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Payroll Outsourcing

Payroll Outsourcing Helps Companies Increase Their Efficiency

The Importance of a Good Payroll System Payroll is an overlooked but essential function of all companies in Singapore. It may seem away from the glamour of high-value transactions and…

The Importance of a Good Payroll System

Payroll is an overlooked but essential function of all companies in Singapore. It may seem away from the glamour of high-value transactions and the walls of fame honouring high-achieving sales representatives. However, appropriate and timely compensation to deserving employees keeps them motivated and morale high. This, in turn, enforces their loyalty to their employers and makes them work harder, adding to their personal growth and bringing the companies to greater heights.

Despite its important role, payroll service, and by extension, the human resource department, are a cost centre in any company. Payroll is more than simply preparing pay slips for the employees. It encompasses functions like preparing reimbursements and calculating increments for promotions. It also covers processing statutory deductions, calculating employee benefits, determining final payments for terminations and resignations, and so on. Working on each of these functions incurs costs in terms of time and resources, and Human Resource heads will have to justify such costs to the management.

Advantages of Payroll Outsourcing

Many companies favour the outsourcing of payroll functions to third-party providers, most of which are accounting and corporate secretarial firms. Run by qualified accountants and human resource professionals, such outsourced payroll services help companies save valuable time and money. By relinquishing themselves of these back-end services, companies free up their precious resources and manpower. They are able to redeploy these limited resources on profit-generating sales and business development activities.

In addition to time savings and the resulting efficiency, companies can also look forward to better-quality work as the work is now handled by specialists. Such service providers, being specialists trained in the areas of payroll and related services, will be able to spot potential errors and omissions and highlight areas of improvements to the commissioning clients. Being highly-trained professionals offering outsourced payroll as a business, these companies have the responsibility to keep themselves abreast of the latest regulations governing the treatment of pay matters and issuance of pay slips.

Itemised Pay Slips

The Ministry of Manpower mandates that all employers must issue itemised pay slips to all their employees covered by the Employment Act. These pay slips can be in hard or soft copy and must be issued at least once a month, within three days of payment to the employees. Such pay slips must also be kept for the latest two years of employment in case of any disputes the employees have with their employers. MOM also dictates the list of items that have to be included in the pay slips. All the items below have to be clearly displayed, unless the items are not applicable to the employees.

The pay slips must cover the names of the employer and the employee. It should also show the date of pay slip issuance, the basic salary for each salary period and the start and end dates of the salary period. Allowances given to the employees, such as fixed allowance and ad-hoc allowance, have to be included. Bonuses, pay given for working on public holidays and other additional pay given for each salary period, must also be included.

Apart from such salary information, deductions such as mandatory CPF contributions and ad-hoc deductions have to be displayed. Employees who are not professionals, managers and executives and are entitled to overtime pay. It will also see overtime hours worked, overtime pay and the start and end dates of overtime payment periods worked, displayed on their pay slips. Finally, the net salary paid for the month for the employee will be stated.


A professional outsource payroll service provider ensures that the itemised pay slips fully comply with the Ministry of Manpower’s requirements. Additionally, it helps their clients with special calculations arising from transitions. This includes onboarding and resignation of employees, as well as promotions and year-end bonuses. Payroll outsourcing frees their clients of such payment worries and allow them to fully focus on their businesses.

To learn more about outsourcing your payroll functions, contact us now!

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