Your guide to Singapore payroll

Providing timely, reliable, and compliant payments is essential to attract and retain top talent in Singapore. Even if your organization is based elsewhere, you need to know how to structure your payroll in Singapore, navigate contributions, and offer benefits that meet the expectations of local workers.

Partnering with an Employer of Record (EOR) in Singapore offers a simpler way to handle payroll and employment, particularly if you want to hire a team in Singapore without setting up a legal entity.

Singapore payroll: Wages and other payments

Setting up a Singapore payroll process demands a working knowledge of the payment cycle, standard salary practices, minimum entitlements, and bonus frameworks, as outlined in Singapore’s Employment Act.

1) Payroll cycle

Salaries are typically paid once a month on the last working day. You can pay directly into an employee’s bank account or pay them by check, and the payments are made in Singapore Dollars (SGD). Either way, employees should always be paid on a working day during working hours.

You also need to issue itemized payslips and keep detailed employment records for any employees covered by Singapore’s Employment Act.

2) Minimum wage

Singapore doesn’t have a statutory minimum wage for most workers. Instead, the city-state uses a Progressive Wage Model (PWM) that applies to both Singaporean citizens and permanent residents working full- or part-time. This system only dictates minimum basic salaries for typically low-paid sectors like cleaning, security, retail, and food services.

Also, the PWM does not apply to foreign workers; it is for Singapore citizens and PRs only.

3) Sick pay

Any employee covered by the Employment Act who has worked for you for at least 3 months is entitled to sick pay.

The maximum entitlement is 14 days for paid outpatient sick leave and 60 days for paid hospitalization sick leave. The full entitlement is given to anyone who has worked for 6 months or more. A prorated entitlement is calculated for anyone who has worked for 3 to 6 months.

To qualify for paid sick leave, employees must be certified unfit for work by a medical practitioner.

4) Maternity pay

Singapore offers government-paid maternity leave to employees who have worked for their employer for at least 3 months and whose children are Singaporean citizens.

If your employee qualifies for government-paid maternity leave, you must pay your employee as normal and then seek reimbursement from the Singaporean government. The amount and duration also vary depending on how many children the employee has.

Eligible employees are entitled to 16 weeks of government-paid maternity leave, with full reimbursement for the first two births and partial reimbursement for subsequent births, subject to Ministry of Manpower claim submission requirements.

5) Severance packages

If an employee is made redundant without notice, you need to pay them their salary in place of their notice period. If they resign, they simply work their notice period, with no further costs to your company. 

Notice periods in Singapore vary by tenure, ranging from 1 day to 4 weeks, and while there is no statutory severance pay, employers may offer ex gratia payments. Final settlement must include salary up to the last working day and encashment of unused leave.

Singapore payroll: Contributions and deductions

Employers must account for several mandatory deductions and contributions when planning how to pay employees in Singapore. 

These deductions help upskill employees and support them in their retirement. However, employers don’t withhold income tax. 

1) Income tax

In Singapore, employers are not responsible for withholding income taxes. Instead, the employee is responsible for filing taxes themselves.

However, you must still report your employee’s income to the Singaporean government by March 1st of the year following the year the income was earned. 

For example, if your employee earned income in 2025, you must report that income to the Inland Revenue Authority of Singapore (IRAS) by March 1st, 2026.

2) Central Provident Fund (CPF)

This is Singapore’s federal pension, housing, and healthcare scheme. Employers contribute 17% and employees contribute 20% of their monthly wages if they are 55 or younger and earn more than SGD 500 per month. Contributions decrease after this.

In 2025, the contributions are capped at SGD 7,400 per month. However, this is increasing to SGD 8,000 per month in 2026.

CPF contributions apply only to Singapore citizens and permanent residents; expatriates are exempt.

3) Foreign Worker Levy (FWL)

You must pay a monthly levy if your employee is not a Singaporean national and holds a work permit. This helps regulate the number of foreign workers in Singapore.

The exact amount you pay depends on the sector of work, the qualifications of the worker, and the number of work permit holders you employ.

The levy amount typically ranges from SGD 300 to SGD 950 per month, depending on sector and skill level, and applies to Work Permit and S Pass holders. Payment is made via CPF submissions to the Ministry of Manpower.

4) Skill Development Levy (SDL)

This levy is designed to upskill employees under the National Continuing Education Training system. You contribute 0.25% of the total monthly wages of all your employees based in Singapore. The minimum contribution is SGD 2 per employee, and the maximum is SGD 11.25 per employee.

To correctly pay this levy, you need to calculate the amount for each employee, add them up, and round the total down to the nearest dollar. The Skill Development Levy Calculator can help here.

The SDL applies to all employees, including foreign workers, and is paid via CPF submissions to SkillsFuture Singapore. Funds collected support the Skills Development Fund, which finances workforce training programs.

Singapore payroll compliance best practices

To comply with local labor laws, you need to keep detailed reports of your Singapore employees and prepare the necessary forms. These forms should be completed and submitted to IRAS annually.

• Form 1R8A: Required for all employees in Singapore
• Appendix 8A: Required for any employees provided with benefits-in-kind
• Appendix 9B: Required for employees involved in Employee Stock Option Plans or Employee Share Ownership Plans
• Form IR8S: Required if you made excess CPF contributions and want to claim a refund

If your non-Singaporean employee hands in their notice or leaves the country for more than 3 months, you need to file Form IR21 and withhold all money owed to the employee so it can be cleared for taxes.

How to pay employees in Singapore

There are three main ways to pay your workers in Singapore.

• Set up a local entity: This is a long and complicated process that even large corporations avoid if they aren’t planning to employ lots of workers in Singapore.
• Using international payment platforms or doing a wire transfer.
• Use an Employer of Record (EOR): An EOR may provide compliant support to pay employees in Singapore. These entities act as the local employer on your behalf, taking on legal responsibilities such as payroll and tax obligations. They also manage onboarding, employee contracts, and benefits, as per local laws.

Payoneer Workforce Management offers EOR services, allowing you to hire full-time employees in over 160 countries, including Singapore. You can pay your international workforce in 70 currencies without setting up local entities.

Book a demo today to learn more.

FAQs

1) How does payroll in Singapore work?

When you pay employees in Singapore, you don’t need to withhold income tax. However, you do need to withhold pension contributions and pay levies for skill development and work permit holders.

2) What is the payroll cycle in Singapore?

Singapore employees must be paid at least once a month, typically on the last working day. If you fail to pay, the employee can claim against you.

3) How to pay employees in Singapore?

If you don’t plan on setting up a legal entity, using an Employer of Record (EOR) may help you simplify payroll in Singapore with compliance support as per the local laws to help pay employees in a timely manner.