Key Employment Terms Provided To New Employees

Salary Payment

In Singapore, employers and employees have the flexibility to negotiate remuneration and service terms. The Employment Act does not stipulate a minimum basic monthly salary or hourly wage rate for local employees, albeit does provide guidelines on overtime pay, such as eligibility, hourly rate, and payment caps. (to double check)

As per Singapore’s Employment Act, workmen (whose work mainly involved manual labour) earning a monthly basic salary of not more than $4,500 and non-workmen employees covered under the Employment Act, earning a monthly basic salary of not more than $2,600, are entitled to overtime pay. For such employees, employers are required to pay their employees at least 1.5 times the basic hourly rate. It is also important to note that overtime pay cannot be substituted for time off.

For foreign employees, however, (i.e. those employed on work passes or work permits) minimum salaries, applicable foreign worker levies (FWL), quotas, and hiring ceilings apply and are regulated by the Ministry of Manpower.

Regarding salary payment practices, employers must ensure employee salaries are paid at least once a month; and within 7 days from the end of the salary period/month, net of any deductions (including Employee’s CPF contribution, see below). If applicable, overtime pay must be paid to the employer within 14 days of the salary period. 

CPF & Levy Payment

Overseen by the CPF Board, the Central Provident Fund (CPF) is Singapore’s national social security system. The fund was established to help local employees (Singapore citizens or Singapore permanent residents) manage their medical fees, purchase government housing, and save for their retirement. Local employees and their employer are required to contribute a percentage of the employee’s monthly wage/salary to the fund. For the employee, this is a deduction from their fixed monthly salary amount, and for the employer it is an additional amount. At the time of writing, the ordinary wage ceiling is SGD$6,000 salary per month and the additional wage ceiling is $102,000.

The total amount of CPF contribution payable to an employee’s CPF account is based on factors such as the employee’s citizenship or PR status (i.e. for the first 2 years of PR status, the base rate is staggered. From the 3rd year onwards, the base rate is the same as for citizens), their age, and total employment income for a particular month and/or any additional wages or bonus payments. The CPF Board website features some helpful calculators to assist you in calculating the correct contribution amount due to each employee. Furthermore, you can find information concerning the amount due from the employer for other payments, such as the Skills Development Levy (SDL), and from the employee for ethnic and religious funds if applicable.

Employers are required to settle full payment of their employees’ CPF contributions within 14 days from the end of the month. At the same time, FWL payments (if applicable) are due and payable to the CPF Board. Should an employer fail to pay the applicable amount by the stipulated deadline, a 2-week grace period period is granted to the employer to make payment – but with a hefty interest rate of 18% per annum per additional day.

In the event an employer has paid an incorrect amount, an application for a refund or an adjustment must be submitted to the CPF Board within 1 year from the date of erroneous payment and all affected employees must be notified. Should the employer fail to make CPF contributions for their employees, he or she will face late payment charges, fines and even imprisonment of up to 7 years.

Public Holidays

All full-time employees in Singapore are entitled to enjoy 11 paid national public holidays per calendar year. If an employee is required to work on a public holiday, the employer must either grant the employee a day’s leave in lieu (of the public holiday worked) or pay the employee the equivalent of an extra day’s salary. The employee is still entitled to a full day of salary even if the public holiday falls on a half work day. If the public holiday falls on any of the rest days, the next working day is considered a paid holiday.

Annual Leave and Medical Leave

Once an employee has completed 3 months of service with a company – including probation period – the employee is entitled to receive paid annual leave. Upon the employee’s sixth month of service, he or she will then be entitled to paid sick leave, after certification by a medical practitioner in Singapore. This entitlement is typically prorated within the first twelve months of service.

Depending on the employee’s length of service to date, the amount of paid annual leave applicable, or earned, will vary. The employee will be entitled to at least 7 days paid annual leave during his or her first year. An additional day of leave is mandated for each year of service, capped at a minimum amount of 14 days paid annual leave for the 8th year and onwards. 

The amount of paid sick leave due to an employee is entitled to will also depend on the length of service.

Need further advice? Please reach out to our team of professionals if you require any assistance on employment-related matters, including: the drafting of employment contracts, setting codes of conduct, and coming up with employee handbooks.