Calculation Of Salary
1. What is basic rate of
pay?
Basic rate of pay is the
total amount of money (including wage adjustment and increments)
which an employee is entitled to under his contract of service but
does not include -
(a) overtime payments;
(b) bonus payments or annual wage supplements (AWS);
(c) any sum paid to the employee to reimburse him for special
expenses incurred by him in the course of his employment;
(d) productivity incentive payments; and
(e) any allowance however described.
2. What is basic rate of pay used
for?
Basic rate of pay is used to calculate pay for work on restday,
work on public holiday and overtime work.
For purpose of computing pay for work on rest day or public
holiday for a monthly-rated employee, the basic rate of pay for 1
day is calculated as follows:
12 x Monthly basic rate of pay
___________________________________________
52 x Average no. of days an employee is
required to work in a week
For purpose of computing pay for overtime work for a
monthly-rated employee, the hourly basic rate of pay is calculated
as follows:
12 x Monthly basic rate of pay
______________________________________
52
x 44
3. What is gross rate of
pay?
Gross rate of pay is the total amount of money including
allowances which an employee is entitled to under his contract of
service, but does not include:
(a) overtime payments;
(b) bonus payments or annual wage supplements (AWS);
(c) any sum paid to the employee to reimburse him for special
expenses incurred by him in the course of his employment;
(d) productivity incentive payments; and
(e) travelling, food or housing allowances.
4. What is gross rate of pay used
for?
Gross rate of pay is used to calculate payment in lieu of notice
of termination, deduction of pay for absence from work, paid
holidays, paid annual leave, paid sick leave and paid maternity
benefits.
For a monthly-rated employee, the gross rate of pay for 1 day is
calculated as follows:
12 x Monthly gross rate of pay
_________________________________________
52 x Average no. of days an employee is
required to work in a week
5. What is "productivity incentive
payment"?
"Productivity incentive payment" means a variable payment,
whether made annually or otherwise, to an employee as a reward for
-
(a) an improvement in that employee's performance; or
(b) an increase in the employee's productivity or contribution
to the employer's business, trade or undertaking.
6. Can certain allowances such as shift and
attendance allowances be considered as productivity incentive
payments and be excluded from gross rate of pay?
If the payment of the allowance incorporates features of an
incentive scheme which fall within the definition of a productivity
incentive payment, it could be excluded from gross rate of pay.
Shift and attendance allowances are paid to employees for
carrying out shift duties and keeping good attendance respectively.
They do not fall within the definition of a productivity incentive
payment. They are therefore part of gross rate of pay.
7. If a company operates on rotating shifts
with different rates of shift allowance, how should the allowance
be computed in working out an employee's gross rate of pay when he
goes on annual leave?
Employers may consider using any of the following methods:
(a) Standardising the rate by working out a simple average as
shown in the example below:
1st shift - no allowance;
2nd shift - $5; and
3rd shift - $10,
Average allowance per shift
0+5+10
_____________ = $5
3
Hence, when an employee goes on leave, he is to be paid shift
allowance of $5 for each day of his leave, irrespective of the
shift on which he is rostered to work.
(b) Continuing to pay the allowance as though the employee has
worked for the day.
Using the same example in 7(a), if the employee goes on leave
when he is rostered to work on the 1st shift, he is not paid any
shift allowance, but if he goes on leave when he is rostered to
work on the 3rd shift, he is paid $10.
Companies may also use other methods so long as they are fair
and reasonable.
8. How should the salary of a monthly-rated
employee who has worked part of the month be
calculated?
An employee may not work a complete month if:
• he commenced employment after the fist
day of the month;
• his employment was terminated before the
end of the month;
• he took no pay leave during the month;
or
• he took leave of absence to perform his
national service under the Enlistment Act.
In such cases, the salary payable to him is pro-rated as
follows:
Monthly Gross Rate Of
Pay
____________________________ x * Number of days
the
employee actually
* Number of days on
which
worked in that month
the employee is
required
(includes public holiday
to work in that
month
if he is entitled
to
(includes public
holidays
holiday pay)
but excludes rest days
and non-working days)
* If the number of working hours in any working day is 5 hours
or less, regard it as a half-day. If it is more than 5 hours,
regard it as one day.
Ministry of Manpower
Website : http://www.mom.gov.sg
Email : [email protected]
OneCall Centre : (65) 6438 5122