Southeast Asia has become the most desirable place to expand business operations as it plays an important role in the world’s growing economy. Singapore, though a small nation, is now the hotspot of leading businesses as it offers a low corporate tax of 17%. It’s a transparent and friendly business environment that has made it a strong and free-market economy. Its payroll operations are at its best.
They outshine in several sectors including pharmaceuticals, transportation, consumer electronics, medical and optical devices, information technology products, and financial services.
So to take full advantage of all Singapore had to offer, companies should understand the basic laws, guidelines, and requirements of payroll in the country.
ALL ABOUT SINGAPORE’S TRADE AND BUSINESS POLICY
Singapore’s free trade policy has enabled more than 7000 international companies to do business. They have made the registration process easier with the Bizfile site of Singapore’s Accounting & Corporate Regulatory Authority (ACRA). It also provides full foreign ownership and the requirement of government approval is not generally required.
Moreover, an in-country bank account is not required to pay off employees. All you will need is the Singapore office address, at minimum to register the type of business – subsidiary, branch office, representative office, incorporated company. For setting up a branch office you will have to appoint two local agents to act on the company’s behalf.
SINGAPORE’S EMPLOYMENT ACT
The Employment Act of Singapore is responsible for detailing the rights and duties of the employee under contract with an employer. This doesn’t include seamen, domestic workers, and government staff. This act states that the contract must include the designation, hours of work, remuneration package, benefits, and the code of conduct and termination.
As most companies hire foreign employees, Singapore’s Employment Act guidelines state that foreign workers should have a proper work visa, a valid work pass to commence business with the company he/she works for. However, there is a quota to the number of foreigners a certain company can employ, and based on that foreign worker levy is paid by the company.
WORKING HOURS AND COMPENSATION
Singapore is one of the countries with no minimum wage and Severance pay. The standard work hours are 8-hour day and 40-hour working week, some even employ 5.5 day week. If the employee is terminated the salary is paid on the employee’s last day of work or within 3 days of termination if the individual is the resident of Singapore. Companies are required to update the Inland Revenue Authority of Singapore (IRAS) via Form IR21 at least 30 days before the date of cessation for foreign workers. Payday is usually monthly and payslips are issued with all required details.
Under the Employment Act of Singapore, Employees earning over 2000SGD/month is stipulated through a contract while workers making less than that a maximum of 27 hours Overtime is paid at 1.5 times of basic hourly salary per month.
TAXES & SOCIAL SECURITY
Singapore has no inheritance tax and people are taxed only based on their income. Employers are required to have the annual wage report of the employees Form report Form IR8A and Appendix 8A, Appendix 8B, or Form IR8S by March 1st of every employment year. Companies with 15 or more are required to file the income report online to IRAS, while the companies with less than 15 employees enter this program automatically.Employers are to have all the necessary documents along with employee wages and income tax in hand, failing to do so can lead to the payment of penalties.
There are two other funds namely Central Provident Fund (CPF) and the Skills Development Fund (SDF). The former is the social security savings that address healthcare, protection, and asset enhancement. While the latter requires employers to contribute 0.25% of the first $4500SGD for training their employees.
LEAVE POLICIES AND CONSIDERATIONS
Employees are entitled to have 7 days of annual leave with the number increasing every year with 14 days leave after 8years. Paid leave is entitled only to employees who worked for the employer for at least 3 months.
Rather than that, there are 6 days of paid childcare leave, 14 days paid sick leave, 16 weeks of maternity leave(4W before delivery and 12W after),and 60 days of paid hospitalization leave. Female employees are entitled to full pay for the first 8 weeks. The employer can claim reimbursement from the government up to $10,000 for every 4 weeks of leave.
THE BOTTOM LINE
The business processes, payroll, employment guideless in Singapore are fairly transparent. However, they may include many nuanced not stated in this article.