1. Understanding Gross Salary and Allowances
In Singapore, the gross salary refers to the total monthly salary earned by an employee before any deductions. It includes both the base salary and any allowances.
Components of Gross Salary
| Component | Description | Example (SGD) | Example (USD) |
|---|---|---|---|
| Monthly Gross Income | Total monthly compensation before any deductions. | 5,000 | 3,703.70 |
| Monthly Allowance | Additional payments for specific needs (e.g., housing, transport). | 1,000 | 740.74 |
| Total Gross Salary | Total of base salary and allowances. | 6,000 | 4,444.44 |
2. Employer Contributions (Burden on Employer)
In Singapore, employers are required to make mandatory contributions to the Central Provident Fund (CPF) for both recurring and non-recurring income. There is also a Skills Development Levy (SDL).
Contribution Breakdown
| Contribution Type | Employer’s Rate | Example (SGD) | Example (USD) | Details / Logic Behind the Burden |
|---|---|---|---|---|
| Central Provident Fund (CPF) – Non Recurring | 17% of Non Recurring Income | 1,020 | 755.56 | CPF contribution for non-recurring income (e.g., bonus, incentive). |
| Central Provident Fund (CPF) – Recurring | 17% of Recurring Income | 1,020 | 755.56 | CPF contribution for recurring income (salary). |
| Skills Development Levy (SDL) | Fixed at 11.25 for income over 4,501 | 11.25 | 8.33 | Fixed contribution based on salary level, capped at 11.25 SGD. |
Total Employer Contribution Cost
| Total Employer Contribution Cost | Total (SGD) | Total (USD) |
|---|---|---|
| Total Employer Contribution Cost | 2,051.25 | 1,519.44 |
3. How the Employer’s Burden is Calculated
For an employee earning 5,000 SGD monthly (gross salary including allowance), the employer’s contributions are calculated as follows:
| Contribution Type | Employer Contribution (SGD) | Calculation Explanation | Cap Amount (SGD) |
|---|---|---|---|
| Central Provident Fund (CPF) – Non Recurring | 1,020 | 17% of the non-recurring income (5,000 × 17%) | Capped at 20,400 |
| Central Provident Fund (CPF) – Recurring | 1,020 | 17% of the recurring income (5,000 × 17%) | Capped at 6,800 |
| Skills Development Levy (SDL) | 11.25 | Fixed contribution of 11.25 SGD for income above 4,501 SGD |
Total Employer Contribution Cost: 2,051.25 SGD
4. Income Tax and Salary Payments
Singapore employs a progressive tax system for employees. Taxes are calculated based on total income, with exemptions and deductions applicable.
Income Tax Calculation Example
For an employee earning 6,000 SGD monthly (gross salary including allowance):
| Taxable Income (SGD) | Tax Rate | Tax Payable (SGD) |
|---|---|---|
| 0 – 20,000 | 0% | 0 |
| 20,001 – 30,000 | 2% | 200 |
| 30,001 and above | 3.5% | 105 |
Total Tax Payable: 305 SGD
5. Working Hours and Pay Schedule
| Category | Details |
|---|---|
| Standard Working Hours | 8 hours per day, 44 hours per week. |
| Overtime | Paid at 1.5x the standard hourly rate. |
| Pay Schedule | Salaries must be paid monthly, by the 7th of the following month. |
6. How GlobainePEO Eases Payroll Management
By partnering with GlobainePEO, businesses can simplify payroll management in Singapore, ensuring compliance with the local laws and minimizing risks.
- Compliance Assurance: Ensure full adherence to Singapore’s tax and contribution regulations.
- Simplified Payroll Processing: Effortlessly manage contributions, deductions, and compliance with the progressive tax system.
- Local Expertise: Leverage GlobainePEO’s deep knowledge of the Singapore payroll system.
- Cost Efficiency: Minimize the administrative burden while ensuring full regulatory compliance.
- Employee Benefits: Simplify management of employee CPF contributions and Skills Development Levy (SDL).
Summary Table: Payroll Breakdown in Singapore (SGD)
| Category | Amount (SGD) | Percentage of Gross Salary | Details / Logic Behind the Burden |
|---|---|---|---|
| Monthly Gross Income | 5,000 | 83.33% | Total salary before deductions or allowances. |
| Monthly Allowance | 1,000 | 16.67% | Additional payments for specific needs (housing, transport, etc.). |
| Central Provident Fund (CPF) – Non Recurring | 1,020 | 17% of Non Recurring Income | CPF contribution for non-recurring income (e.g., bonuses, incentives). |
| Central Provident Fund (CPF) – Recurring | 1,020 | 17% of Recurring Income | CPF contribution for recurring income (salary). |
| Skills Development Levy (SDL) | 11.25 | Fixed | Fixed contribution capped at 11.25 SGD for income above 4,501. |
| Total Employer Contribution Cost | 2,051.25 | 34.19% | Total employer contributions (CPF, SDL). |
| Overall Cost (Total Gross + Employer Contributions) | 8,051.25 | 100% | Total cost of employment, including salary, allowances, and employer contributions. |
How GlobainePEO Can Help with Payroll in Singapore🌐
Globaine Payroll is committed to simplifying global payroll management with zero errors. Our advanced platform leverages powerful payroll calculator software to streamline processing for workforces in over 150 countries, ensuring accuracy, compliance, and efficiency at every step.