Monetary benefits are the main reason why people work. And that fact alone should explain why the ability to understand every component in a payslip, and how all they add up, is essential.
In the professional setting, everything needs to be recorded in a documented format. It instills confidence in the overall system and process, as well as improves performance and operational practice. With solid records, one has the ability to track everything and prepare for some possible scenarios that may require proof of documentation. This applies to payslips too. As it provides the exact figure of salary drawn, a payslip should outline the total pay one receives before tax and other details of any deductions from pay. Employees are entitled to a monthly payslip which could be provided in soft copy or hard copy. It is, in fact, among the most important documents employees receive. For some people, it is considered only as a confirmation that their salary has been paid, and there is no checking whether it is accurate.
In Singapore, from April 1st, 2016, all employees who are covered by the Employment Act must receive itemized payslips given by their employers. The payslips must be issued and given to employees with their payment. In the case where employers could not provide the payslips at the same time as the payment, the payslips should be given within three working days of payment. In general, a payslip should contain five types of information: the employer’s name and job designation, the fixed salary, the variable income (e.g overtime pay), the deductions (e.g tax), and additional information, such as annual and sick leaves.
As stated by the Singapore Ministry of Manpower, there are twelve items to include in a payslip.
|1||Name of Employer (Full Name)|
|2||Name of Employee (Full Name)|
|3||Date and Mode of PaymentIf payments are made multiple times in a month, include all the dates|
|4||Basic SalaryFor hourly-rated, daily-rated, and piece-rated employees, include the basic rate of pay and the total number of hours/days worked or pieces produced|
|5||The Salary Period (Start and End Date)|
|6||AllowancesThis applies to fixed allowances (e.g family, housing allowances) and ad-hoc allowances (e.g incentives, gift voucher)|
|7||Other Multipliers (Additional Payment) for the Salary PeriodExamples include rest day pay and public holiday pay|
|8||DeductionsThis applies to fixed deductions (e.g CPF contributions) and ad-hoc deductions|
|11||Overtime Payment Period (Start and End Date)This applies if it differs from item no. 5)|
These are the twelve components of a payslip. Needless to say, some adjustments are required when there are items which may not apply to your business, such as overtime hours for companies who do not allow works beyond normal working hours in all circumstances. It is always a good practice for employees to understand each item in their payslips. It enables them to determine whether the compensation and deductions are fair and as expected.
As an employer, your job is to make sure that you structure the payslips correctly and accurately. Mistakes in a payslip could cost you and your employees dearly, and none of us wants that. This is why it is always a good idea to automate the process (in case your payroll process is still manual) and utilize reliable payroll software for your business. We are talking about Kayaroll here, a payroll software we design for businesses, especially SMEs and startups, to advance. Not only does it help you with your salary structure and employee records, but our payroll software will also assist you with your overall payroll system, from attendance data to bank accounts to tax compliance.
It is user-friendly and IRAS-integrated, it is secured and cost-effective. And as we are serious about improving your business operations, we want you to experience our one-stop payroll solution first hand. Kayaroll is currently offered for free, limited to the first one hundred sign-ups on our website. See how our software helps you with all the time-consuming tasks, and plunge into all the benefits today.