How is Payroll Calculated in the Singapore?
In Singapore, salary payments, deductions, and variable wages are all governed by The Employment Act. While employers don't withhold monthly taxes for their employees, there are still key levies, deductions, and contributions to keep in mind.
What is The Employment Act?
The Employment Act is Singapore’s key legislation when it comes to payroll, setting out the rules for paying employees. It covers most employees working under a contract of service, including both local and foreign workers. Whether someone is working full-time, part-time, on a temporary or contract basis, the Act applies. It also covers employees paid hourly, daily, monthly, or by the amount of work they complete.
However, there are some exceptions. The Act doesn’t apply to seafarers, domestic workers, statutory board employees, or civil servants. So, while it provides protection for most workers, certain groups have different regulations to follow.
Salary and Payments
Under the Employment Act in Singapore, employers are required to pay their employees at least once a month. Payments must be made within 7 days after the end of the salary period. "Salary" refers to any remuneration, including allowances, for work done under a contract of service.
However, there are certain items that don't count as part of the salary, such as the value of accommodations, utilities, or amenities provided by the employer, contributions to pension or provident funds, travel allowances, expense reimbursements, gratuities on retirement, and retrenchment benefits.
In Singapore, salaries can be structured as either monthly or daily payments.- Daily wages are calculated based on either the gross rate (which includes paid public holidays, leave, and deductions) or the basic rate (for work done on rest days or public holidays).
- Monthly wages are calculated as a portion of the employee's annual salary, spread across the months.
These salary structures ensure clarity for both employers and employees, helping businesses remain compliant with local payroll regulations. Monthly and daily salary: definitions and calculation
In Singapore, you can choose to pay your employees either on a daily or monthly basis. When calculating daily wages, you’ll use either the gross rate, which covers items such as paid public holidays, leave, salary in lieu, and salary deductions, or the basic rate, which is applicable for work done on rest days or public holidays.
Monthly wages
For monthly wages, a "month" refers to any calendar month in the year. If an employee doesn’t work the full month, the salary is adjusted accordingly. The formula to calculate pay for an incomplete month of work is:
Monthly gross rate of pay
Total number of working days in the month
x
Number of days actually worked
If you take no-pay leave
If your full-time monthly-rated employees take unpaid leave during the month, it will count as an incomplete month. In this case, you’ll need to prorate their salary based on the number of days they actually worked during that month.
Definitions
When the number of hours worked in the day is 5 or less.
When the number of hours worked in the day is more than 5.
Where an employee:
Starts work after the first day of the month.
Leaves employment before the last day of the month.
Takes no-pay leave of one or more days during the month.
Is on reservist training during the month.
Total no. of working days in the month
Excludes rest days and non-working days, but includes public holidays.
For employees with fixed rest days on Sundays or non-working days on Saturdays, the total number of working days per month for year 2022 to 2024 is shown in this table. Total no. of days actually worked in the month
Includes public holidays, paid hospitalisation leave and annual leave, if entitled.
Basic rate of pay
For calculating pay for work on a rest day or public holiday.
Basic rate of pay includes wage adjustments and increments that an employee is entitled to under a contract of service.
Basic rate of pay excludes:
- Overtime payments, bonus payments and annual wage supplements (AWS).
- Reimbursement of special expenses incurred in the course of employment.
- Productivity incentive payments.
- Any allowance.
Definitions
When the number of hours worked in the day is 5 or less.
When the number of hours worked in the day is more than 5.
Where an employee:
- Starts work after the first day of the month
- Leaves employment before the last day of the month
- Takes no-pay leave of one or more days during the month
- Is on reservist training during the month
Monthly gross rate of pay
Total amount of money including allowances, payable for one month's work. This excludes:
- Additional payments (overtime, bonus, AWS).
- Reimbursement of special expenses incurred during the course of employment.
- Productivity incentive payments.
- Travel, food and housing allowances.
Total no. of working days in the month
Excludes rest days and non-working days, but includes public holidays.
For employees with fixed rest days on Sundays or non-working days on Saturdays, the total number of working days per month for year 2022 to 2024 is shown in this table.
Total no. of days actually worked in the month
Includes public holidays, paid hospitalisation leave and annual leave, if entitled.
Basic rate of pay
For calculating pay for work on a rest day or public holiday.
Basic rate of pay includes wage adjustments and increments that an employee is entitled to under a contract of service.
Basic rate of pay excludes:
- Overtime payments, bonus payments and annual wage supplements (AWS)
- Reimbursement of special expenses incurred in the course of employment
- Productivity incentive payments
- Any allowance
How it is calculated
For a monthly-rated employee, the basic rate of pay for 1 day is calculated as follows:
12 × Monthly basic rate of pay
52 x Average number of days worked per week
Gross rate of pay
For calculating:
- Salary in lieu of notice of termination of service.
- Salary in lieu of annual leave.
- Salary deduction for unauthorised absence from work.
- Paid public holidays.
- Approved paid leave, including annual leave, hospitalisation leave and maternity leave.
Gross rate of pay includes allowances that an employee is entitled to under a contract of service
Gross rate of pay excludes:
- Overtime payments, bonus payments and annual wage supplements (AWS).
- Reimbursement of special expenses incurred in the course of employment.
- Productivity incentive payments.
- Travel, food and housing allowances.
Gross rate of pay
For calculating:
- Salary in lieu of notice of termination of service
- Salary in lieu of annual leave
- Salary deduction for unauthorised absence from work
- Paid public holidays
- Approved paid leave, including annual leave, hospitalisation leave and maternity leave
Gross rate of pay includes allowances that an employee is entitled to under a contract of service
Gross rate of pay excludes:
- Overtime payments, bonus payments and annual wage supplements (AWS)
- Reimbursement of special expenses incurred in the course of employment
- Productivity incentive payments.
- Travel, food and housing allowances
Gross rate of pay
For calculating:
Salary in lieu of notice of termination of service.
Salary in lieu of annual leave.
Salary deduction for unauthorised absence from work.
Paid public holidays.
Approved paid leave, including annual leave, hospitalisation leave and maternity leave.
Gross rate of pay includes allowances that an employee is entitled to under a contract of service
Gross rate of pay excludes:
Overtime payments, bonus payments and annual wage supplements (AWS).
Reimbursement of special expenses incurred in the course of employment.
Productivity incentive payments.
Travel, food and housing allowances.
How it is calculated
For a monthly-rated employee, the gross rate of pay for 1 day is calculated as follows:
12 × Monthly gross rate of pay
52 x Average number of days worked per week
Hours of work, overtime and rest day
If your employees are covered under Part IV of the Employment Act, their working hours are regulated, and they’re entitled to breaks, overtime pay, and rest days.
Who is covered
The guidelines for work hours only apply to employees under Part IV of the Employment Act. However, it's important to note that managers and executives are not included. If your employees fall outside of this coverage, their working hours and conditions will depend on the terms outlined in their employment contracts.
Definitions
Week: A continuous 7-day period from Monday to Sunday.
Hours of Work: The time when your employees are expected to carry out their job responsibilities. This does not include intervals for rest or meal breaks. Keep in mind, you are not required to pay for rest or meal times.
Break times
Generally, employees should not work more than 6 consecutive hours without a break. However, for roles requiring continuous work for up to 8 hours, you must provide meal breaks that are at least 45 minutes long.
Normal hours of work
Contractual working hours refer to the hours mutually agreed upon between you and your employees, as stated in the contract of service. For most standard work arrangements, these hours should be clearly laid out in the employment contract to avoid any confusion.
If you work
5 days or less a week
Your contractual hours of work are
Up to 9 hours per day or 44 hours a week
If you work
More than 5 days a week
您的合同工作时间是
每天最多 8 小时或每周 44 小时
Your contractual hours of work are
Up to 9 hours per day or 44 hours a week
Up to 8 hours a day or 44 hours a week
For other work arrangements, your contractual hours of work are as follows:
If you work
Less than 44 hours every alternate week
Your contractual hours of work are
Up to 48 hours a week, but capped at 88 hours in any continuous 2-week period.
Example:
If week 1 = 40 hours; week 2 = 48 hours; week 3 = 40 hours:
- Average for weeks 1 and 2 = 44 hours
- Average for weeks 2 and 3 = 44 hours
If you work
Shifts of up to 12 hours a day
Your contractual hours of work are
Up to an average of 44 hours over a continuous 3-week period.
Example:
If week 1 = 40 hours; week 2 = 44 hours; week 3 = 48 hours; week 4 = 40 hours:
- Average for weeks 1, 2 and 3 = 44 hours
- Average for weeks 2, 3 and 4 = 44 hours
Your contractual hours of work are
Less than 44 hours every alternate week
Up to 48 hours a week, but capped at 88 hours in any continuous 2-week period.
Example:
If week 1 = 40 hours; week 2 = 48 hours; week 3 = 40 hours:
- Average for weeks 1 and 2 = 44 hours
- Average for weeks 2 and 3 = 44 hours
Shifts of up to 12 hours a day
Up to an average of 44 hours over a continuous 3-week period.
Example:
If week 1 = 40 hours; week 2 = 44 hours; week 3 = 48 hours; week 4 = 40 hours:
- Average for weeks 1, 2 and 3 = 44 hours
- Average for weeks 2, 3 and 4 = 44 hours
If your employees are not shift workers but agree to work up to 12 hours a day, while ensuring they do not exceed an average of 44 hours over any three continuous weeks, you must:
- Obtain the employee's written consent for this arrangement
- Ensure the provisions of Sections 38 and 40 of the Employment Act are clearly explained to the employee
- Inform the employee about their daily working hours, number of working days each week, and their designated weekly rest day
Overtime pay
Overtime work refers to any work done beyond normal hours (excluding break times). As an employer, you are required to pay overtime if your employee falls into one of the following categories:
- A non-workman earning a monthly basic salary of $2,600 or less
- A workman earning a monthly basic salary of $4,500 or less
Note. Generally, a workman is defined as an employee whose job primarily involves manual labour. As an employer, it’s important to determine if your employee falls under this category to ensure compliance with the relevant regulations.
The overtime rate payable for non-workmen is capped at the salary level of $2,600, or an hourly rate of $13.60.
For overtime work, you are required to pay your employees at least 1.5 times their hourly basic rate of pay. Ensure that payment is made within 14 days after the last day of the salary period.
For example, if a non-workman earning $2,600 a month works 2 hours of overtime, the calculation for overtime pay would be: $13.60 × 1.5 × 2 hours = $40.80
How overtime pay is calculated
Overtime pay is calculated as follows:
- Hourly basic rate of pay × 1.5 × number of hours worked overtime
The hourly basic rate of pay is calculated as follows: For this category of employee
Monthly-rated employee
Hourly basic rate of pay is
(12 x Monthly basic rate of pay) / (52 x 44)
For this category of employee
Hourly basic rate of pay is
Daily pay at the basic rate / Working hours per day
For this category of employee
Hourly basic rate of pay is
Total weekly pay at the basic rate of pay / Total number of hours worked in the week
For this category of employee
Hourly basic rate of pay is
(12 x Monthly basic rate of pay) / (52 x 44)
Daily pay at the basic rate / Working hours per day
Total weekly pay at the basic rate of pay / Total number of hours worked in the week
Maximum hours of work
As an employer, you are generally not allowed to require your employees to work more than 12 hours a day. However, you can request them to work beyond this limit under specific circumstances, such as:- In the event of an accident or the threat of one
- When work is essential to the life of the community, national defence, or security
- If there is urgent work required on machinery or plants
- When there's an unforeseen interruption of work
Working more than 12 hours a day (overtime exemption)
Maximum hours of overtime
An employee can only work up to 72 overtime hours in a month.
Employers can apply for an exemption if they require employees to work more than the 72 hours of overtime in a month. Work on rest day or public holidays is not counted in the 72-hour overtime limit, except for work done beyond the usual daily working hours on those days. Such extra hours are included in the 72-hour limit.
Overtime on a rest day or public holiday is calculated as follows:
(Hourly basic rate of pay × 1.5 × Number of hours worked overtime)
+
(休息日或公共假期工资)
Rest day
As an employer, you are required to provide your employees with one rest day per week. This rest day must comprise a full 24-hour period (midnight to midnight), and it is not a paid day.
For shift workers, the rest day can be a continuous period of 30 hours. A 30-hour rest period that begins before 6pm on a Sunday is considered one rest day, even if it extends into Monday.
A week is defined as a continuous period of 7 days starting from Monday and ending on Sunday. You cannot compel your employees to work on their rest day unless there are exceptional circumstances.
When rest day can fall
The employer determines the rest day, which can be on a Sunday, or any other day of the week.
Other than the rest day, the other days of the week which you don’t need to work are not considered rest days.
If the rest day is not a Sunday, your employer should prepare a monthly roster and inform you of the rest days before the start of each month.
The maximum interval allowed between 2 rest days is 12 days.
How pay for work on a rest day is calculated
Payment for work on a rest day is calculated as follows:
For up to half normal daily working hours
At the employer’s request
For more than half normal daily working hours
At the employer’s request
Beyond normal daily working hours
At the employer’s request
2 days’ salary + overtime pay
For up to half normal daily working hours
At the employee’s request
For more than half normal daily working hours
At the employee’s request
Beyond normal daily working hours
At the employee’s request
1 day’s salary + overtime pay
For up to half normal daily working hours
For more than half normal daily working hours
Beyond normal daily working hours
At the employer’s request
2 days’ salary + overtime pay
At the employee’s request
1 day’s salary + overtime pay
When it comes to paying your employees, the salary should be given on a working day, during office hours, and at the agreed workplace, or any other location you and your employee have mutually decided.
You can transfer the payment directly into the employee’s bank account or issue a cheque. However, keep in mind that if you opt for a cheque, the payment is only considered complete once the cheque has been cleared.
Does payroll tax apply?
In Singapore, unlike in some other countries, employers don't withhold payroll taxes for their employees. Instead, it's the employee's responsibility to handle their own annual income tax declaration, which they pay directly to the Inland Revenue Authority of Singapore (IRAS).
What are common salary deductions?
In Singapore, there are clear rules under the Employment Act about the deductions employers can make from an employee's salary. Employers may be required to make deductions due to a court order or other valid authorities, such as if they are appointed as agents to recover income tax, property tax, or GST owed by the employee. However, before making any deductions, employers must first get approval from the Commissioner for Labour.
It's important to note that salary deductions should not exceed 25% of an employee's salary in a given month. Common reasons for allowable deductions include:
- Absence from work
- Damage or loss of money or goods
- Supplying accommodation, amenities or services
- Recovering advances, loans, overpaid salary or unearned employee benefits
- CPF contributions
- Payments to a registered co-operative society
Public holidays and payroll
Full-time employees in Singapore receive paid public holidays, which are already included in their overall salary package. For part-time employees, they are also entitled to paid public holidays, but these are pro-rated based on the number of hours they work.