Payroll and Benefits Guide - Singapore

Singapore
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Currency

Singapore Dollar (SGD)
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Capital

Singapore
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Employer Taxes

20.00%

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Date Format

dd/mm/yy
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Fiscal Year

1 Jan – 31 Dec

Fun Facts

Singapore is the only country in the world that is both an island and a city-state.

The iconic Merlion statue, which has the body of a fish and the head of a lion, is a symbol of Singapore. It represents the city’s original name, “Singapura,” meaning “Lion City” in Malay.

Despite its urbanization, Singapore is known as a “City in a Garden.” It has over 300 parks and four nature reserves.

Singapore is renowned for its cleanliness and strict anti-littering laws.

Singapore has four official languages: English, Malay, Mandarin Chinese, and Tamil.

While chewing gum was once banned in Singapore, it was lifted in 2004 with some regulations to maintain cleanliness and hygiene.

Singapore

Contributions

Employee Payroll Tax

Contribution TypeRate
Central Provident Fund – CPF20.00%

Employer Payroll Tax

Contribution TypeRate
Central Provident Fund – CPF17.00%
Skills Development Levy (SDL)0.25%
Foreign worker surcharge350 USD/month
For S PASS holders450 SGD/month

Payroll

Payroll Cycle

Employees will receive their monthly salary within seven days after the completion of each salary period. If an employee’s employment is terminated or they resign, their final payment will be issued on their last day of work.

13th Salary

In Singapore, it is a tradition to provide employees with a 13th-month salary at the conclusion of each year.

Work Hours and Week

According to Part IV of the Singapore Employment Act, the regular maximum weekly working hours in Singapore are set at 44 hours.

Overtime

Employees who fall under the Employment Act in Singapore are entitled to receive overtime pay at a rate of at least 150% of their regular hourly wage. They can work a maximum of 12 hours per day and 72 hours per month as overtime. For white-collar workers, the highest monthly overtime pay is capped at 4,500 SGD, while blue-collar workers can receive up to 2,600 SGD.

Employers are obligated to disburse overtime pay within 14 days from the end of the salary period.

Singapore

Leave

Paid Time Off

Paid Time Off (PTO) is mandated for employees who are under the coverage of the Employment Act and have served for a minimum of three months. Such employees are entitled to at least 7 days of paid annual leave in their initial year of service, with an increment of one additional day for each subsequent year of employment. Nevertheless, it is a widespread practice among employers to grant a more generous allowance of 14–20 days after the completion of the first year.

Public Holidays

There are 11 holidays.

Sick Days

After an employee has completed six months of service, they become eligible for paid sick leave, equivalent to 14 days per year if hospitalization is not required, or 60 days per year if hospitalization is necessary, including 14 days for outpatient care.

Before reaching six months of employment, an employee’s entitlement to paid sick days depends on their length of employment at the time:

  • Up to three months of employment: Five days per year, or 15 days if hospitalization is necessary.
  • Four months of employment: Eight days per year, or 45 days if hospitalization is necessary.
  • Five months of employment: Eleven days per year, or 45 days if hospitalization is necessary.
  • Six months of employment: Fourteen days per year, or 60 days if hospitalization is necessary.

In the event of sickness, the employee must promptly inform their employer within 48 hours of their inability to work and subsequently provide a medical certificate from a qualified medical professional when they return to work for any period of sickness.

Maternity Leave

An expectant employee, who has been employed for a minimum of three months before the due date and whose child is a Singaporean citizen, is entitled to 16 weeks of paid maternity leave. The maternity leave is divided into two periods: the woman can choose to take up to 8 weeks before the expected due date, with a minimum of 28 days, and the remaining weeks after the baby’s birth.

If the child is not a Singaporean citizen, the maternity leave period is shortened to 12 weeks.

For the first and second child, the employer provides payment for the initial eight weeks at the regular gross salary. The additional eight weeks can be reimbursed by the Government, with a maximum cap of 10,000 SGD per 4 weeks, or a total of 20,000 SGD per child.

However, starting from the birth of the third child, the entire 16 weeks of maternity leave are directly reimbursed by the Government, capped at 10,000 SGD per 4 weeks, or a total of 20,000 SGD per child.

Paternity Leave

The father or partner is eligible for two weeks of paid paternity leave after the baby’s birth, provided they have completed three months of service and take the leave within 16 weeks of the baby’s birth. The government funds this paternity leave, known as Government-Paid Paternity Leave (GPPL), with a cap of 2,500 SGD per week or a total of 5,000 SGD.

Adoptive fathers who meet the eligibility criteria are also entitled to government-paid paternity leave.

Parental Leave

Fathers who meet the criteria can opt for Shared Parental Leave, enabling them to share up to 4 weeks of their wife’s 16 weeks Maternity Leave. The government reimburses the payment for this leave, with a maximum cap of 2,500 SGD per week.

Both parents, provided they have served at least 3 months, are eligible for 6 days per year of Childcare Leave until the year their child turns 7, regardless of the number of children they have. Childcare leave is limited to 42 days for each parent.

Employees are required to utilize their yearly childcare leave entitlement by the end of that specific year and cannot carry it over to the following year.

The payment structure for the leave is as follows:

The employer will provide payment for the first 3 days of leave. The Government will cover the payment for the remaining 3 days. Payments are limited to 500 SGD per day, including CPF contributions, or a total of 1,500 SGD within a calendar year.

Additionally, employees are eligible for 2 days of Extended Childcare Leave per year if their youngest child, who is a Singapore citizen, falls between the ages of 7 and 12 (inclusive). These days are reimbursed by the Government, capped at 500 SGD per day.

Termination

Termination Process

The employment relationship can be terminated by either the employer or the employee, provided that the legally required notice is given, and the termination reason is not illegal, such as discrimination against a protected group as defined by the law, among other factors. The termination should also comply with the terms outlined in the employment contract.

In cases where the termination is not due to misconduct, leavers should receive payment for any outstanding holiday entitlement. The employer must obtain appropriate tax clearance from IRAS (Inland Revenue Authority of Singapore) before issuing the final payment.

If the employer terminates the contract or the employee resigns and fulfills the entire notice period, the payment is made on the last day of employment or within three days if immediate payment is not feasible.

However, if an employee resigns without giving notice and does not work during the notice period, the payment should be made within seven days from the last day of employment.

Notice Period

Here are the notice periods for terminating employment based on the length of service:

  • Less than 26 weeks of service – 1 day notice
  • More than 26 weeks but less than 2 years of service – 1 week notice
  • More than 2 years but less than 5 years of service – 2 weeks notice
  • More than 5 years of service – 4 weeks notice

During the probation period, employment can be terminated by either the employer or the employee with five days’ notice.

Severance Pay

In Singapore, employment contracts or collective agreements typically include provisions for “retrenchment benefit” payments to be provided upon termination after an employee has rendered two years of service. It is a common practice for these payments to amount to 2 to 4 weeks’ worth of pay for each year of employment.

Probation Period

Probation Period

In Singapore, the probation period is determined within the employment contract or collective agreement and usually spans between 3 to 6 months.

VISA

VISA

In Singapore, individuals are required to obtain work permits, and the specific type of permit depends on their skills. Those with a degree, professional qualifications, or specialist skills will need an employment pass to work in the country.

On the other hand, skilled or unskilled foreign workers require a work permit. The Singapore Ministry of Manpower (MOM) is responsible for issuing all types of employment passes.

The issuance of different employment passes may vary based on the applicant’s salary, but the fundamental procedures remain consistent. The employment pass is linked to both the individual and the company they work for. If an employment pass holder wishes to change jobs, the current employer must cancel the existing pass, and the new employer must apply for a new one.

The employment pass must also be canceled if the holder ceases employment in Singapore or obtains permanent resident status.

VAT

As part of Budget 2022, the Minister for Finance revealed a two-step increase in the standard VAT (Value-Added Tax) rate. The planned increments are as follows: (i) from 7% to 8% starting from January 1, 2023, and (ii) from 8% to 9% starting from January 1, 2024.