New requirement to issue itemised payslips and key employment terms

With effect from 1 April 2016, all Singapore employers will be required to issue itemised payslips and key employment terms to employees covered under the Singapore Employment Act. As a rule of thumb, an employee who earns no more than S$4,500 a month and is not a domestic worker, public servant or seafarer, is likely to be covered under the Employment Act.

A failure to provide itemised payslips or provide written key employment terms to employees will be considered a “civil breach” under the Employment Act and will attract administrative penalties.

Itemised payslips

Itemised payslips are to be issued to employees together with their salary payments every month. These payslips can be issued in soft or hard copies, as long as they reflect the required breakdown of items. Amongst others, the required breakdown of items include the following:

  • full name of employer;
  • full name of employee;
  • date of payment;
  • basic salary;
  • allowances paid;
  • deductions made (for example, central provident fund contribution);
  • overtime hours worked and overtime pay; and
  • net salary paid for the month.

Employers must keep proper records of an employee’s last 2 years of payslips throughout the term of employment, and if the employee leaves employment, the last 2 years of payslips must be kept by the employer for 1 year.

Key Employment Terms (“KET”)

Employers must issue written KET to all newly employed employees on or after 1 April 2016 who are covered under the Employment Act with a continuous employment of at least 14 days with the employer.

The KET must be issued to the employee within 14 days from the start of employment. Employers are given the flexibility of issuing the KET in soft or hard copies. Common KET such as leave policy that applies to a group of employees can be set out in the employer’s employment handbook or on the employer’s intranet. Amongst others, the KET should include the following items:

  • full name of employer;
  • full name of employee;
  • job title, duties and responsibilities of the employee;
  • commencement date of employment;
  • salary period;
  • basic salary;
  • fixed allowances;
  • fixed deductions;
  • overtime rate of pay;
  • leave entitlements;
  • medical benefits;
  • probation period; and
  • notice period.

The Ministry of Manpower (“MOM”) will provide a one-year grace period for employers to implement these changes. From 1 April 2016 to 31 March 2017, the MOM will adopt a light-touch enforcement approach to assist employers to meet these requirements. It is therefore advisable for the employer to take first steps in effecting these changes to ensure that it is in a position to meet the new regulatory requirements when they come into effect.