How To Calculate Employee Wages In Singapore

Salary Calculation Singapore

Many industrious investors and entrepreneurs are looking to establish commercial operations in Singapore. It boasts one of the most successful economies in Asia with plenty of room for further growth and development. While Singapore has relatively strict laws, particularly when it comes to business operations, it’s a country that has served its local market players well. There are numerous variables that are involved in handling employees such as salary calculation, Singapore payroll laws, and the like.

Given that the Singapore Government is very strict when it comes to laws and regulations of the land, it’s important for any kind of business owner to always familiarize themselves with local ordinances, particularly when it comes to labor laws. Every successful organization is made up of hardworking individuals who invest their efforts in the success of the company. One key to retaining good talent in a company is to pay them their fair share of wages.

There are many factors to take into consideration when calculating wages for employees in Singapore such as overtime, rest days, holidays, and more. This article will touch on everything you may need to know about calculating salaries for employees in Singapore.

Monthly Wages in Singapore

When calculating for employees’ salaries in Singapore, there are typically two categories under which they can fall: monthly and daily rates. According to the government’s Ministry of Manpower, daily wages are computed using either the gross rate or basic rate.

The Simple Steps to Calculating Payroll in Singapore

As tiring and tedious as the process of payroll computation is, it’s still a necessary task for any type of company to have and go through, especially if employees are to receive their hard-earned salaries on time. It’s important that employees always receive their pay in a timely manner in order to protect your company from any potential government sanctions and to ensure your employees are happy and loyal to you. Premia TNC has a payroll service that is fully designed to help any Singapore-based establishment calculate their staffs’ payrolls promptly and efficiently.

Know Your Employees’ Gross Pay

Every employee in a company will have a specific gross income based on what’s stipulated in their contract. This can largely depend on their tenure and position in the company. It’s imperative that business owners always keep track of the gross pay that all employees are entitled to. In order to calculate the daily gross rate of pay for any employee, use this formula:

12 * monthly gross rate of pay / 52 * number of days an employee is required to work in a week

So, if your employee has a monthly gross rate of pay of SGD 100,000 and is required to work five days per week, then their gross daily pay should be calculated as follows:

12 * 100,000 / 52 * 5 = 1,200,000 / 260 = 4615.38

From this calculation, you know that your employee has a gross daily wage of SGD 4615.38.

Add their Allowances

On top of the gross pay, certain employees might also be entitled to allowances that cover transportation, food, accommodations, and other gratuities. It may be a different case for every employee and it’s important to nail these details appropriately.

Incorporate Overtime Pay

According to Singapore law, overtime work is considered to be any kind of work that is in excess of the normal hours of work (excluding breaks). Employees can only claim overtime pay if they are a non-workman earning up to SGD 2,600 and a workman earning up to SGD 4,500. An employee classifies as a workman if their work involves a significant amount of manual labor.

Employers are mandated to pay 1.5 times the hourly basic rate of pay and this must be done within 14 days after the last day of the salary period. Employee overtime hours are also capped at 72 hours in a month.

Calculate Tax Deductions

The Singapore government requires that employers who (i) received notice to file their employment income electronically or (ii) have 5 or more workers in their employment during the entire year must submit their employees’ income information to IRAS electronically by the first of March every year.

Distribute the Payment to Employees

Once all the calculations are complete, employers must transfer employees’ payroll to their individual accounts. On top of that, employers must also issue pay slips to their employees in accordance with the law.

How Can Premia TNC Help?

Premia TNC’s payroll services are fully designed to allow Singapore establishments to streamline their operations so that there is no wasted energy or resources. Premia TNC’s payroll solutions can help businesses comply with all of the requirements provided by the Employment Act of Singapore. Whether it is with monthly salaries, bonuses, and deductions, Premia TNC’s payroll services offer an end-to-end approach to helping clients manage their businesses more efficiently.

As has been mentioned, Singapore is very strict when it comes to its employment laws and regulations. In accordance with any legal employment contract, it’s the responsibility of any business owner to pay their staffs’ salaries on time. Protect your business from legal action by always making sure that your employees’ payrolls are fulfilled in a timely manner.

Employee Salary FAQs

How to Calculate Incomplete Months?

complete month of work happens when an employee:

Starts work after the first day of the month.

Resigns from work before the last day of the month.

Has a no-pay leave of one or more days within the month.

Is on reservist training during the month.

The salary proration formula for an incomplete month is:

[(Monthly gross rate of pay) / (Total number of working days in that month)] * Total number of days the employee actually worked in that month.

What Constitutes a Half-Day and One Working Day?

A half-day is when the number of hours worked in the day is only five or less. Anything that exceeds five hours of work in a day is considered one full working day.

What are the Statutory Payroll Contributions in Singapore?

There are various statutory payroll contributions in Singapore such as the Central Provident Fund (CPF), Skill Development Levy (SDL), Foreign Workers Levy (FWL), Chinese Development Assistance Council (CDAC), Eurasian Community Fund (ECF), Mosque Building and Mendaki Fund (MBMF), and Singapore Indian Development Association (SIDA). All of these contributions are to be taken included in deductions for monthly wages.

How Many Working Days in a Month?

The total working days in a month are determined by the total number of days in the month minus rest days, and non-working days. But they do include public holidays.

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