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Salary and Pay Rate Calculations (Singapore)
Salary and Pay Rate Calculations (Singapore)

When managing payroll, different pay rates are used to calculate earnings for various scenarios—such as for unpaid leave, public holidays, or leave encashment. Here we break down common definitions and formulas, with examples.

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Written by StaffAny
Updated over 2 weeks ago

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Product: PayrollAny

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This guide will cover the following definitions:


1. Hourly Basic Rate

Definition:
The Hourly Basic Rate is used to determine the pay for overtime or additional hours worked. Especially for Salaried, it is derived from the monthly salary.

  • For Salaried Employees:
    The formula is:

    (12 × Monthly Salary) / (52 × Weekly OT limit)

    *) Weekly OT limit represents the number of overtime hours after the regular work hours in a week defined in the wage setting of each individual staff.

    • Example:
      Assume an employee has a Monthly Salary of SGD 4,000, and the company determines the overtime basis as 10 hours per week.
      Then:
      Hourly Basic Rate = (12 × 4,000) / (52 × 10) = 48,000 / 520 ≈ SGD 92.31

  • For Hourly Employees:
    The rate is simply the hourly wage specified in the employee’s wage details.


2. Daily Basic Rate (Salaried, Singapore)

Definition:
This rate is primarily used to calculate pay on public holidays for salaried employees. Hence, it is only applicable to Salaried.

The formula is:

(12 ÷ (52 × Working Days per Week)) × Basic Rate

Where:

  • Basic Rate = Monthly Salary + 2nd Entity Wage

  • Working Days per Week is the regular work schedule (e.g., 5 days for a Monday–Friday schedule).

Example:
For an employee with a Monthly Salary of SGD 3,000, plus SGD 1,000 from the 2nd entity, and a 5-day workweek:

  • Daily Basic Rate = 12 ÷ (52 × 5 Working Days per Week)) × (3,000 + 1,000)

    = 0.04615 × 4,000 ≈ SGD 184.62


3. Incomplete Month Pay Daily Rate

Definition:
This rate is applied when a salaried employee does not work a full month, and their pay needs to be prorated based on the number of working days in that month.


General Formula:

Monthly Salary / Working Days


Working Days are determined depending on the proration settings.

  • Fixed Working Days per Week:
    Count working days based on the "working days per week" setting.
    e.g., for a 5-day week, count all Mondays to Fridays within the month.

  • Attendance Data:
    Count the days with shifts (regardless of whether they are absent) and leave taken that has working days enabled in its setting.

Example:
If an employee earns SGD 4,000 monthly, prorate the salary based on "Fixed Working Days per Week", with 5 working days per week setting.


The daily rate between 1 Jan 2025 - 31 Jan 2025:

Daily Rate = 4,000 / 23* ≈ SGD 173.91
*) there are 23 days by counting all Mondays to Fridays between 1 Jan - 31 Jan 2025


4. Incomplete Month Pay Daily Rate (Legacy – Singapore)

Definition:
An older method in the system exclusively for salaried employees, where the daily rate is always computed by dividing the Monthly Salary by the number of working days based on the standard working week setting, regardless of attendance data.


Formula:

Monthly Salary / Working Days

Example:
For the same SGD 4,000 monthly salary over 23 fixed working days, even though the proration setting is based on "Attendance Data":

  • Daily Rate = 4,000 / 23 ≈ SGD 173.91


5. Incomplete Month Pay Daily Rate (Singapore)

Definition:
This rate is used when additional allowances (tagged as prorated pay items) need to be included—commonly for adjustments like unpaid leave where allowances are considered.

Formula:

(Monthly Salary + Sum of Tagged Prorated Pay Items) / Working Days

Example:
An employee with a Monthly Salary of SGD 4,000 and extra prorated pay of SGD 500, over a month with 23 working days, would have:

  • Daily Rate = (4,000 + 500) / 23 ≈ SGD 195.65


6. Gross Rate of Pay (Salaried, Singapore)

Definition:
The Gross Rate of Pay represents the average daily earnings for a salaried employee. It is calculated by including the monthly salary and any extra fixed pay items that can be prorated, annualizing this total, and then dividing by the total number of workdays per year. This rate is commonly used when calculating encashment of leave.

Formula:

Gross Rate of Pay = ((Monthly Salary + Sum of Tagged Prorated Pay Items) × 12) / (52 × Working Days per Week)

Example:
For an employee with a Monthly Salary of SGD 4,000, additional prorated pay items totaling SGD 500, and working 5 days per week:

  • Annualized amount = (4,000 + 500) × 12 = 4,500 × 12 = SGD 54,000

  • Total working days per year = 52 × 5 = 260

  • Gross Rate of Pay = 54,000 / 260 ≈ SGD 207.69 per day


Conclusion

Each calculation serves a specific purpose—whether determining pay for public holidays, prorated work periods, or leave encashment. By understanding these formulas and examples, payroll managers can accurately compute the various components of an employee's earnings, ensuring fairness and compliance with local standards in Singapore.

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