Since 1 April 2016, employers covered by the Employment Act (EA) are required by the Ministry of Manpower (MOM) to provide itemised payslips to their employees. These payslips are crucial documents that detail the different parts of an employee’s salary, ensuring fairness and compliance with employment laws by offering clear insights into earnings calculation. This guide explores the compliance requirements of itemised payslips, as well as the challenges of manual payslip processing.
What is an Itemised Payslip?
An itemised payslip is a detailed document employers provide to employees with each salary payment, outlining earnings, deductions, and other relevant details. It shows the breakdown of an employee’s earnings and deductions for a specific pay period. This includes details such as gross salary (total earnings before deductions), net salary (amount received after deductions), allowances, overtime pay (if applicable), and deductions like CPF contributions and income tax.
What Is Included in a MOM-compliant Itemised Payslip?
According to the EA, an itemised payslip must include key details such as:
| 1 | Full name of employer. |
| 2 | Full name of the employee. |
| 3 | Date of payment (or dates if the pay slips consolidate multiple payments). |
| 4 | Basic salary For hourly, daily, or piece-rated workers, indicate all the following: Basic rate of pay, e.g. $X per hour. Total number of hours or days worked, or pieces produced. |
| 5 | Start and end date of salary period. |
| 6 | Allowances paid for salary period, such as: All fixed allowances, e.g. transport. All ad-hoc allowances, e.g. one-off uniform allowance. |
| 7 | Any other additional payment for each salary period, such as: Bonuses Rest day pay Public holiday pay |
| 8 | Deductions made for each salary period, such as: All fixed deductions (e.g. employee’s CPF contribution). All ad-hoc deductions (e.g. deductions for no-pay leave, absence from work). |
| 9 | Overtime hours worked. |
| 10 | Overtime pay. |
| 11 | Start and end date of overtime payment period (if different from item 5, start and end date of salary period). |
| 12 | Net salary paid in total. |
Source: Ministry of Manpower
Importance of MOM-Compliant Itemised Payslips
Distributing itemised payslips is crucial for transparency in salary calculations. It ensures compliance with the Employment Act in Singapore and helps employees clearly understand their earnings and deductions. Employees can easily verify their payments and resolve any discrepancies by reviewing their earnings, allowances, CPF contributions, taxes, and overtime pay details. This practice not only promotes fairness and accountability in salary disbursements but also strengthens trust between employers and employees.
When Should Employers Issue Out the Itemised Payslip?
Under the Employment Act (EA), employers must issue itemised payslips to their employees on a monthly basis. This obligation applies to all employees covered by the EA, regardless of whether they work full-time, part-time, or temporarily. The guidelines for issuing itemised payslips are as follows:
- Payslips should be given to employees together with the payment.
- Alternatively, if the payslip is not provided together with the payment, employers must issue it within three working days of payment.
- In cases where an employee is dismissed or their contract of service is terminated, employers should issue the payslip along with any outstanding salary or dismissal/termination payment.
How Long Must Employers Keep the Itemised Payslip Records ?
Employers must keep payslip records for at least two years. This applies to both current employees and those who have left the company. Maintaining these records ensures that employers adhere to rules and regulations and have documents available if there are audits, disputes, or questions about how salaries are paid, and deductions are made.
Challenges of Processing Itemised Payslips
Creating detailed payslips can be challenging, especially when done by hand. Here are some challenges that may come with manually processing payslips:
- Calculation Complexity: Manually calculating components such as basic salary, allowances, overtime pay, deductions, and statutory contributions can be complex.
- Compliance: Adhering to regulatory requirements for itemised payslips, including ensuring accuracy and timely distribution, can be challenging due to frequent updates in labour laws.
- Data Accuracy: Ensuring that the itemised payslips reflect accurate data (e.g., attendance records, benefits, taxes) without discrepancies.
- Data Security: Protecting sensitive employee information in payslips from unauthorised access or breaches.
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