The Ministry of Manpower (MOM) has announced its latest amendments to the Employment Act (EA), which requires all employers to issue itemised pay slips and written Key Employment Terms (KETs) to employees covered under the EA from 1st April 2016 onwards.
According to MOM, these amendments allow employees to better understand how their salaries are calculated, as well as their employment terms and benefits. The issuance of itemised payslips and KETs will also “help employers prevent misunderstandings and minimise disputes at the workplace”, MOM added.
MOM’s latest amendments to the Act will have a greater impact on small to medium-sized businesses (SMEs) in Singapore, that’re less likely to have formalised contracting and payroll processes. So get your notebooks ready, SME owners – here’s what you need to know to be prepared come April ‘16.
The Lowdown on KETs
According to MOM, KETs must be communicated to employees who are employed on or after 1st April 2016, are covered under the EA and are employed for a continuous period of 14 days or more. KETs must be communicated to these employees within 14 days from the start of their employment.
Not sure whether your employees are covered under the EA? MOM says that as a rule of thumb, if your employee earns up to S$4.5K/month, is not a domestic worker, public servant or seafarer, it’s pretty likely that he is covered.
If you’re still unsure, you can drop MOM a message here, or give them a call at 6438 5122.
The KETs can be issued in soft or hard copies, and must include terms like working arrangements, leave entitlements, notice period and basic pay. Common KETs like your company’s leave policies can be stored in an employee handbook, or on your company’s intranet for employees’ reference.
Itemised Payslips: What’s the Score
For the uninitiated, itemised payslips, are notes issued to employees when they’re paid, detailing their basic salary, as well as all allowances and deductions that were made during the salary period. Apart from KETs, you’ll have to issue itemised payslips to all employees covered under the EA as well.
According to MOM, each payslip must contain key items such as the employee’s name, his/her basic salary, and other allowances that were paid during the salary payment period. Payslips must be issued to employees together with their salary payments, in either hard or soft copies. If you have employees who’re paid more than once a month, you can combine each employee’s payments into a single payslip for the month.
Check out the full list of items to be included in each payslip, as well some other requirements for the issuance of payslips here. MOM has also provided a basic itemised payslip template on its website, to give you a sense of what’s required come April ‘16 onwards.
Keeping Proper Records
Besides issuing itemised payslips and KETs to employees from 1st April 2016 onwards, you’ll have to keep proper employee and pay records as well.
Employee records must include details such as the employee’s address, NRIC number and working hours. Pay records must include the same items covered in the MOM-compliant itemised payslip. You’ll have to keep the latest 2 years’ records of all employees.
For ex-employees, these records have to be kept for at least a year after they leave employment.
As with KETs and itemised payslips, records can be kept in hard or soft copies. Get the full list of items to be included in the employee and salary records here.
The Impact on SMEs
For the average SME that doesn’t use a payroll software, churning out dozens of payslips month after month can get tiresome pretty quickly. Therefore, MOM’s website contains a download link for SP-Pay, a simple, basic piece of software that generates itemised payslips based on your inputs. However, you’re looking at more than a dozen employees and are still growing your business, you’ll need a payroll solution that’s faster and more scalable. That’s where a comprehensive software solution such as HerdHR that not only complement your payroll needs, but other criticial HR functions such as leave, roster, attendance, employee management and more!
MOM also introduced an Assistance Package, that includes a whole host of guidelines and resources for KETs and payslips, to ensure that these amendments can be implemented into your business with minimal fuss.
What Does This Mean?
The issuance of itemised payslips and KETs will provide employees with much-needed clarity on their employment terms, as well as the various components that make up their salary each month. And if implemented well, it can help employers reduce pay and contract-related disputes in the workplace.