Compared to many other countries, Singapore has more accessible and transparent payroll rules and regulations. Yet, properly managing payroll services can be challenging, especially for small and medium enterprises that might not be relying on accounting firms in Singapore. Dealing with payroll is a critical part of any business, small or large, as it must run payroll to pay its employees. Payroll errors can cause massive financial losses to organizations; hence, companies should be familiar with all the different aspects of payroll management.
Here are the top 10 commonly asked questions about payroll in Singapore:
1. Do you have to pay overtime?
Organizations are legally bound to pay overtime to employees in the following cases:
- If the employee is a non-workman earning up to $2,600 SGD.
- If the employee is a workman earning up to $4,500 SGD.
Such types of payments should be made within 14 days after the salary period is over. Moreover, Singapore law dictates that the overtime rate must be 1.5 more than normal pay.
2. How often should companies pay their employees?
According to the Employment Act, employees must be paid at least once a month. Businesses can pay their employees in shorter intervals, as well. Salaries must be paid within 7 days of the end of the payroll period. For overtime work, employees must be paid within 14 days of the end of the payroll period.
3. Can companies outsource their payroll management?
Yes, companies in Singapore can outsource their payroll services to audit and accounting firms in Singapore. Some businesses get so busy with marketing, promotion and other financial matters that payroll management often gets ignored. In such cases, companies can outsource their payroll functions. Outsourcing is a very efficient manner of dealing with critical parts of a business, without diverting your focus from the main goals.
4. What type of records should businesses save?
The Employment Act states that all employers must maintain employment records as well as salary records. It is always a good idea to maintain all kinds of records, either in soft or hard copy, to avoid any legal issues in future. The duration for which you have to keep the records varies from the type of the company and the nature of hiring. Generally, for current employees, you should save records for up to two years; for ex-employees, you should save records for one year after they have left the company.
5. Are the companies required to give employees payslips?
According to the Employment Act, every business must issue an itemized payslip, either soft or hard copy, to its employees within three working days of payment. Moreover, if you have fired an employee, or his/her contract has expired, you must provide all remaining payslips, along with any remaining salary.
If an organization pays its employees multiple times, it can provide consolidated payslips, which must contain all the essential information of the payments made since the previously issued payslip. Many companies find issuing payslips to be a difficult task, especially if they have many employees. In such a case, you should hire an accounting firm in Singapore that can help you throughout the process.
6. Why should companies submit Form IR21?
If your company has hired a non-Singapore citizen who wants to break a contract and leave the company, you must get tax clearance for that employee. As a result, all employers in Singapore must file an IR21 form and provide employee tax clearance. It is applicable for all work passes and PEP holders.
7. What are third-party liabilities?
Holding employee’s payments for retirement plan investments, insurance and other company benefits is called third-party liabilities mean. The employee typically decides the amount that is to be held at the time of the employment contract.
8. What is Worker Compensation Insurance?
All employers in Singapore must pay for their employees’ medical care, if they have gotten sick at work, or facing any kind of health emergency at the workplace. This policy is called worker compensation insurance. The amount of insurance paid to the employee is dependent on the medical condition and various aspects of the worker’s compensation law.
9. Which forms are necessary for reporting employee income?
Businesses must declare the earnings of their employees by filing tax forms, which are regulated by IRAS. The tax forms of all the employees hired in Singapore before 1st March are required, including an IR8A, Form IR8S, Appendix 8A and 8B.
10. Should companies use payroll software?
Technology should be adopted in every part of an organization to become successful in a highly competitive business landscape. Payroll software makes payroll management easy, quick, efficient and reliable. Companies that hire accounting firms in Singapore do not have to worry about choosing suitable software because the accounting firm will be experienced and trained in using the best payroll software for your company.
In a Nutshell
Now that you are familiar with the most common problems and questions associated with payroll services, you should have no problem in conducting smooth payroll or hiring an accounting firm in Singapore to perform all of the essential payroll functions. In this way, your company remains in compliance with all guidelines, and you will not have to worry about any kind of irregularity or legal issue. For more information, feel free to get in touch with us.