Achi Biz GuidesSalary Payment & Deduction

Salary Payments, Deductions And Variable Wages

The Employment Act covers salary payments, deductions and variable wages. Find out the guidelines for these and how to calculate salary in different scenarios.

Salary

In accordance to the Employment Act, your employer must pay your salary at least once a month and within 7 days after the end of the salary period. There are exceptions for overtime, resignation without notice and other situations.

What is Salary

Salary refers to remuneration, including allowances, paid for work done under a contract of service.


It does not include:	The value of accommodation, utilities or other amenities. Pension or provident fund contribution paid by the employer. Travelling allowance. Payments for expenses incurred during work. Gratuity payable on discharge or retirement. Retrenchment benefits.

Minimum Wages in Singapore

Singapore does not have a minimum wage. Your salary is subject to negotiation and agreement between your employer and you or your trade union.

How often Salary must be Paid

If you are covered by the Employment Act, your employer must pay your salary at least once a month.
They can also pay it at shorter intervals if they choose.

Salary must be paid:

Within 7 days after the end of the salary period
For overtime work, within 14 days after the end of the salary period
Your final salary payment could vary depending on the following situations:

In this situation	Your final salary must be paid
Employee resigns and serves the required notice period	On the last day of employment.
Employee resigns without notice and doesn’t serve the notice period	Within 7 days of the last day of employment.
Dismissal on grounds of misconduct	On the last day of employment. If this is not possible, then within 3 working days from date of dismissal.
Employer terminates the contract	If this is not possible, then within 3 working days from date of termination.
Note: If your contract involves commission, how and when the commission is paid depends on what is in your employment contract or existing policies or practices. If you are a foreign worker who is leaving your employment, your employer is required to withhold all your monies due to you for tax clearance. The monies include your salary, leave pay, etc.

How salary should be paid

Salary should be paid:
On a working day, during working hours.
At your place of work, or any other place you and your employer have agreed on.

Payment can be made:

Directly into your bank account.
By cheque. The cheque needs to be cleared by your bank before you are considered paid.

Itemised pay slips

From 1 April 2016, all employers must issue itemised pay slips to employees covered by the Employment Act.

Salary records

From 1 April 2016, employers must keep detailed employment records, including salary records, of employees covered by the Employment Act.

If you are Paid late or not Paid Salary

Non-payment of salary is an offence.
Your employer must pay your salary on time, according to the terms of your employment contract.
If you are not paid on time, approach your employer to understand if there are reasons for the late payment, and whether the regular payment schedule can be resumed.
If you do not receive your salary, you can file an employment-related claim at the Tripartite Alliance for Dispute Management (TADM), or approach your union for assistance.

Note:

File your claim early – don’t wait for the amount to accumulate. There are limits to the claim amount and timeline for filing.

Allowable Salary Deductions

If you are covered by the Employment Act, your employer can deduct your salary only for specific reasons. If you are a work permit holder, your employer must also inform MOM before increasing or making new deductions to your salary.

When Deductions may be Required

Your employer may be required to deduct your salary:

By court order, or other valid authority.
If your employer is declared an agent for the recovery of income tax, property tax or goods and services tax (GST) payable by you.

Note:

Any compensation should generally be recovered directly from you, rather than through a salary deduction.

Types of Deductions allowed

Your employer can deduct your salary only for the following reasons:

Nature of Deductions	Valid / Acceptable Reasons For Deductions
For absence from work	For a monthly-rated employee, your salary may be deducted for absences. Calculate your deductions for: For authorised absence (incomplete month). For unauthorised absence (gross rate of pay).
For damage or loss of money or goods including work gear, tools, equipment, and vehicles	Your salary will be deducted if you damage or lose such goods or money that you are responsible for. Before deducting your salary, your employer should: Hold an inquiry to determine if you are directly at fault. Not make any deductions until you have had the opportunity to explain the cause of the damage or loss. Not deduct more than 25% of your 1 month’s salary. The deduction must be made as a one-time lump sum payment.
For supplying accommodation	Accommodation that you have accepted.
For supplying amenities and services	Supplying amenities and services that the Commissioner for Labour has authorised and you have accepted. Note: The total deductions for supplying accommodation, and amenities and services must not exceed the value of the accommodation, amenities or services supplied. It should also not exceed 25% of your salary for the salary period.
For recovering advances, loans, overpaid salary or unearned employment benefits	For advances, your employer can deduct your salary in instalments spread over not more than 12 months. Each instalment should not exceed 25% of your salary for the salary period. For loans, your employer can deduct your salary in instalments. Each instalment should not exceed 25% of your salary for the salary period. For overpaid salary and unearned employment benefits, your employer can recover the full amount from you.
For CPF contributions	CPF contribution is a statutory deduction from both the citizen and permanent resident employees.
For payments to any registered co-operative society	Payments to any registered co-operative society can be made only with your written consent.
For other purposes	For any other purposes for which you consent in writing and your employer allows you to withdraw your written consent at any time. This is meant for deductions that would benefit the employee, and which the employer is in a position to collect the payment. Other than the deductions mentioned above, employers must not deduct an employee’s salary for items which are not to the benefit of the employee, such as for liquidated damages. The deduction also cannot contravene any other law. For example, if you are a foreign worker, your employer is not allowed to deduct your salary to recover levy costs.

Note:

For deductions approved by the Minister for Manpower before 1 April 2019, the deductions continue to be an authorised deduction up till the approved specified expiry date.
For deductions approved without a specified period, the expiry date is 30 September 2019.
Employers who wish to continue making the authorised salary deductions after 30 September 2019 should seek written consent from their employees.

Maximum amount of deductions

Your employer cannot deduct more than 50% of your total salary payable in any one salary period.

This does not include deductions made for:

Absence from work.
Recovery of advances, loans, overpaid salary or unearned employment benefits.
Payments, with your consent, to registered co-operative societies for subscriptions, entrance fees, loan instalments, interest and other dues payable.
However, when your contract of service is terminated, the total authorised deduction may exceed 50% of your final salary payment.

Deducting salaries of foreign workers

Your employer can only reduce your salaries, or increase or make new deductions to your salaries, if:

They get your written consent.
They inform MOM of the change in your salary using WP Online (for Work Permit holders) or submit the request to MOM through EP Online one month before the salary is reduced (for EP or S Pass holders).

Note:
Your employer is not allowed to change your salary if your Work Permit is not yet issued.


Your employer is not allowed to make deductions to your salaries under any circumstances, for the following purposes as specified in the Employment of Foreign Manpower Act:	As a condition for employing or continuing to employ you. For costs related to your employment: Work pass renewal Security bond Medical insurance Repatriation costs Compulsory training Medical fees Levy payment

Monthly and daily Salary: Definitions and Calculation

You may receive a monthly or daily salary. Daily wages are calculated using either the gross rate (for paid public holidays, paid leave, salary in lieu and salary deductions) or the basic rate (for work on rest days or public holidays).

Monthly wages

For calculating salary, a “month” or “complete month” refers to any one of the months in the calendar year.

How an incomplete month pay is calculated

Salary for an incomplete month of work is calculated as follows:

(Monthly gross rate of pay / Total number of working days in that month) x Total number of days the employee actually worked in that month.

If you take no-pay leave

If you are a monthly-rated full-time employee and took unpaid leave for the month, you should count it as an incomplete month of work to calculate your salary.

Definitions

Details	Definitions
Half-day	When the number of hours worked in the day is 5 or less.
One working day	When the number of hours worked in the day is more than 5.
Incomplete month of work	Starts work after the first day of the month. Leaves employment before the last day of the month. Takes no-pay leave of one or more days during the month. Is on reservist training during the month.
Monthly gross rate of pay	Additional payments (overtime, bonus, AWS). Reimbursement of special expenses incurred during the course of employment. Productivity incentive payments. Travel, food and housing allowances.
Total no. of working days in the month	Excludes rest days and non-working days, but includes public holidays. For employees with fixed rest days on Sundays or non-working days on Saturdays, the total number of working days per month for year 2019 is shown in this table.
Total no. of days actually worked in the month	Includes public holidays, paid hospitalisation leave and annual leave, if entitled.

Basic rate of pay
How it is used	For calculating pay for work on a rest day or public holiday.
What is included	Basic rate of pay includes wage adjustments and increments that an employee is entitled to under a contract of service.
What is excluded	Basic rate of pay excludes: Overtime payments, bonus payments and annual wage supplements (AWS). Reimbursement of special expenses incurred in the course of employment. Productivity incentive payments. Any allowance
How it is calculated	For a monthly-rated employee, the basic rate of pay for 1 day is calculated as follows: (12 months × monthly basic rate of pay) / (52 weeks × average number of days an employee is required to work in a week)
Example-1 of calculation	Monthly Basic Salary: $5,000/- with 5 days a week: Basic Rate of pay for 1 day: (12 x $5,000) / (52 x 5) = $230.77
Example-2 of calculation	Monthly Basic Salary: $5,000/- with 6 days a week: Basic Rate of pay for 1 day: (12 x $5,000) / (52 x 6) = $192.31

Gross rate of pay
How it is used	Salary in lieu of notice of termination of service. Salary in lieu of annual leave. Salary deduction for unauthorised absence from work. Paid public holidays. Approved paid leave, including annual leave, hospitalisation leave and maternity leave.
What is included	Gross rate of pay includes allowances that an employee is entitled to under a contract of service.
What is excluded	Gross rate of pay excludes: Overtime payments, bonus payments and annual wage supplements (AWS). Reimbursement of special expenses incurred in the course of employment. Productivity incentive payments. Travel, food and housing allowances.
How it is calculated	For a monthly-rated employee, the gross rate of pay for 1 day is calculated as follows: (12 months × monthly gross rate of pay) / (52 weeks × average number of days an employee is required to work in a week)
Example-1 of calculation	Monthly Basic Salary: $5,000/- with 5 days a week: Basic Rate of pay for 1 day: (12 x $5,000) / (52 x 5) = $230.77
Example-2 of calculation	Monthly Basic Salary: $5,000/- with 6 days a week: Basic Rate of pay for 1 day: (12 x $5,000) / (52 x 6) = $192.31

Variable wage components: AWS, bonus, variable pay

The variable portion of your wages can include the 13th month bonus or Annual Wage Supplement (AWS), bonus and variable payments. These payments are not compulsory, unless they are in your contract.

Annual Wage Supplement (AWS)

The AWS is also called the “13th month payment”. It is a single annual payment on top of an employee’s total annual wage.
AWS is not compulsory. Payment depends on what is in your employment contract or collective agreement. Employers are encouraged to give their employees AWS to reward them for contributing to the company’s performance.
Your employer can negotiate a lower amount of AWS if business results are exceptionally poor for the year.

Limits on AWS

Your employer cannot pay AWS of more than 1 month’s salary if they did not pay any AWS before 26 August 1988.

Bonus

A bonus is a one-time payment to reward employees for their contributions to the company. It is usually offered at the end of the year.
Bonus payments are not compulsory, unless specified in the employment contract or collective agreement.

Variable payment

A variable payment is an incentive payment to increase productivity or reward employees for their contributions.
Variable payments are not compulsory, unless specified in the employment contract or collective agreement.

ACHI BIZ is one of the licensed Employment Agencies in Singapore. We will assist your work pass related applications and appeals at our level best with the regulatory authority Ministry Of Manpower (MOM) for successful outcom

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