Payroll in Singaore: A complete beginner guide (2025)

If you run a business in Singapore, you'll eventually need to pay your employees properly.
But here's the reality:
Payroll isn't just about transferring salaries once a month. You've got to handle CPF contributions, tax filings, itemized payslips, and stay compliant with the latest MOM regulations.

Miss a step, and you could face fines or frustrated employees.

And if you're doing this manually? It's a headache, especially if you're new or managing multiple employees.

That's why our tax accounting experts have broken down everything you need to know to get payroll right in Singapore in this comprehensive article

Let's make payroll one less thing to stress about.

1. What is payroll in Singapore?

Payroll in Singapore goes far beyond simply transferring money to your employees each month.

It encompasses a complex system of calculations, deductions, and compliance requirements that every business owner must understand.

In its most basic form, payroll refers to the process of paying employees for their services. However, in practice, it involves:

1. Calcule gross pay based on employment terms
2. Process mandatory deductions and contributions
3. Compute net pay
4. Maintain accurate records
5. File necessary reports with government authorities
6. Issue proper payment documents to employees.

For Singapore businesses, payroll typically follows a monthly cycle, with most companies paying employees on the last working day of the month or within the first week of the following month.

Here is one example to help you understand payroll.

SingTech Solutions, a local software development company with 25 employees, processes its payroll on the 25th of each month.

Their payroll accountant spends approximately three days gathering timesheet data, calculating salaries with applicable bonuses, processing CPF contributions, and preparing payment files for their DBS corporate account.

Payments hit employee accounts on the 28th of each month, and electronic pay slips are distributed on the same day via their HR portal.

Now that you have an overview of what payroll is in Singapore, it is better to understand the payroll regulations you need to comply with.

2. Legal framework: What law do you need to follow?

Payroll in Singapore isn’t just about numbers. It’s also about compliance.

Here’s a breakdown of the key legislation that shapes how you pay your employees working for your Singapore company.

Following these laws isn’t optional. Non-compliance equals penalties. But when do you get it right? You build trust, stay audit-ready, and get your employee satisfaction level up.

3. What are the core payroll components in Singapore?

Payroll isn’t just about base pay. It’s a mix of fixed, variable, and non-cash elements — and getting each right is key to staying compliant and keeping employees happy.

Here’s what goes into a typical Singapore payroll package:

4. What do you need to know about mandatory contributions and deductions?

If you're running payroll in Singapore, statutory contributions aren’t optional — they’re mandatory. And they add up.

Here’s what you need to know to stay compliant:

4.1. Central Provident Fund (CPF)

Singapore’s national social security scheme covers retirement, housing, and healthcare.

For Singapore Citizens and Permanent Residents aged 55 and below:

• Employer contribution: 17% of ordinary wages
• Employee contribution: 20% of ordinary wages
• Total contribution: 37%

These rates vary based on:

1. Employee's age
2. Permanent residency status (first 2 years have special progressive rates)
3. Salary level (contributions are capped based on an Ordinary Wage Ceiling of $6,000 per month and an Additional Wage Ceiling of $102,000 per year)

Contributions are distributed into three accounts:

• Ordinary Account (OA): For housing, investment, insurance, and education
• Special Account (SA): For retirement and investment in retirement-related financial products
• MediSave Account (MA): For hospitalization expenses and approved medical insurance

CPF contributions must be paid by the 14th of the following month. Late payments incur interest penalties of 1.5% per month.

For example,  Lee Kuan Engineering employs Desmond, a 48-year-old Singaporean engineer earning $7,500 monthly. His CPF contributions are calculated as follows:

1. CPF contribution is capped at the ceiling of $6,000
2. Employer's contribution: $6,000 × 17% = $1,020
3. Employee's contribution: $6,000 × 20% = $1,200
4. Total CPF contribution: $2,220.

These contributions are distributed across Desmond's three CPF accounts according to the allocation rates for his age group. The company submits the total contribution of $2,220 to CPF Board by the 14th of the following month.

4.2. Skills Development Levy (SDL)

This mandatory contribution supports workforce development:

• Rate: 0.25% of monthly remuneration
• Minimum: $2 per employee per month
• Maximum: $11.25 per employee per month for employees earning more than $4,500 a month.
• Due on the same date as CPF contributions

For example, Cloud Nine Technologies has 8 employees with varying salaries. For their receptionist who earns $2,000 monthly, they calculate SDL as: $2,000 × 0.25% = $5.00.

For their CTO, who earns $12,000 monthly, they pay the maximum SDL of $11.25 (since 0.25% of $12,000 = $30, which exceeds the cap of $11.25).

The company's total monthly SDL payment of $68.25 is automatically deducted via GIRO along with their CPF contributions.

4.3. Self-Help Group (SHG) Contributions

These are voluntary contributions to community self-help groups based on the employee's ethnicity:

1. Chinese Development Assistance Council (CDAC)
2. Mendaki (Council for the Development of Singapore Malay/Muslim Community)
3. Singapore Indian Development Association (SINDA)
4. Eurasian Community Fund (ECF)

While voluntary, these are typically processed through payroll deductions unless employees opt out.

For example,  Rainbow Retail has a diverse workforce of 30 employees from various ethnic backgrounds. Their Chinese employees contribute to CDAC ($0.50-$15 monthly depending on income), Malay employees contribute to Mendaki ($1-$16 monthly), Indian employees contribute to SINDA ($1-$30 monthly), and Eurasian employees contribute to ECF ($2-$15 monthly).

4.4. Foreign Worker Levy

If you employ foreign workers:

• Different rates apply based on sector, qualifications, and dependency ratio ceiling
• Must be paid monthly via GIRO by the 14th of the following month
• Late payments incur penalties

For example, Grand View Restaurant employs 5 foreign workers as kitchen staff on Work Permits.

Based on the food service sector rates and their dependency ratio ceiling, they pay $450 per month for each worker, totaling $2,250 monthly. This amount is automatically deducted via GIRO on the 14th of each month. When they hired a new foreign chef on an S Pass, they paid the higher S Pass levy rate of $650 monthly for that position.

5. How to run payroll in Singapore (A beginner's suggestion)

In this section, we give you an overview of what a typical Singapore company does to run payroll monthly. You can apply this knowledge to your business scenario.

We suggest you use payroll software to make the process automatic and easy to execute for your HR assistant. We will give you a recommendation list of payroll software in the next section

The first step is to perform pre-payroll activities.

Step 1: Pre-payroll activities

Here’s your pre-payroll checklist:

• Update employee records: New hires, exits, promotions, salary changes
• Collect timesheets, leave forms, and attendance data
• Process approved claims: Expenses, transport, or mobile allowances
• Verify bonus/commission amounts with department heads

For example, at FastTrack Logistics, HR Assistant Jenny begins the monthly payroll process on the 20th of each month by:

• Downloading attendance data from their biometric time clock system
• Compiling approved leave applications from their HR portal
• Collecting overtime sheets from department managers
• Gathering expense claims with attached receipts
• Updating the employee database with two new hires and one salary increment

Step 2: Calculate payroll

During the calculation phase, the HR assistant must:

• Compute the gross salary for the month
• Add allowances and additional payments
• Calculate overtime based on timesheet data
• Deduct employee CPF contributions
• Process other statutory deductions
• Deduct income tax (if applicable)
• Calculate final net pay

Step 3: Review and approve the payroll

Before finalizing, the HR assistant must do:

• Generate a pre-payroll report
• Have it reviewed by management or the finance department
• Address any discrepancies or errors (I.e, Empoyee overtime)
• Obtain necessary approvals

Step 4: Process payroll

Once approved, the HR assistant or the accountant will

• Prepare bank transfer files
• Submit to the bank for processing (typically 2-3 business days before payday)
• Issue physical checks if necessary (though this is increasingly rare)

For example, the accountant prepares a payment file with employee details and amounts, which is uploaded to the bank system on the 26th of each month. The file requires dual approval—from both the Financial Controller and the Managing Director—before processing. Funds are transferred to employee accounts on the 28th.

Step 5: Document

After payment, the HR assistant will

• Generate and distribute itemized pay slips (mandatory under the Employment Act)
• Update payroll records
• Prepare CPF submission files
• Process SDL and other statutory payments
• Maintain proper documentation for audit purposes

6. What is required on a payslip?

The Ministry of Manpower says every pay slip must include, by law:

• Employee + Employer names
• Salary period and date of payment
• Basic salary, allowances, and deductions
• Overtime hours and pay
• CPF contributions (both sides)
• Net pay

Pay slips must be issued within 3 working days of salary payment and can be electronic or physical.

Example ofan  itemized payslip from the Ministry of Manpower

7. Other employee tax obligations in Singapore

7.1. Handle tax clearance for foreign employees

When a non-citizen employee resigns, transfers, or finishes a contract, tax clearance is your legal must-do. If you skip this, your company becomes liable for any unpaid taxes, not the foreign employees.

• File Form IR21 (Tax Clearance) at least 1 month before their final day
•  Withhold all due payments (salary, bonus, allowances) until you get clearance
•  Use those withheld funds to settle any tax owed to IRAS

To learn more about the tax clearance, you can read our guide on tax clearance for foreign employees here.

7.2. Auto-inclusion scheme (AIS)

AIS makes tax reporting smoother. Once all the information is submitted, employees don’t need to declare these in their personal tax returns — IRAS auto-fills the info.

There are rules you must follow. 

• Employers submit employment income information directly to IRAS
• This includes salary, bonus, director's fees, and allowances
• The submission deadline is March 1st each year
• Employers with 5 or more employees must participate in AIS

7.3.  Form IR8A and its appendices

Even with AIS, you still need to prep and distribute these forms to employees:

•  IR8A – Total annual income
• Appendix 8A – Non-cash benefits (e.g., car, insurance)
•  Appendix 8B – Employee stock options
• IR8S – CPF contributions beyond mandatory

Deadline: March 1 (or earlier — many companies issue by the end of February). The HR department maintains copies of all forms for at least 5 years as required by IRAS.

8. 7 payroll software options for  Singapore SMEs 

If you are still doing manual payroll, that is a fast track to errors and stress. We recommend these tools for Singapore's unique compliance needs,  and they make payday a breeze.

• SWINGVY: User-friendly interface, built for SMEs
• PayrollHero: Features include facial recognition time tracking
• HReasily: Mobile-first approach with strong regional coverage
• PayrollServe: Comprehensive solution with good compliance features
• MYOB: Accounting software with integrated payroll functions
• QuickBooks: Popular accounting software with payroll add-ons
• Xero: Cloud accounting with payroll capabilities

We recommend that SMEs consider using QuickBooks among all tools since it can cover all your accounting needs, including payroll. It is easy to use, even for a business owner with little to no accounting knowledge

9. How can we help your Singapore company run payroll efficiently?

The best payroll solution for your Singapore company depends on how hands-on you want to be and how complex your needs are. If you prefer full control with in-house expertise, we’ll help you implement QuickBooks accounting system for your internal accountants and HR employees.

But if you want a stress-free experience with compliance, calculations, and deadlines handled for you, our end-to-end payroll service is the smarter, faster path.

Book a free consultation with our experts at Global Link Asia Consulting today if you haven’t already.

If you are thinking about expanding overseas with Singapore to be your company headquarters, we can help you:

• Register a company in Singapore;
• Open a corporate bank account in Singapore with a 99% success rate;
• Choose the right company types for tax optimization in Singapore;
• Apply for Singapore business licenses;
• Get an affordable, professional registered office address for your business;
• Support to open, authenticate, and manage Stripe Paypal Business in Singapore, Hong Kong, and the U.S;
• Handle all your tax accounting needs, timely annual filings, auditing, and more.

10. FAQs about Payroll in Singapore

We offer a comprehensive range of accounting and tax services for Singaporean companies. Our services include:

• Tax Consulting including corporate income tax, GST tax, contractor tax, and more.
• Monthly/Annual Tax Accounting services in accordance with Singapore accounting standards (SFRS).
• QuickBooks Consulting and Licensing.
• Corporate Income Tax Return Preparation
• GST Tax Return Preparation.

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