Step 1.

Employee Record Keeping

Having a detailed record of each employee is the first thing you want to start with. Aside from keeping
compliant to MOM requirements, building a solid employee database is essential for any Payroll system
to function. A proper management of employee records can also contribute to you being able to
effectively monitor the performance and productivity of your employees.

Key components in Employee Records that you’ll want to include:

Basic Information – Refers to personal information such as employee’s full name, identification number,
nationality, address, birth date, contact number, employment date etc. This section can also include
emergency contacts.

Salary Details – This includes various components of an employees’ salary, namely basic pay, bonuses,
commission and contributions.

Statutory Information – Income Tax Reference number, Banking Info and Immigration Info where
applicable. Information here is generally also required for tax reporting purposes.

Confidential Agreements/Documents – Employee contracts, resumes, resignation agreements etc.

should be kept in your employee records for easy access and referring for checks.

Step 2. Salary Calculations

Now that you’ve got your employee database ready, the next step is putting together the components
of employees’ salary. Some key considerations to factor in:

Are employees’ salary calculated by hours or days?

How is no pay leave calculated?

If your employees are entitled to bonus, how is it measured?

How should overtime be calculated?

If employees are late or early for work, how do you calculate allowances and deductions?

It’s always a good idea to classify your employees, whether they are full-time, part-time or
contract, with there being different tax requirements and minimum wage regulations you’ll want to
adhere to. Additional components that must be factored into employees’ salary:

CPF Contributions – Businesses operating in Singapore are expected to comply with CPF(Central
Provident Fund Board) contributory requirements. To calculate contributions for employees’ CPF, you
may click here.
Foreign Worker Levy (FWL) – If your business employs foreign workers, there is a monthly levy
requirement for Work Permit and S Pass holders via General Interbank Recurring Order (GIRO).

Contribution to Self Help Group Funds – They include SHARE, CDAC, ECF, MBMF and SINDA. If your
employees contribute to aforementioned self help group funds, these contributions and donations are
to be deducted from employee’s wages together with the employee’s share of CPF contribution as well.

Step 3. Set Periodic Payment Date

Employees cannot go too long without a salary, and you can’t possibly be processing Payroll say, every
day. It’ll be a complete nightmare! Take note however, that employees’ salary must be paid within 7
days after the end of the salary period – and non-payment of salary will be considered an offence.

Step 4. Establish Payroll Policy

For your employees to know when to and what to expect on payday, you must establish relevant payroll
policies that are clearly communicated to, and understood by all of your employees.This will include:

Salary calculations, Pay Periods and Payday – You’ve already established a process for reimbursement of
employees’ salaries. The next step is to ensure your employees are aware of pay periods and paydays
that are relevant to them. Should they be paid on a monthly basis, they will need to know the start and
end dates for the month long pay period, and the actual payday.

Time & Attendance Guidelines – Clearly state what your employees need to do in order to achieve a
proper time sheet submission. For those of you who record employees’ time & attendance manually and
require employees to fill out a time sheet, you may want to convey rounding procedures, time sheet
submission deadlines, who is assigned to endorse them and most importantly, highlight the
consequences of falsifying time sheets.

Employee Benefits – Break down the benefits offered to employees and how they can be
obtained. Employee benefits may include annual leave entitlements for vacation, sick, personal and
bereavement, health and life insurance, business expense reimbursements and paycheck advances.

Now that you’ve got it all set up, it’s time to pay your employees. Which brings me to the next point for
consideration- Payroll logistics. Depending on your company’s preference, payroll can be delivered via
cash, cheque or GIRO. As of 1 April 2016, it is mandatory for all businesses in Singapore to issue itemized
payslips to employees covered under the employment act.

Step 5. Keep Track of Payroll History

If there is no proper documentation of payroll history, it can be quite difficult to answer to management
when an issue pertaining to past payroll data crops up at some point in the future. Common situations
where businesses require to dig up past payroll records include difficulties in balancing accounting books
within the finance department, and discrepancies in salary payments.
In addition, it is a legal obligation that businesses in Singapore are required to keep payslip records of at
least 2 years of their existing employees, and 1 year of resigned employees.

Step 6. Ensure Tax Submissions

Avoid unnecessary penalties of your business’ taxes by constantly keeping yourself updated with the
latest regulations and submission dates. In Singapore, all businesses are expected to prepare Form IR8A
and Appendix 8A, Appendix 8B or Form IR8S (where applicable) for employees by 1st March every year.

That aside, you will have to comply with the method of filing taxes as well. From Year of Assessment
2017, it is a requirement for all businesses who have either received a notice from IRAS(Inland Revenue
Authority of Singapore) or have 10 or more employees during the entire year, to submit income
information electronically via the Auto-Inclusion Scheme (AIS).

Of course, a Payroll Software or Service Provider can come in very handy when you’re caught up with
other business matters, and lack of manpower to manually check the Payroll process from end-to-end.
However outsourcing Payroll services and running Payroll through a software does require a
considerable investment, so you have to think about your own business needs and decide what works
the best for your business. Ultimately, it is recommended to keep it as simple as possible and always
make sure your process is constantly reviewed and updated to be in compliance with employment
regulations at all times.