The Basics of Salary, Payroll, and Taxes in Singapore

There are many different ways to employ someone in Singapore. An employee can be full-time, part-time, temporary, or contractual. Workers can be native Singaporeans, or foreigners working in the country. But regardless of the types of workers employed, employer responsibilities remain the same: pay fairly, manage responsibly, and hire in compliance with Singaporean law. 

So, how does monthly pay work for employees? Do employers have to pay anything out besides salaries to their workers? 

Read on to learn more about how salaries, payrolls, taxes, and other key employer obligations in SG:

Monthly Salary for Workers

As in many other markets globally, salaries or wages are typically paid monthly to workers, within seven days of the end of the salary period (in this case, the month worked).

What is the Minimum Wage in SG?

Something to note about Singapore is that it does not have a standard nationwide minimum wage or basic pay rate. This is why there is no standard salary calculator that can be used across the board for all industries in the country. 

Rather, salaries in various industries instead adhere to government-mandated rates, while salaries for foreign workers must meet specific minimum requirements. These requirements dictate the type of work pass or permit these non-local employees are eligible to hold. For example, to qualify for an S Pass, a foreign worker must earn at least SGD 3,000 per month. To qualify for an Employment Pass or EP, a foreign worker must earn at least SGD 5,000.00 monthly.

Only salaries in certain industries are specifically regulated under Singapore's Progressive Wage Model (PWM). As of last year, these specific sectors include: food service, retail, cleaning, security, and landscaping.

What is the Average Salary in SG?

The Statistics Department of Singapore reports that in the year 2023, the average yearly salary of full-time employed Singaporean citizens and permanent residents is SGD 62,364.00. That’s SGD 5,197.00 per month, before taxes (more on this below).

Part-time work

Part-time employees are those who are contracted to work less than 35 hours per week. 

Part-time workers must ensure their contract of employment indicates how many hours they are to work, and their hourly rate. Similar to full-time employees, there is no standard minimum amount that they should be paid per hour; this depends on their tasks and agreements with their employer. However, Singapore-based employment websites report that as of early 2024, part-time workers were earning around SGD 9.00 to 11.00 per hour on average.  

All workers, whether full-time or part-time, are protected by Singapore’s employment laws, and have the right to demand for overtime pay should they exceed their contractual work hours per week. 

Income Tax and Employer Contributions

Another thing that Singapore does differently compared to other markets in the region like Malaysia and the Philippines, is that annual Income Tax is not withheld with payroll in Singapore. This means that it is the employee’s - and not the company’s - responsibility to pay their taxes every year to the Inland Revenue Authority (IRAS).

Singapore categorizes workers as “tax residents” and “non-residents”. An individual’s tax rate depends on their tax residency status, and their income.

An employee is considered a tax resident if the are any of the following:

• Singapore Citizens (SC) or Singapore Permanent Residents (SPR) who reside in the country
• Foreigners who either live in Singapore or are employed there (other than a company director) for 183 days or more
• An expatriate (someone who lives outside their native country) who stays in Singapore for a consecutive period spanning three calendar years (but not necessarily three full calendar years)

Income Tax Rates

Residents are taxed at a progressive rate between 0% to 22%. The tax rate is 0% for individuals with a taxable income of below SGD 20,000.00, and 22% for those with a taxable income of over SGD 320,000.00. See the full tax rate chart here. 

They must also contribute to the Central Provident Fund (CPF) - more on this below. The employees themselves pay their income taxes, while their employers can pay for their CPF contributions.

Non-residents must pay either a 15% flat rate on their employment income, or follow the progressive resident tax rate, whichever is higher. In addition, a 22% flat rate is applied on any income that is in addition to their regular salary.

Any salary used for relevant employment expenses, charitable donations, and “relief funding” such as education fees, are exempt from income tax.

Employer Contributions

While employers do not have to pay income taxes for their employees, they do have certain obligations to pay to the Singapore government:

• Central Provident Fund (CPF) - Employers must make monthly CPF contributions for all their employees who are Singapore citizens or Permanent Residents (employees working overseas do not qualify for this contribution). CPF contributions are what fund Singapore’s social benefits, such as retirement, healthcare, homeownership and family protection.

         An employee’s age group and salary determine their CPF contribution rates. 

• Skills Development Levy (SDL) - The SDL is a compulsory levy that employers pay for all their employees, including non-locals, working in Singapore.  This fund is used to support workforce upgrading programmes and provide training grants to employers who send their workers to training under the National Continuing Education Training system. Employers contribute 0.25% of an employee's monthly salary, capped at SGD 11.25, every month.
• Self Help Group funds (SHG) - Though not mandatory in the same way as the CPF and SDL, employers may also deduct SHG funds from their employees’ monthly wages. These funds go to supporting lower-income households within specific cultural communities in Singapore. These communities include Chinese, Muslim, Indian, and Eurasian communities.
• Foreign Worker Levy (FWL) - Organisations who employ certain ranks of foreign workers, particularly workers with S Passes or similar types of work permits, pay monthly levies. These levies help the Singapore Ministry of Manpower to regulate the amount of overseas workers employed in the local industry, especially given that all organizations must adhere to a foreign worker quota. The amount to be paid is therefore determined by the foreign worker's qualifications/work pass, the industry they work within, and the foreign-to-resident worker ratio of the organisation. 

Payroll Process

When and how are salaries usually disbursed to employees?

In compliance with the Singapore Employment Act, employees must be paid within 7 days of the end of their contractual salary period. Legally, employers must pay wages at least once per month.

Companies are also legally required to issue itemised pay slips to their employees, and maintain detailed employment records, including salary records, for all their employees.

Salary payments are typically made via direct bank deposits, or by issuing cheques.

Conclusion

These are the topics that potential workers in Singapore find important and often search online - their salary ranges, work and payment conditions, and of course, taxes and potential deductions to their wages.

As an employer, being familiar with these topics will help you not just stay compliant at all times, but also communicate and relate more effectively to your potential and current hires. 

If you are a Singapore-based organization looking to hire foreign workers and apply for their Employment Passes, let Veremark assist you.

Employment Pass applications in Singapore are strongly regulated, and all applicants' educational requirements must be verified by Ministry of Manpower-accredited institutions such as Veremark. Our MOM education verification package offers many advantages to employers looking to hire for Singapore operations. Furthermore, we can also carry outmany other types of background checks to implement as part of your screening and hiring process for international workers, ensuring speed, efficiency, and compliance. Get in touch with us to learn more.