A payslip with every salary, the KETs within 14 days, and a wrong one counts as a missing one

WHO IS COVERED

Every employee on a contract of service, local or foreign.

The Employment Act covers anyone working under a contract of service: full-time, part-time, temporary and fixed-term, paid monthly, daily, hourly or by the piece, whether a citizen, a permanent resident or a work pass holder. Managers and executives are covered at any salary; the only parts of the Act limited by pay are the hours, overtime and rest-day rules in Part 4, which apply to workmen earning a basic salary of S$4,500 or less and to other employees earning S$2,600 or less. The Act leaves out just three groups: seafarers, domestic workers, and statutory board employees and civil servants.

It turns on the contract, not the title. A director who works under a contract of service and draws a salary is an employee for this purpose; one paid only director’s fees under the constitution is not. A freelancer on a contract for service is not an employee and gets an invoice, not a payslip. The KETs add one condition of their own: the employee must be employed for 14 days or more, measured by the length of the contract rather than the days actually worked.

THE PAYSLIP

Twelve items, given with the salary or within three working days.

MOM’s list has 12 items, and a payslip must carry every one that applies to the employee. An item that does not apply, such as overtime for an executive, is left off. Where salary is paid more than once a month the payslips can be consolidated, at least monthly, provided the consolidated slip shows every payment since the last one.

Timing is set by the Regulations. A payslip for a single salary period is due on the day the salary is paid, or within three days after it excluding Saturdays, Sundays and public holidays if that is not possible. When employment ends, every payslip not yet given is due with the final salary, on the last day or on the payment date of the last period. Soft copy, hard copy and handwritten all count; an electronic payslip is given once the employee can access it and keep it for later reference.

The deductions line deserves a second look. The Act permits only certain deductions: the employee’s CPF share, absence from work, recovery of advances or overpayments, and a short list of others, with a cap of 50% of the salary for the period except on a final payment. A deduction that the Act does not allow is a salary breach on its own, before the payslip is even considered.

THE KEY EMPLOYMENT TERMS

Seventeen terms, in writing, by the 14th day.

The KETs are not the whole contract. They are a written record of 17 specific terms that must reach the employee within 14 days of the start date: start on 1 January, KETs by 15 January. A letter of appointment that contains all 17 is the KETs. Terms common to everyone, such as the leave policy and medical benefits, may sit in an employee handbook or on an intranet, as long as the employee is told where and can reach it. An executive to whom overtime does not apply skips the two overtime items.

MOM lists an 18th, optional item, the place of work, and recommends including it when the employee works somewhere other than the employer’s address. The items most often left out of an SME’s letter are the salary period, the notice period, the probation period and the working arrangements, which is why MOM publishes a KETs verification tool that generates the working-hours and salary sections and checks them against the Act. The Act’s own rule is the one to remember: a record with a term missing or wrong is treated as not given, whether or not the employer knew.

THE RECORDS

Two years for MOM, five for IRAS.

Alongside the documents it gives out, an employer keeps two records for every employee. The employee record holds the address, NRIC number or work pass number and expiry, date of birth, gender, start and end dates, working hours including meal and tea breaks, and the dates of public holidays and leave taken. The salary record is the payslip’s 12 items, so a file of the payslips issued is the salary record. Both may be soft copy, hard copy or handwritten.

The IRAS clock is the longer one. A company must keep the source documents and records behind its accounts for at least five years from the relevant Year of Assessment, and payroll is a business expense like any other: the same payslips support the salary deduction in the tax computation, the CPF submissions and the IR8A forms. Keep payroll for five years and MOM’s two are met on the way. One further record is easy to miss: the Regulations require the year’s public holidays, and any agreed substitute days, to be displayed at each place where employees work.

WHAT IT COSTS

S$200 then S$400, per employee, per occasion.

Failing to give payslips or KETs, or to keep records, is a civil contravention under the Employment Act rather than a criminal offence. MOM’s authorised officers can issue a contravention notice requiring an administrative penalty at the amounts in the Regulations, for each occasion and each employee. A document not given at all costs more than one given with something missing.

The first-occasion rate applies to the first failure with respect to any one employee; every later occasion, for the same employee or another, is at the higher rate. That is what makes the 12-person company’s 6 months expensive: at most 12 of its 72 occasions can be first occasions, so the schedule gives at least S$26,400. Had the company issued payslips that left out the salary period, the same 72 occasions would have been priced at S$100 then S$200 instead.

Instead of a penalty, or on top of one, MOM may direct the employer to end the contravention and fix its effects. Not complying with that direction is where the criminal law starts: a fine of up to S$5,000, imprisonment of up to six months, or both. Inspecting officers may enter a workplace without notice to audit terms and conditions of employment, and MOM may also ask for records in response to an employee’s salary claim, which is the more common trigger. An employer who disputes a notice has 14 days to ask for an internal reconsideration or to appeal to the General Division of the High Court.

IN ORDER

Six steps that cover all three documents.

Common questions.