Payroll Compliance in Singapore: What Employers Need to Know

Singapore is often ranked among the easiest places in the world to do business — but when it comes to payroll, the rules are detailed & strict. Employers must juggle multiple government agencies, statutory contributions, and reporting deadlines. A mistake doesn’t just cost money in penalties; it can put your ability to hire foreign workers at risk.

At Intermezzo, we’ve designed our payroll engine to handle these complexities automatically. Here’s a breakdown of what every employer (and every payroll system) needs to get right in Singapore.

The Building Blocks of Singapore Payroll

Singapore’s payroll compliance rests on three pillars:

1. Employment law and work passes – Regulated by the Ministry of Manpower (MOM).
2. Contributions and levies – Managed by the CPF Board, covering retirement savings and workforce development.
3. Reporting and submissions – Overseen by the Inland Revenue Authority of Singapore (IRAS).

Get these wrong, and the penalties add up quickly.

Key Payroll Terms You’ll Hear

• CPF (Central Provident Fund) – Mandatory retirement savings for Singapore Citizens and Permanent Residents. Combined employee + employer contributions are 37% of wages, capped by Ordinary Wage (S$7,400/month from 2025) and Additional Wage (S$102,000/year) ceilings.
• SDL (Skills Development Levy) – 0.25% of wages, capped at S$11.25 per month per employee. Applies to all workers, local or foreign.
• FWL (Foreign Worker Levy) – Employer-only levy, based on sector, skill level, and dependency ratio ceilings.
• SHG (Self-Help Group Contributions) – Small monthly deductions supporting community funds (CDAC, SINDA, MBMF, ECF), typically S$0.50–S$30 depending on wages.
• AIS (Auto-Inclusion Scheme) – IRAS’s system for submitting employee income data.
• APEX – Singapore’s secure government API gateway, used to connect payroll systems to agencies.
• GIRO – Banking system for moving money between employers, employees, and the state.

Wage Classifications That Matter

How you classify wages determines how CPF is calculated:

• Ordinary Wages (OW): Monthly pay, allowances, overtime (if paid by the 14th of the following month).
• Additional Wages (AW): Irregular or delayed payments like annual bonuses.
• Benefits in Kind (BIK): Non-cash perks (cars, housing, medical benefits) which may still be taxable.

Why it matters: OW has a monthly ceiling, AW has an annual ceiling, and both feed into CPF. Every dollar you misclassify risks over- or under-contributing.

Who You’re Paying (and What It Means)

• Singapore Citizens & Permanent Residents (SC/SPR): Full CPF contributions.
• Foreign Nationals: No CPF, but subject to FWL.

Work pass types also matter:

• Employment Pass (EP): Professionals, managers, executives.
• S Pass: Mid-skilled staff.
• Work Permit: Semi-skilled/unskilled workers, with quotas and levies tightly controlled by MOM.

The Compliance Workflow

1. Collect employee data – Employers gather records (personal details, wages, hours, deductions) and send them to payroll providers like Intermezzo.
2. Calculate payroll – Gross-to-net calculations must cover CPF, SDL, SHG, and FWL deductions accurately.
3. Move the money – GIRO handles the tripartite transfers to employees and government agencies.
4. Report and submit – CPF, SDL, and SHG must be filed by the 14th of the next month; annual Form IR8A must be filed with IRAS via AIS.
5. Issue payslips – Within 3 working days of salary payment, itemized and compliant with the Employment Act.

Why Accuracy Matters

The government doesn’t hesitate to enforce payroll rules:

• Late CPF or SDL: Interest charges.
• Overdue FWL: Fines, plus suspension of work pass privileges.
• Repeated non-compliance: MOM may block you from hiring foreign workers altogether.

How Intermezzo Helps

We built our payroll engine with Singapore’s complexity in mind. Our system:

• Automates CPF, SDL, SHG, and FWL calculations.
• Applies OW and AW ceilings automatically.
• Connects securely to AIS via APEX.
• Issues itemized payslips on time.

The result: Payroll in Singapore that’s predictable, compliant, and audit-ready.

Takeaway

Singapore may be one of the world’s most business-friendly economies, but its payroll rules are not negotiable. Employers must master work passes, statutory contributions, and multiple government touchpoints.

The good news: with the right payroll engine, compliance becomes routine. At Intermezzo, we make sure your payroll stays out of trouble — so you can focus on growing your business.

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