New Employers: 3 policies every Singapore employer needs to know


From 1 April 2016, there are a couple key amendments of the Employment Act to let employees better understand their employment terms, benefits and how their salaries are calculated. At the same time, the framework aims to help employers prevent conflicts or disputes with their staff.

In this piece, we highlight these three key policies every new employer shall pay attention to. If you are starting a new business in Singapore, or starting out with your first hire, make sure you familiarize yourself with below.

All Singapore employers are now required to do these: 1) Issue an itemised payslip; 2) Have a set of key employment terms (KETs); & 3) Pay the Skills Development Levy (SDL). We discuss them one by one here:



What is it?

An itemized payslip is the note issued to an employee after remuneration detailing the amount of pay, additional pay and deductions from the pay.

As per the new requirements, employers should issue one to their staff monthly, including the following details:

  1. Full name of employer
  2. Full name of employee
  3. Date of payment
  4. Basic salary for each salary period
  5. Allowances paid for the salary period
  6. Any other additional payment for each salary period
  7. Deductions for each salary period
  8. Overtime hours worked
  9. Overtime pay
  10. Start and end date of overtime period
  11. Net salary paid in the month

A sample itemized payslip could be downloaded from Ministry of Manpower website, or you could refer to the sample below:


Why Itemized payslips?

With the new initiative including all details regarding employees shall get a clear picture of how their pay is derived. It also helps to curb salary related misunderstandings between employers and employees.

When to issue and how?

An itemized payslip should be issued along with the payment to the employee. If this is not the case, then it should be given to employee within 3 working days of payment of salary. You could issue this in soft or hard copy. In cases of termination, an itemized payslip should be given along with the outstanding salary.

In cases where MoM requests for payslip proof and itemized payslips, employers should have ready records to be presented.

For employees, you shall be able to retrieve a record of 2-year latest payslips from the company. In the case of ex-employees, a record of their last 2-year payslips should be kept for 1 year after they leave work.


2 - Key Employment Terms (KET) for employees

As in the case of itemized payslips, all employers are required to issue KET to their new employees taken in after 1st April 2016.

What is KET?

KET is a form in writing that contains employment terms of an employee to a company or a business. The KET can either be in soft or hard copy. The initiative was introduced to promote transparency between employers and employees as well as boost trust between each other.

Once an employer and an employee enter into a Contract of Service (commonly known as Employment Contract) with an employee, the KET kicks in. The KET is usually shorter and more concise than a formal contract. It is about one page long and usually prepared internally. You could download a sample KET from MoM website, or a see a sample below. It shall contain:

  1. Name of employer
  2. Name of employee
  3. Job title, main duties, and responsibilities
  4. Date of start of employment
  5. Duration of employment
  6. Working arrangements
  7. Salary period
  8. Basic salary
  9. Fixed allowances
  10. Fixed deductions
  11. Overtime rate of pay
  12. Overtime rate of pay
  13. Other salary related components
  14. Leave
  15. Other medical benefits
  16. Probation period
  17. Notice period

A Sample Key Employment Terms sheet



Employers requirement for KET

If you have a new hire after 1 April 2016, you should issue a KET within 14 days from the date of start of employment. It is ideal that the KET is prepared for individuals who are employed for a period of 14 days or more with reference to the length of contract.

Applicable to foreign employees

You must issue KET to all employees regardless of their nationality. As long as your employees meet the following criteria then a KET is applicable:

  • Covered under the employment act
  • Employed on or after 1st April 2016
  • Employed under contract of service for an ongoing period of 2 weeks or more

It is in the employers’ best interest if your new employee reads through the KET and signs the document. This makes it effective for use in case any disputes arise in the future unlike in cases where the KET is not signed. If you wish to see a detailed guide about KET, you could refer to the official link here.


3 – Skills Development Levy

What is SDL?

We have written a detailed guide to Singapore Skills Development Levy here but in simple terms, SDL is separate and mandatory levy on employers. This is an independent levy and is not linked to other payments like the Foreign Workers Levy (FWL) or the Central Provident Fund (CPF).

SDL is used for upgrading programs conducted for the Singapore workforce and facilitate training grants for employers when they tap on any Continuing Education and Training centres.  It is administered by the Singapore Workforce Development Agency.

Who needs to comply?

All employers need to comply with the Skills Development Levy Act. By all employers, reference is made to individuals or corporations that are liable to pay remuneration to employees. There however are exceptions in the case of employees who are:

  • Domestic servants, chauffeurs or gardeners employed but not in connection with cases related to the employers trade or business
  • Employees who do not render services in Singapore for the related months

In the above named cases, SDL is not payable for these employees.



For Self-employed, Local, or Foreign employees

Self-employed individuals like hawkers, taxi drivers, or gardener do not have to pay SDL. The earnings from these individuals are not considered as remuneration for the purpose of the SDL Act.

Remuneration is that amount paid to an employee for a contract of service. In case you are a self-employed individual but have employees, then you are liable to pay SDL on account of the remuneration paid to your employees.

Local versus Foreign employees

Again – SDL is applicable to both local and foreign employees working in Singapore. In the case of foreign workers, the SDL is paid in addition to the foreign worker levy payable to the ministry of manpower.

Accessing SDL portals and when to pay SDL?

You could access the SDL system via the Workforce Development Agency main page under the Employers menu. You can also alternatively use the Skills Development Levy page direct. The SDL system is a one-stop online service enabling employers to transact with WDA regarding SDL.

Available services over the SDL system portal include:

  1. Maintaining company profile
  2. e-Payment for SDL
  3. Viewing earlier SDL payment transactions
  4. Submitting SDL e-refunds request
  5. Submitting e-Declaration on non-liability of SDL
  6. Computing SDL with online SDL calculator
  7. Downloading SDL forms

SDL should be paid each month for the employees. The payment should be made within 14 days after the end of the month.

In case as an employer you are late in paying the SDL or made an under-payment, then you need to make a lump sum payment to the SPF board or WDA of the outstanding amount. Remember, the SDL Act allows for a 10% p.a penalty fee of outstanding amounts on employers. 

Computing and payment of SDL

Finally the amount - The SDL payable is 0.25% of the monthly remuneration of the employee. The minimum payable is $2 while the maximum payable is $11.25 which is charged on the first $ 4500 only as shown in the table below


In cases of a variable salary where bonuses are involved, the SDL is calculated for the remuneration of that time i.e (salary + bonus).

Example: March salary is $ 2500 and bonus for the month totals to $ 1200. SDL computed for employee is based on $ 3,700 (2500 + 1200). The SDL payable is $ 9.25 (0.25% x 3700).

Should I as an employer pay for SDL if I’m not planning to use the SDF nor send my employees for training?

Yes. Each employer with a registered company is under obligation to pay the SDL, even you do not intend to tap on the SDP or send your staff for training.

Since all registered companies in Singapore are eligible to apply for SDF training assistance, SDL is mandatory for all.

For full details of amendments to the Employment Act effective 1 April 2016, you may refer to Ministry of Manpower website.