entirely dependent on the skills and competence of the workers. This creates a landscape where companies are more likely to offer incentives in order to retain valuable employees.

Bonuses

That said, under the Employment Act of Singapore, there are no payroll requirements for any bonus payments to be paid to an employee from any given company. Any bonuses you do issue through payroll in Singapore are entirely at your discretion.

New guidelines for contractors

As of last year, there are new guidelines for contract staff in Singapore that entitle them to employee benefits and statutory leave which contractors in other countries may not be entitled to.

These benefits apply to contract workers who have worked in the same firm for at least three months and consist of things like paid and unpaid leave. Any breaks in time-worked do not count towards the length of the considered employment with the company and the entitlements become void if the total time off in the three-month period equates to over one month.

Taxes

Taxes in Singapore do not need to be held back from an employee’s salary by a company, as all workers nationwide are responsible for calculating and paying their own taxes. An employee remuneration return must be provided to all employees, though — this calculates how an employee is compensated for their labor.

While there are no payroll taxes in Singapore, personal income tax can range from 0 to 22% based on the individual’s tax bracket, capping out at 22% for earnings in excess of S$320,000.

Social security

Employees who are permanent residents in Singapore will be entitled to a security scheme known as the Central Provident Fund. This comprises compulsory contributions that an employer has to make to support retirement expenses, healthcare, housing, etc.

This fund is calculated based on a worker’s monthly salary.

Leave

Paid annual leave in Singapore must be available to all employees after three months of service, beginning at a minimum of 7 days and capping at a minimum of 14 days for any employee with at least eight years of service.

After a minimum of 6 months of continual employment, workers are entitled to pro-rated sick leave based on their length of service. Statutory payments for payroll must be considered.

Overtime

Legally, a Singaporean employee may only work up to a maximum of 72 hours of overtime a month.

Keeping records

All employees must be provided either a hard or soft copy of all of their payslips, containing itemized details of their basic pay, any allowances, and any overtime they have worked. It must show the start and end date of the payment period as well as the date the payment was sent. Use of payroll software is advised for keeping records up to date.

Any company with more than 5 employees must report their employees’ earnings via an IR8A Form every year by March 1st. Companies operating in Singapore are also required to keep salary records for one year after an employee leaves the organization and maintain two years’ worth of salary records for each employee.

<< Wise up when it comes to international payroll — or contact a member of the Skuad team to help you manage everything. >>

Outsourcing payroll in Singapore: what are your options?

If you’re looking to hire a team in Singapore, then you’ll want a local payroll partner — that much is a given. But who you get to manage payroll for you is a decision you need to make. 

Local payroll service in Singapore will understand the ins and outs of local law, compliance, currencies, and all other details. But chances are their expertise stops there. Outsourcing your payroll in Singapore to an international payroll service on the other hand carries far more advantages indeed.

With Skuad as your payroll partner, you no longer need multiple payroll systems operating across the world — we give payment and withdrawal flexibility and take care of remote workers, whether at home in your HQ country or living elsewhere. Skuad provides optimal exchange rates, stays up to date with regulations, and provides you with a single dashboard where you can view and analyze global payroll data. It’s everything you need to know about international payroll, all in one place.

How do I get started with Skuad?

Getting started with Skuad is easy and efficient. See how Skuad simplifies remote hiring by booking a demo now. The team is available 24/7 and provides hiring services in over 160 countries, including Singapore.