Outsourcing your payroll in Singapore?
Here’s a few things to consider…
Along with its reputation as a global business hub, Singapore is also an outsourcing hotspot; due mainly to its business-friendly compliance regulations, low corporate tax rate of just 17%, and strategic geographical location.
There’s also the fact that Singaporeans place great value on outsourcing as a fundamental tool of business. Service providers focus intently on quality, technology and the delivery of products and services; whilst the Monetary Authority of Singapore (MAS) has published clear outsourcing guidelines to help ensure that company owners will truly benefit from hiring an outsourced service provider.
IT outsourcing in Singapore a growing trend
As a result, outsourcing Singapore style has become particularly popular in recent years, especially for big firms and multinational organizations contracting local IT service providers with expertise in functions such as IT infrastructure, software and application development and digital marketing etc.
The practice allows firms to continue to focus on their core business whilst they benefit from immediate access to mission-critical IT solutions – without the extra costs and hassles associated with trying to internally manage new infrastructure, systems and staff.
One area within IT outsourcing that’s been particularly active in recent timers is payroll outsourcing.
In Singapore, this can be a daunting task. Especially with myriad of administrative tasks associated with payroll for employees such as calculations, distribution, CPF contribution, employer tax liability and more. It can be a real hassle, especially for smaller companies.
As a result, many Singaporean businesses have taken steps to optimise their payrolling process simply by automating it. Auto-generated payslips standardise the whole process, allowing HR managers to minimise any inaccuracies caused by human error.
Others have outsourced their payroll completely to a specialised service provider.
Problem solved? Not quite.
Whilst Singapore payroll guidelines and regulations are relatively transparent when compared with that of neighbouring countries, there are nevertheless a number of issues to be aware of when automating or outsourcing your payroll in Singapore. For example, overtime, deductions, payslips & record keeping.
Workaholic Singapore & Overtime
In a workaholic world like Singapore overtime has always cast a big shadow. So has overtime pay.
Employers are legally required to pay overtime to employees if they are either:
- A non-workman earning up $2,600 SGD
- A workman earning up to $4,500 SGD
In addition, overtime payments need to be made within 14 days after the last day of the salary period, whilst the pay for overtime work in Singapore must be at least 1.5 times the hourly rate of the employee’s standard pay.
Deductions, payslip regulations and record keeping
The issue of deductions is also complex. As are payslip regulations and record keeping. The Singapore Employment Act mandates that employers must maintain employment records detailing both employee and salary records. This is sometimes overlooked and can lead to legal consequences.
Details of these regulations can be found on the Singapore Government’s Ministry of Manpower website.
Outsource your payroll
This complexity is also part of the reason why many businesses choose to outsource their payroll to a specialist service provider like CXC Global, which boasts in-country support and on-the-ground knowledge of Singapore’s many employment laws and regulations.
But the recent boom in IT outsourcing in Singapore – and outsourcing generally – has had other consequences too; making payroll even more complicated for many businesses, especially smaller ones that lack manpower.
Once a company outsources any part of its business functions it often entails becoming an employer of a hybrid workforce comprising employees and contractors. The two are quite separate beasts, especially in terms of payment/entitlement rules and regulations, employment classification and compliance.
Outsource your contractor management and compliance headaches too
If you’re outsourcing in Singapore, then managing contractors, especially if you engage them in large numbers, can be a difficult undertaking. Even more so when you consider that a modern hybrid workforce may consist of a multi-cultural mix of permanent employees, consultants and independent professionals, contractors, temps, freelancers and others.
Ensuring they are all paid correctly is just the start.
You may also have to take into account things like changing legislation, worker classifications, compliance issues, health and safety training and obligations, contractor entitlements, and more. Then there’s the documentation and record-keeping mandates.
Mitigate your risk
If you’re caught short the risks are huge.
At CXC Global, we are fully aware of the critical importance of payroll rules and regulations, especially as we provide payroll, contractor management and compliance solutions to businesses in over 60 countries.
For example, CXC Comply, our Global Contractor Vetting and Compliance Technology Platform is specially designed to assist with all the complex classification issues involved with engaging contractors when you are managing a hybrid workforce.
Its impressive functionality encompasses three key areas of compliance:
Worker Classification: CXC Comply’s classification assessment and vetting process ensures proper classification of independent, freelance, sole trader, limited company and corporate contractors. It also mitigates any risks to your organisation by ensuring they adhere to local classification guidelines for taxation purposes and are set up properly and working in compliance with local and in-country laws
Right to Work: Right to work requirements vary in every country. CXC Comply’s right to work assessments and digital vetting ensures the contractor that you want to engage has the proper work authorisation in the country or region where the work will be performed by verifying domestic right to work eligibility and proper setup within their country’s schemes.
Background Screening: CXC Comply ensures your contingent workers are properly checked and vetted by facilitating checks for issues such as criminal checks, education checks, work verification, international sanctions and credit checks.
By any measure, employing staff – employees and contractors – can be complex and challenging, especially if the process is not managed properly.
To learn more about how CXC Global can help you with payroll services and better ensure contractor compliance and overall workforce management, don’t hesitate to contact us today on firstname.lastname@example.org.