{"id":3376,"date":"2016-08-23T05:38:37","date_gmt":"2016-08-22T21:38:37","guid":{"rendered":"https:\/\/zegal.com\/?p=3376"},"modified":"2024-12-27T18:00:13","modified_gmt":"2024-12-27T10:00:13","slug":"how-to-choose-a-payroll-software","status":"publish","type":"post","link":"https:\/\/zegal.com\/en-gb\/blog\/post\/how-to-choose-a-payroll-software\/","title":{"rendered":"How To Choose a Payroll Software"},"content":{"rendered":"\n

<\/span>How To Choose a Payroll Software That Is Right For Your Business<\/span><\/h3>\n\n\n\n

Because payroll calculation is directly impacted by the employment laws that govern a particular country, it is important that your payroll software is programmed with formulae that are localized for your country of business operations. <\/strong>Learn how to choose a payroll software that complies with countries’ rules and regulations.<\/strong><\/p>\n\n\n\n

Hong Kong has the Mandatory Provident Fund (MPF) and if we dig deeper into Singapore for example, the following are some must-know acronyms for payroll calculation:<\/p>\n\n\n\n

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  1. CPF <\/strong><\/span>\u2013 Central Provident Fund<\/li>\n\n\n\n
  2. SDL<\/strong><\/span> \u2013 Skill Development Levy<\/li>\n\n\n\n
  3. FWL<\/strong><\/span> \u2013 Foreign Worker Levy<\/li>\n<\/ol>\n\n\n\n
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    <\/p>\n

    Check your FWL and FW quota with Talenox’s free online calculator<\/a><\/p>\n<\/div>\n\n\n\n

    Types of donation funds:<\/strong><\/p>\n\n\n\n

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    1. CDAC<\/strong><\/span> \u2013 Chinese Development Assistance Council Fund<\/li>\n\n\n\n
    2. ECF<\/strong><\/span> \u2013 Eurasian Community Fund<\/li>\n\n\n\n
    3. MBMF<\/strong><\/span> \u2013 Mosque Building and Mendaki Fund<\/li>\n\n\n\n
    4. SINDA<\/strong><\/span> \u2013 Singapore Indian Development Association Fund<\/li>\n<\/ol>\n\n\n
      \n
      \"puzzle_piece_bible-ashz-140812\"<\/figure>\n<\/div>\n\n\n

      Image credit: Piece Together<\/a><\/span><\/em><\/p>\n\n\n\n

      The Ministry of Manpower of Singapore (MOM) provides the following formulae for salary calculation:<\/p>\n\n\n

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      \"Calculation<\/figure>\n<\/div>\n\n\n

      Source: MOM Singapore<\/a><\/span><\/em><\/p>\n\n\n\n

      In other words…<\/p>\n\n\n\n

      <\/span>Your payroll software must be good at math!<\/strong><\/span><\/h3>\n\n\n\n

      A good payroll software should get all of the following covered so you never have to worry about them:<\/p>\n\n\n\n

      1. Proration of salary<\/strong> \u2013 for incomplete months of work (typically for new hires or departures). Common practice is to use <\/span>work days<\/em> in a month for calculation.<\/span><\/p>\n\n\n\n

      2. Salary payment in arrears <\/strong>\u2013 if payment is mutually agreed to be carried over to the following month, any CPF contribution<\/a> due (including SDL and donation funds) should still be calculated for the first month of work.<\/p>\n\n\n\n

      3. Frequency of payment<\/strong> \u2013 weekly, bi-weekly, bi-monthly, monthly. Monthly pay is by far the most common practice in Singapore. Weekly or bi-monthly payment schedules are practised by businesses with a significant number of part-time employees with a preference for more frequent pay disbursement.<\/p>\n\n\n\n

      Both options are not commonly supported by payroll software due to CPF considerations (contribution amount is determined by a full calendar month\u2019s salary). One solution is to apportion 20% of the payment for CPF to be reconciled with the last payment of the month.<\/p>\n\n\n\n

      4. Rate of pay <\/strong>\u2013 hourly\/daily-rated with varying rates based on the day of the week or rest days and public holidays. Again this isn\u2019t a common feature but a good system should allow for any combination of rate of pay.<\/p>\n\n\n\n

      Does your Employment Contract<\/a> specify the rate of pay?<\/strong><\/p>\n\n\n

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      \"how<\/a><\/figure>\n<\/div>\n\n\n

      <\/p>\n\n\n\n

      With effect from 1 April 2016, all Employment Contracts for Singapore are to include these Key Employment Terms<\/a><\/span><\/strong>:<\/p>\n\n\n\n

      Start drafting Employment Contract with Key Employment Terms<\/a><\/p>\n\n\n\n

      5. Additional payments & deductions <\/strong>\u2013 e.g. reimbursement, allowance, bonus, commission, overtime, leave encashment, loan, and unpaid leave etc. Apart from capturing these pay items, it is crucial to determine if they contribute to CPF (as ordinary or additional wage) and tax calculations. Most software typically tag common items accordingly, while some utilise an open-ended feature for users to determine the appropriate contribution.<\/p>\n\n\n\n

      6. Statutory contributions<\/strong> (CPF, SDL, FWL, Donation funds) <\/strong>\u2013 Aside from the contribution situations highlighted above, treatment of decimal places needs to be applied correctly. Steps to compute CPF contribution:<\/p>\n\n\n\n