Many business owners find it challenging to navigate overtime pay regulations. Ensuring accuracy and compliance with labour regulations when calculating overtime hours is a multifaceted responsibility that requires careful attention to detail. If you are an employer in Singapore seeking clarity on overtime pay, this guide will equip you with essential information and the tools you can use to navigate the process effectively. Understanding these regulations is crucial for maintaining compliance and ensuring fair compensation for your employees.
Who is Entitled to Overtime Pay in Singapore?
Part IV of the Employment Act regulates working hours for staff, ensuring they receive breaks, overtime pay, and rest days as entitlements. But who qualifies under Part IV?
- A workman earning a monthly basic salary of $4,500 or less
- A non-workman covered by the Employment Act earning a monthly basic salary of $2,600 or less.
- Part IV does not apply to all managers or executives.
Regular and Overtime Hours in Singapore
In Singapore, employees have the right to claim overtime pay for hours worked beyond their regular work hours. Overtime pay becomes applicable after employees work up to 8 hours per day or 44 hours per week. Any additional hours worked should be compensated according to the guidelines outlined in the Act.
According to the Ministry of Manpower (MOM) Labour Market Report for Quarter 1 2024, the average weekly total paid hours per employee is 43.3, with 2.0 hours allocated to paid overtime. This marks a slight decline from December 2023, when the average weekly total paid hours were 43.4, including 2.3 hours of paid overtime.
Maximum Overtime Hours
Typically, employees are restricted to a maximum of 72 monthly overtime hours. However, employers can apply for exceptions to exceed these limits, although not all work activities may qualify for such exemptions.
Overtime Pay Rate in Singapore
The following outlines the overtime pay rate in Singapore:
Hourly basic rate of pay × 1.5 × number of hours worked overtime.
For instance, if an employee earning $2,600 monthly works 2 hours of overtime, their overtime pay would be calculated as follows: 13.60 (hourly rate) x 1.5 (overtime rate) x 2 (hours) = $40.80
Overtime on Rest Days and Public Holidays
Different rates will apply if an employee works on a rest day or public holiday.
Rest Day:
| If work is done | For up to half your regular daily working hours | For more than half your regular daily working hours | Beyond your regular daily working hours |
| At the employer’s request | 1 day’s salary | 2 days’ salary | 2 days’ salary + overtime pay |
| At the employee’s request | Half day’s salary | 1 day’s salary | 1 day’s salary + overtime pay |
Source: Ministry of Manpower
Public Holiday:
Payment for work on a public holiday is calculated as follows:
| If you work on a public holiday that falls on | You are entitled to the following |
| A working day | An extra day’s salary at the basic rate of pay. The gross rate of pay for that holiday. Overtime pay if you work beyond your regular hours |
| A non-working day (e.g. Saturday for employees on a 5-day work week) | Overtime pay for extra hours worked on a Saturday. One extra day’s salary at the gross pay rate or another day off for the public holiday. |
| A rest day | Payment for work done on a rest day. Overtime pay if you work beyond your regular hours. The following working day will be a paid holiday instead. |
Source: Ministry of Manpower
Remember:
- For employees covered under Part IV: Employers cannot substitute overtime pay with time off; they must compensate it at a rate of at least 1.5 times the hourly basic rate of pay.
- For employees NOT covered under Part IV: Overtime entitlement depends on the terms stipulated in the employment contract.
- Timing of overtime pay: Employers must disburse overtime compensation within 14 days following the end of the salary period during which the employees worked overtime.
Challenges of Manual Overtime Calculation
Are you still manually computing overtime pay for your employees? If so, you may have encountered several difficulties with this method.
Prone to Errors
Overtime rules are intricate, with varying rates applied depending on different types of days. Calculating overtime manually requires meticulous attention to navigate these nuances. However, this approach leaves room for errors in data entry and potential miscalculations. These complexities increase the chances of errors and present challenges in accurately compensating employees for their additional hours worked.
Compliance Risks
Incorrectly calculating overtime can lead to non-compliance with labour laws, putting businesses at risk of facing legal consequences like fines or penalties. Manual methods exacerbate the problem by increasing the likelihood of errors and complications, making it challenging to adhere to statutory obligations. This could lead to legal consequences that may negatively affect a company’s reputation and financial stability.
Time-Consuming
Manual overtime calculation demands meticulous tracking of each employee’s hours and precise calculation of overtime pay rates. This process can significantly strain HR departments, increasing their already demanding workload. Ensuring accuracy in overtime calculations amidst varying work schedules and regulatory requirements adds complexity to the task, further burdening HR departments.
Data Management Challenges
Tracking work hours and overtime rates requires attention to detail and efficient data management. Relying solely on spreadsheets for monitoring attendance introduces risks such as data mishandling or loss, potentially resulting in payroll inaccuracies and administrative challenges. Businesses must implement robust systems that ensure data integrity and streamline these processes to maintain smooth payroll operations and compliance with regulations.
Simplify Overtime Pay Calculation with Info-Tech’s HRMS Software
Are you looking for a seamless solution to calculate overtime pay for your business? Info-Tech has the perfect solution for you! Our HRMS software simplifies overtime management with advanced payroll software.
Our payroll software automates overtime calculations using predefined rules and rates, eliminating errors, and ensuring precision. It seamlessly integrates with our time attendance software, which captures regular and overtime hours in real-time. The real-time tracking feature improves accuracy by offering instant visibility into employee work hours and overtime data, thereby facilitating efficient overtime management.
For further details on our HRMS software and streamlined solutions for overtime payment, contact our sales team at +65 6297 3398 or email us at sales@info-tech.com.sg!
