Singapore Payroll & HR Support

According to the Employment Act, all employees working for at least 3 months are eligible for annual leave. The minimum number of leave is 7 days for 1 year of service and will be increased by 1 day for each subsequent year, capped at 14 days for the 8th year onwards.

For example: If you started working on 15 Mar 2019, the annual leave calculation is:

Period of Employment Completed Month of Service Annual Leave Entitlement

15 Mar 2019 to 14 Mar 2020 12 7 days (1st year)

15 Mar 2020 to 14 Mar 2021 12 8 days (2nd year)

15 Mar 2021 to 14 Mar 2022 12 9 days (3rd year)

If an employee resigns, the annual leave will be calculated on pro-rated basis using the following formula: (Number of completed months of service ÷ 12 months) × Number of days of annual leave entitlement.

For example: If you started working on 15 Mar 2019 and resigned on 31 Aug 2019 and your annual leave entitlement is 14 days, the pro-rated leave calculation is:

15 Mar 2019 to 14 Aug 2019 = 5 completed months, the period from 15 Aug 2019 to 31 Aug 2019 is not a completed month.

(5 completed months ÷ 12 months) x 14 days annual leave = 5.83 days

Rounded up to 6 days as the fraction is more than 0.5.

The Employment Act entitles all employees to 11 days of paid public holidays in a year.

These public holidays are:

New Year’s Day

Chinese New Year – First day

Chinese New Year – Second day

Hari Raya Puasa

Hari Raya Haji

Good Friday

Labour Day

Vesak Day

National Day

Deepavali

Christmas Day

If the holiday falls on non-working day, the next working day will be treated as paid public holiday.

When you hire an employee in Singapore, you need to prepare a contract of service. The contract of service is an agreement between employer and employee that defines their relationship and explains the terms and conditions of the employment.

The contract of service should include the below Key Employment Terms (KET) in writing.

Number Item Description

1 Full name of employer

2 Full name of employee

3 Job title, main duties and responsibilities

4 Start date of employment

5 Duration of employment (if employee is on fixed-term contract)

6 Working arrangements, such as:

Daily working hours (e.g. 8.30am – 6pm)

Number of working days per week (e.g. six)

Rest day (e.g. Saturday)

7 Salary period

8 Basic salary

For hourly, daily or piece-rated workers, employers should also indicate the basic rate of pay (e.g. $X per hour, day or piece)

9 Fixed allowances

10 Fixed deductions

11 Overtime payment period (if different from item 7 salary period)

12 Overtime rate of pay

13 Other salary-related components, such as:

Bonuses

Incentives

14 Type of leave, such as:

Annual leave

Outpatient sick leave

Hospitalisation leave

Maternity leave

Childcare leave

15 Other medical benefits, such as:

Insurance

Medical benefits

Dental benefits

16 Probation period

17 Notice period

18 (Optional) Place of work

Used if the work location is different from the employer's address

Although optional, you are strongly encouraged to include this info

Employment Records

All employers must keep records of the employees who are covered by Employment Act with effect from 1 April 2016. You must keep the latest 2 years records of your current employees, and the last 2 years records of your ex-employees for 1 year after the employee left.

The employment records include employee records and salary records.

If your non-resident or Singapore Permanent Resident employee stops working for you, transfers overseas or leaves the country for more than 3 months, you are obligated to do tax clearance for the employee by withholding the final month’s salary and filing Form IR21 with IRAS.

Who is exempted from tax clearance?

Singapore Permanent Resident who remains in the country after he leaves your employment. In this case, the employee has to sign a Letter of Undertaking (LOU) to ensure that he or she plans to stay in Singapore and keep this in your record.

Non-resident employee who worked for 60 days or less, except for company director, public entertainers or professionals, etc

Non-resident employee who worked for more than 183 days and earned less than $21,000 in a year.

In order to process the tax clearance, your HR management, or outsourced payroll agent like Piloto Asia would have to submit the Form IR21 at least one month prior to the employee leaving the employment, transfers overseas or leaves Singapore for more than 3 months. Failure to inform IRAS may attract penalty up to $1,000.

When you made a payment to a non-resident of Singapore (either individual or company), you have to pay withholding tax (WHT) to IRAS.

The non-resident could be a professional (consultants, trainers, etc), public entertainer, and director of a Singapore company. The payer is obligated to deduct the WHT amount out of the payment to the non-resident.

Payment to non-resident director

Receive pay as a board director

When an employer pays director’s remuneration/fees, the employer needs to withhold the tax at 22%. The employer has to submit form S45 and pay the WHT by the 15th of the second month after the payment of the director’s fees.

Receive pay as an executive director

If the director receives monthly salary as a managing director, there is no need to withhold the tax. Instead, the employer has to prepare Form IR8A for tax filing.

Payment to non-resident shareholder

Dividend payment is not subject to withholding tax

Payment to non-resident employee

If the employment period is less than 60 days in a calendar year, the employment income will be exempted from tax. Otherwise, the income will be taxed at non-resident rate of 15% or resident rate for employment period of 61 to 182 days, whichever is higher. There is no withholding tax for non-resident employee. However, if the employee resigns, the employer has to file Form IR21 at least 30 days before he leaves the employment.

You may refer to IRAS for other types of payment that attract withholding tax.

The reporting of individual income tax is done every 15 April each year. If you are an employer, you need to submit the employees’ income by 1 March every year. You have to prepare Form IR8A, Appendix 8A or Form IR8S (if applicable) with IRAS.

The Form IR8A is the mandatory form that contains all the income information of the employee for the preceding year. Some employees with certain working conditions may be issued Appendix 8A, Appendix 8B and Form IR8S as well.

Appendix 8A must be filed if your employees received benefits-in-kind.

Appendix 8B must be filed if your employees received gains from Employee Stock Option (ESOP) Plans or other forms of Employee Share Ownership (ESOW) Plans.

Form IR8S must be filed if there are excess CPF contributions made on your employees’ wages and/or has claimed refund on the excess CPF contributions.

Piloto Asia’s one-stop HR support services could support with multiple HR functions, including preparation and compilation of above statutory forms.

One thing to note when you hire locals is the CPF contributions. The Central Provident Fund (CPF) is the Singapore social security system that allows Singaporeans and Permanent Residents to set aside pension funds and plan for their retirement. The purpose of the CPF is to address the needs for healthcare, homeownership, family protection and asset enhancement.

The frequently asked questions when hiring a local is whether company needs to pay CPF. The answer is yes, it is compulsory for both employers and employees to make monthly contributions based on the rate set by the CPF Board.

From 1 January 2016, the CPF contribution rates are as below:

Employee's age (years) Contribution rates (for monthly wages ≥ $750)

By Employer (% of wage) By Employee (% of wage) Total

(% of wage)

55 and below 17.0 20.0 37.0

Above 55 to 60 13.0 13.0 26.0

Above 60 to 65 9.0 7.5 16.5

Above 65 7.5 5.0 12.5

If you hire non-residents with a Work Permit or S Pass, you do not have to pay CPF. Instead, you have to pay for Foreign Workers Levy (FWL). The FWL is set by the government to limit the number of foreign workers in Singapore. The levy rate depends on the company sector whether it is construction, manufacturing, marine shipyard, process or service.

You need to pay for the levy on time every month. If you do not pay for the levy, there will be penalties such as late payment charge, cancellation of Work Permit, prohibited from applying or renewing the Work Permits and legal actions.

SDL is a mandatory levy imposed by SkillsFuture Singapore Agency (SSG) for all employees working in Singapore. The funds that companies paid can be used as training grants to upgrade their employee’s skills. The SDL is calculated at 0.25% of the employee’s total monthly salary with a minimum of $2 and capped at $11.

You may refer to our SDL Guide for more details.

Piloto Asia provides comprehensive 'HR support" services that are specifically designed to meet the needs of your organization effectively.

These include payroll outsourcing, contract management, recruitment assistance, and employment pass applications - among other services. Specifically, for an IRAS Investment Holding Company, our HR expertise can ensure that your HR processes and systems are in line with the industry's best practices and regulatory requirements. IRAS Investment Holding Company can also greatly benefit from our frequent regulatory updates, compliance checks, and strategic HR recommendations. Piloto Asia aims to manage your HR operations efficiently to let you focus more on your investment portfolios.