Complete Guide to Managing and Processing Payroll in Singapore

If your business employs people, you will need to manage and process payroll.

Payroll in Singapore is regulated under the Employment Act¹, which serves to protect the rights of those working in Singapore.

As a business owner in Singapore, you should ensure that your company is compliant with the legal requirements under the Employment Act to avoid penalties, ensure long-term business success and maintain employee satisfaction.

Instead of having to pore over all 121 pages of the Employment Act, this comprehensive guide distils everything you need to know to manage and process payroll in Singapore efficiently.

We'll also mention how Wise Business is an easy way for Singapore companies to manage payroll with its intuitive Batch Payments feature. You’ll be able to send payments to all your staff - both local and overseas - faster, and more cost-effectively as Wise always uses the mid-market rate for any foreign currency conversions.

Table of contents
Payroll management workflow in Singapore Main Singapore payroll legislation that businesses must be aware of Employment Act Central Provident Fund (CPF) Worker Levies Singapore Income Tax Important payroll considerations in Singapore FAQ on payroll in Singapore

Payroll management workflow in Singapore

For a start, here’s a typical payroll management and processing workflow in Singapore. Use this as a guide to design your internal workflow and ensure that your employees are compensated accurately.

1. Ensure clear salary structures: You should clearly define your employee’s basic pay, overtime pay (if required), allowances, bonuses, incentives, and deductions. This ensures that both you and your employee are on the same page, reducing any potential cause of conflict.

You should also be clear about your payroll frequency. While most companies pay every month, if you are in the hospitality, retail or service sector, freelancers or contract workers may expect payment on a weekly or bi-weekly cycle.

1. Compute the payroll of employees: At the end of every payroll cycle, you will need to compute your employees’ gross and net salaries after deductions such as CPF contributions.

Take note that Singapore employers are required to issue an itemised pay slip for employees, and you will need to keep records of pay slips for the past two years.

While this process is manageable for a small company, it can take a toll as your company grows. Payroll software can help you to automate this process while ensuring that your business is compliant with the Employment Act.

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1. Distribute payroll payments: Sending payroll payments is the next key step in the process. These can be done manually or through GIRO via your corporate bank account, paid via a multi-currency bank account like Wise Business, or automated with a payroll software.
2. Submit Income details for Tax Filing: Singapore businesses are required to submit their employees’ income details to IRAS annually. Keep a record of your employees’ pay slips and income breakdown so that this process can be done efficiently. You can also sign up for the Auto-Inclusion Scheme (AIS) to help speed up the process.

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Main Singapore payroll legislation that businesses must be aware of

As a business owner in Singapore, you do not have to be an expert on Singapore’s payroll legislation. However, you should have a basic understanding of the following laws and legal requirements to ensure that your business remains compliant.

Employment Act

The Employment Act¹ has been the main labour law in Singapore since 1968 and covers the payroll legislation in the country.

Part Three of the Act focuses on salary and mandates that:

• Salaries must be paid within 7 days from the end of the salary period, at least once a month
• Overtime pay must be paid within 14 days from the end of the salary period
• Salary due to an employee upon the completion of a contract of service must be paid upon the completion of the contract.
• Bonuses are not required by law
• Employees are only allowed to make authorised deductions (more details below)

You should also note that the Act mandates that an itemised pay slip must be provided to all employees, either in soft or hard copy, in Part 12.

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Essential payroll regulations in Singapore

Central Provident Fund (CPF)

The CPF is a mandatory social security savings scheme. It is a key component of payroll management in Singapore because employers would deduct the employee’s CPF contribution from their gross salary.

Employers are required to contribute to their employees’ CPF if they are Singapore Citizens or Permanent Residents and are earning a combined wage of more than 50 SGD a month. Employees who earn above 500 SGD are also required to contribute to their CPF, with rates being determined by their age. The CPF board provides a handy CPF contribution calculator that helps you calculate both the employer and employee CPF contributions.

At the point of writing, the CPF contribution rates² are as follows:

Employee's age (years)	By employer (% of wage)	By employee (% of wage)	Total (% of wage)
55 and below	17	20	37
Above 55 to 60	15.5	17	32.5
Above 60 to 65	12	11.5	23.5
Above 65 to 70	9	7.5	16.5
Above 70	7.5	5	12.5

Source checked: 16 Jun 2025

Do note that there will be upcoming increases to the CPF contribution rates for senior employees (aged from 55 to 65) from 1 January 2026³.

What payments attract CPF contributions?

In general, CPF contributions are required on all wages⁴, which are defined as any monetary or cash remuneration under the CPF Act. These would include basic salary, overtime pay, bonuses, allowances, commissions or cash incentives.

You do not have to contribute to CPF for any non-cash benefits, gifts, reimbursements and termination benefits.

Worker Levies

Levies are another key component in payroll management. Here are two common worker levies you may need to include in your payroll processing workflow.

Skills Development Levy (SDL): SDL is a compulsory levy on all employees working in Singapore, including foreign employees⁵. It is collected alongside CPF contributions. The SDL is collected by SkillsFuture Singapore Agency (SSG) and is used to support skills upgrading and to fund training grants for employers who send employees for training under the National Continuing Education Training system.

The minimum amount payable is 2 SGD for employees earning less than 800 SGD per month and up to 11.25 SGD for employees earning more than 4,500 SGD per month.

Foreign Worker Levy (FWL): Singapore businesses are required to pay a monthly levy for any Work Permit (WP) holders employed⁶. The FWL is calculated based on the worker’s qualification and the number of Work Permit or S Pass holders that your company hires.

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Singapore Income Tax

Singapore businesses are not required to withhold taxes from employees. However, under the Singapore Income Tax Act⁷, you are legally required to submit details of your employees’ income to the Inland Revenue Authority of Singapore (IRAS).

There are four types of tax forms for employers⁸:

• IR8A: Form IR8A is the most common tax form you’ll need to submit for all employees.
• Appendix 8A: Appendix 8A has to be furnished if employees received benefits-in-kind such as insurance, accommodation, and more.
• Appendix 8B: Appendix 8B has to be furnished if employees derive gains or profits from Employee Stock Option (ESOP) Plans or other forms of Employee Share Ownership (ESOW) Plans.
• IR8S: You will need to complete Form IR8S if you have made or are claiming a refund on excess CPF contributions on your employees’ wages.

Submission of employee income is an annual process that can be done manually or via the AIS. This process can be automated easily using Singapore payroll software, too.

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Important payroll considerations in Singapore

Variable Wage Components

On top of their basic pay, Singapore business owners may choose to offer variable wage components⁹ that encourage productivity or reward employees for their work. The following are the most common variable wage components. Do note that they are eligible for CPF contributions as well.

Annual Wage Supplement (AWS): AWS, also commonly known as the “13th month bonus”, is an additional single payment on top of an employee’s total annual wage. While encouraged, AWS is not compulsory unless stated in the employee’s contract. The amount can be decided by the employer, depending on the company’s performance.

Bonus: Another one-time payment, bonuses are commonly used to reward employees for their contributions to the company. Like AWS, it is not compulsory.

Variable Payments: Commonly referred to as incentive payments, variable payments help drive and encourage productivity and are usually based on milestones or key performance indicators. These are not compulsory as well.

Authorised Deductions

As a Singapore employer, you should know your rights and limitations when it comes to salary deductions. While you are allowed to make salary deductions, you should know that deductions are only allowed for specific reasons¹⁰, such as:

• Absence from work
• Damage or loss of money or goods
• Supply of accommodation, amenities or services that have been accepted by the employee
• Recovery of advances, loans, overpaid salary or unearned employment benefits
• CPF contributions

Any other deduction will require a written consent from the employee, and deductions are capped at 50% of the employee’s total salary payable in any one salary period.

Calculating payroll in Singapore

Now that we’ve covered the key aspects of managing and processing payroll in Singapore, here’s a quick step-by-step process on how to calculate payroll for your employees.

1. Determine the basic monthly salary: If your employee started work in the middle of the month or had taken no pay leave, you’ll need to prorate their salary as per their employment contract.
2. Work out the Gross Monthly Wage: To determine an employee’s gross monthly wage, include any additional wages such as allowances, overtime, bonuses or incentives. This should also include any valid authorised deductions within the salary period.
3. Calculate CPF contribution: Refer to the CPF contribution rate table above, or use the CPF Contribution Calculator provided by the CPF board. Employee’s CPF contribution should be deducted from their gross monthly wage.
4. Calculate SDL contributions: Use the SDL calculator to compute the exact levy amount. Take note that SDL is paid by the employer and should not be deducted from the employee’s monthly wage.
5. Determine the Net Monthly Wage: Deduct CPF contribution and any other valid deductions that do not attract CPF from the gross monthly wage.
6. Issue an itemised pay slip: Issue either a softcopy or hardcopy itemised pay slip to your employees with the details above.
7. Dispense pay: This can be done manually through your corporate bank account or automated with payroll software.

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FAQ on payroll in Singapore

Is overtime pay mandatory in Singapore?

Yes, overtime pay is mandatory in Singapore for eligible employees.

Eligible employees include:

• Employees who do not perform manual labour (aka non-workmen) and whose monthly basic salary is 2,600SGD or less
• Employees who perform manual labour (aka workmen) and whose monthly basic salary is 4,500SGD or less

Employers are required to pay at least 1.5 times the employee’s basic hourly rate, and the overtime pay is subject to CPF contributions. You should also note that employees are only allowed to work up to 72 overtime hours per month.

Do Singapore employers have to provide employees with payslips?

Yes. As of 1 April 2016, the Employment Act mandates that all employers must issue itemised pay slips to employees.

Itemised payslips must include the name of the employer and the employee, date of payment, basic salary, salary period, any allowances or additional payments, deductions and net salary paid in total¹¹.

Do employers have to keep employment and salary records?

You will be required to keep employment records of your employees and pay slip records from the past two years.

Do note that you should keep pay slip records from the last two years of any ex-employee for one year after they leave.

Does minimum wage exist in Singapore?

No. Singapore does not have a universal minimum wage regulation. Instead, we use a Progressive Wage Model (PWM)¹² that encourages the increase of workers’ wages through skills upgrading and improvements in productivity.

The PWM determines a required PWM wage level for eligible employees and a Local Qualifying Salary (LQS) for all local employees, by sector or occupation.

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Conclusion

In this comprehensive guide, we’ve given you the essential overview to managing and processing payroll in Singapore, which ensures your business is compliant with payroll regulations.

By leveraging solutions like Wise Business, you can streamline your payroll process, saving time and money while ensuring accuracy and compliance.

💡Whether you're handling one-off invoices, recurring payments, or mass payouts, Wise Business makes it easy to simplify your financial operations and maximise profits.

• Fast and secure payments to 140+ countries with no exchange rate markups.
• Always get the mid-market rate with transparent conversion fees starting from 0.26%.
• Send up to 1,000 payments with just one transfer using Batch Payments.
• Enjoy lower fees when sending amounts above 20,000 GBP (or equivalent in your currency).

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Sources:

1. Singapore Employment Act
2. How much CPF contributions to pay | CPFB
3. CPF contribution changes from 1 January 2026 | CPFB
4. What payments attract CPF contributions? | CPFB
5. Skills Development Levy | CPFB
6. Foreign worker quota and levy requirements | Ministry of Manpower
7. Singapore Income Tax Act
8. Reporting Employee Earnings | IRAS
9. Variable wage components | Ministry of Manpower
10. Allowable salary deductions | Ministry of Manpower
11. Itemised pay slips | Ministry of Manpower
12. What is the Progressive Wage Model | Ministry of Manpower

Sources checked on 17 Jun 2025