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Salary

Updated: Oct 30, 2021

The Employment Act covers salary payments, deductions and variable wages.


Paying salary


In accordance to the Employment Act, your employer must pay your salary at least once a month and within 7 days after the end of the salary period. There are exceptions for overtime, resignation without notice and other situations.


What is salary


Salary refers to remuneration, including allowances, paid for work done under a contract of service.


It does not include:

  • The value of accommodation, utilities or other amenities.

  • Pension or provident fund contribution paid by the employer.

  • Travelling allowance.

  • Payments for expenses incurred during work.

  • Gratuity payable on discharge or retirement.

  • Retrenchment benefits.

Singapore does not have a minimum wage. Your salary is subject to negotiation and agreement between your employer and you or your trade union.

How often salary must be paid


Your employer must pay your salary at least once a month.


They can also pay it at shorter intervals if they choose.


Salary must be paid:

  • Within 7 days after the end of the salary period

  • For overtime work, within 14 days after the end of the salary period

Your final salary payment could vary depending on the following situations:


1. Employee resigns and serves the required notice period, your final salary must be paid on the last day of employment.


2. Employee resigns without notice and doesn’t serve the notice period, within 7 days of the last day of employment.


3. Dismissal on grounds of misconduct, on the last day of employment. If this is not possible, then within 3 working days from date of dismissal.


4. Employer terminates the contract, on the last day of employment. If this is not possible, then within 3 working days from date of termination.


If your contract involves commission, how and when the commission is paid depends on what is in your employment contract or existing policies or practices.


If you’re a foreign employee who is leaving your employment, your employer is required to withhold all your monies due to you for tax clearance. The monies include your salary, leave pay, etc.


How salary should be paid


Salary should be paid:

  • On a working day, during working hours.

  • At your place of work, or any other place you and your employer have agreed on.


Payment can be made:

  • Directly into your bank account.

  • By cheque. The cheque needs to be cleared by your bank before you’re considered paid.

Itemised pay slips

All employers must issue itemised pay slips to employees covered by the Employment Act.


Salary records

Employers must keep detailed employment records, including salary records, of employees covered by the Employment Act.


If you are paid late or not paid salary


Non-payment of salary is an offence. Your employer must pay your salary on time, according to the terms of your employment contract.


When deductions may be required


Your employer may be required to deduct your salary:

  • By court order, or other valid authority.

  • If your employer is declared an agent for the recovery of income tax, property tax or goods and services tax (GST) payable by you.

Any compensation should generally be recovered directly from you, rather than through a salary deduction.


Types of deductions allowed

Your employer can deduct your salary only for the following reasons:


- For absence from work. For a monthly-rated employee, your salary may be deducted for absences.


- For damage or loss of money or goods including work gear, tools, equipment, and vehicles. Your salary will be deducted if you damage or lose such goods or money that you are responsible for. Before deducting your salary, your employer should:

  • Hold an inquiry to determine if you are directly at fault.

  • Not make any deductions until you have had the opportunity to explain the cause of the damage or loss.

  • Not deduct more than 25% of your 1 month’s salary. The deduction must be made as a one-time lump sum payment.

- For supplying accommodation that you have accepted.


- For supplying amenities and services that the Commissioner for Labour has authorised and you have accepted. For example, childcare services, recreation facilities, etc, that are beyond what your employer is reasonably required to provide for you. Your employer must get approval from the Commissioner for Labour before deducting your salary.


The total deductions for supplying accommodation, and amenities and services must not exceed the value of the accommodation, amenities or services supplied. It should also not exceed 25% of your salary for the salary period.


- For recovering advances, loans, overpaid salary or unearned employment benefits.

  • For advances, your employer can deduct your salary in instalments spread over not more than 12 months. Each instalment should not exceed 25% of your salary for the salary period.

  • For loans, your employer can deduct your salary in instalments. Each instalment should not exceed 25% of your salary for the salary period.

  • For overpaid salary and unearned employment benefits, your employer can recover the full amount from you.


- For CPF contributions.


- For payments to any registered co-operative society with your written consent.


- For other purposes for which you consent in writing and your employer allows you to withdraw your written consent at any time.

  • This is meant for deductions that would benefit the employee, and which the employer is in a position to collect the payment.

  • Other than the deductions mentioned above, employers must not deduct an employee’s salary for items which are not to the benefit of the employee, such as for liquidated damages.

  • The deduction also cannot contravene any other law. For example, if you are a foreign worker, your employer is not allowed to deduct your salary to recover levy costs.

Maximum amount of deductions

Employer cannot deduct more than 50% of total salary payable in any one salary period.


This does not include deductions made for:

  • Absence from work.

  • Recovery of advances, loans, overpaid salary or unearned employment benefits.

  • Payments, with your consent, to registered co-operative societies for subscriptions, entrance fees, loan instalments, interest and other dues payable.

However, when your contract of service is terminated, the total authorised deduction may exceed 50% of your final salary payment.


Deducting salaries of migrant workers

Your employer can only reduce your salaries, or increase or make new deductions to your salaries, if:

  • They get your written consent.

  • They inform MOM of the change in your salary using WP Online (for Work Permit holders) or submit the request to MOM through EP Online one month before the salary is reduced (for EP or S Pass holders).

Your employer is not allowed to make deductions to your salaries under any circumstances, for the following purposes as specified in the Employment of Foreign Manpower Act:

  • As a condition for employing or continuing to employ you.

  • For costs related to your employment:

  • Work pass renewal

  • Security bond

  • Medical insurance

  • Repatriation costs

  • Compulsory training

  • Medical fees

  • Levy payment

Monthly and daily salary: definitions and calculation


You may receive a monthly or daily salary. Daily wages are calculated using either the gross rate (for paid public holidays, paid leave, salary in lieu and salary deductions) or the basic rate (for work on rest days or public holidays).


Monthly wages

For calculating salary, a “month” or “complete month” refers to any one of the months in the calendar year.

How an incomplete month pay is calculated

Salary for an incomplete month of work is calculated as follows:


Monthly gross rate of pay × Total number of days the employee

------------------------------------ actually worked in that month

Total number of working

days in that month


If you take no-pay leave

If you are a monthly-rated full-time employee and took unpaid leave for the month, you should count it as an incomplete month of work to calculate your salary.


Definitions


Half-day

When the number of hours worked in the day is 5 or less.


One working day

When the number of hours worked in the day is more than 5.


Incomplete month of work

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.


Total no. of days actually worked in the month

Includes public holidays, paid hospitalisation leave and annual leave, if entitled.


Basic rate of pay


How it is used

For calculating pay for work on a rest day or public holiday.


What is included

Basic rate of pay includes wage adjustments and increments that an employee is entitled to under a contract of service.


What is excluded

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 × average number of days an employee is required to work in a week


Gross rate of pay


How it is used

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.


What is included

Gross rate of pay includes allowances that an employee is entitled to under a contract of service


What is excluded

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.


Bestar was featured in Product Nation's Choice published article: Bestar Corporation has been recognized as the Best Payroll Software in Singapore






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