The moment you bring on your first employee, you become an employer with statutory payroll obligations. Many early-stage founders underestimate how quickly payroll compliance obligations accumulate — from payslips and employment contracts to CPF/PF/TDS deductions, leave tracking, and year-end tax filings. This guide helps you set up payroll correctly from the start, whether you're building in Singapore, India, or both.
When Payroll Obligations Begin
Your payroll obligations begin the moment you make your first hire — not when you reach a specific headcount. Some obligations vary by country and headcount, but the basics (employment contract, payslips, tax withholding) apply from employee number one.
- Singapore: CPF contributions begin immediately for your first SC/PR employee; EP/S Pass holders are exempt from CPF
- India: PF is mandatory at 20 employees (voluntary below); TDS on salary begins from the first employee earning above the basic exemption limit
- India: ESI is mandatory at 10 employees (in most states)
- Both: Employment contracts are mandatory from day one — a written contract is legally required in Singapore (Employment Act) and strongly recommended in India
- Both: Payslips are required by law — Singapore (within 3 days of payment), India (payslip provisions under state-specific Shops and Establishments Acts)
- Both: Minimum wage laws apply — Singapore's Progressive Wage Model covers certain sectors; India has state-specific minimum wages under the Code on Wages
Don't wait until you're 'big enough' to set up payroll properly. Getting it right from the first hire prevents expensive remediation later — backfiling CPF or PF arrears is a painful and expensive process.
Employment Contract Essentials
An employment contract protects both the employer and the employee. In Singapore, the Employment Act requires a Key Employment Terms (KET) document to be issued within 14 days of employment. In India, an offer letter followed by a formal employment agreement is standard practice.
- Must include: start date, job title, scope of work, salary, working hours, leave entitlement
- Singapore KETs: must cover 16 specific items under the Employment Act — salary period, overtime, annual leave, medical leave, notice period
- India employment agreement: should cover confidentiality, IP assignment, non-solicitation (non-compete clauses have limited enforceability in India)
- Probation period: typically 3–6 months; during probation, notice period is usually shorter and termination is simpler
- Intellectual property clause: all work created during employment should vest in the company — do not skip this
- Governing law clause: specify which jurisdiction's law governs the contract, especially for remote employees
For Singapore, use MOM's standard Key Employment Terms template as a starting point. For India, have a lawyer review your employment agreement — particularly the IP assignment and confidentiality clauses.
Payroll Frequency, Gross vs Net Pay, and Payslip Requirements
Monthly payroll is the standard in both Singapore and India. Payroll involves computing gross pay, deducting statutory contributions (CPF/PF, ESI, TDS), and paying net pay to the employee. Payslips must be issued for every payroll run.
- Payroll frequency: monthly is standard in both countries; weekly or fortnightly is permissible but uncommon
- Gross pay: total compensation before any deductions — includes basic salary, allowances, bonuses, commissions
- Statutory deductions (Singapore): employee CPF contribution (20% for under-55), SDL (employer-paid, not a deduction from employee)
- Statutory deductions (India): employee PF (12% of basic+DA), employee ESI (0.75% of gross, if applicable), TDS on salary (varies by income and declarations)
- Net pay: gross pay minus statutory deductions minus any advance deductions
- Payslip must include: pay period, basic salary, all allowances, all deductions, net pay, CPF/PF reference numbers
- Singapore: digital payslips are acceptable; must be issued within 3 working days of salary payment
- India: under most state Shops and Establishments Acts, payslips must be issued before or on the day of salary payment
Set a consistent payroll date — the last working day of the month is most common. Changing payroll dates creates confusion around CPF/PF submissions, which are deadline-driven.
Leave Accruals, Probation, and Contractor vs Employee
Leave management and the contractor vs employee distinction are two areas where many founders make costly mistakes. Getting the classification right from the start prevents legal and tax complications down the line.
- Annual leave (Singapore): minimum 7 days/year for first year; +1 day per year of service up to 14 days (Employment Act)
- Sick leave (Singapore): 14 days outpatient sick leave, 60 days hospitalization leave per year (for employees with more than 6 months service)
- Annual leave (India): minimum varies by state; typically 12–21 days per year depending on state and industry
- Probation and leave: Singapore — pro-rated leave during probation; employees must serve probation to be entitled to full leave
- Contractor misclassification: paying someone as a contractor when they work like an employee is illegal in both countries — triggers back-payment of CPF/PF, ESI, and TDS penalties
- Signs of employee vs contractor: fixed working hours, exclusivity, company equipment, no other clients — these signal an employee relationship
- True contractors: provide services to multiple clients, set their own hours, use their own equipment, invoice periodically
- India: the Contract Labour (Regulation and Abolition) Act has specific rules for engaging contract workers through third-party agencies
If your "contractor" works exclusively for you, takes instructions from you, and has been doing so for more than 6 months — they are likely a deemed employee under most jurisdictions' tests. Reclassify proactively before an audit does it for you.
Using Payroll Software vs Manual Payroll
Many early-stage founders start with a spreadsheet for payroll. This is fine for 1–2 employees, but quickly becomes error-prone and legally risky as headcount grows. Here's when to switch to payroll software and what to look for.
- Spreadsheet payroll: feasible for ≤3 employees with simple salary structures; no allowances, no variable pay
- Switch to software at: 4+ employees, or when you have variable pay, multiple allowances, or employees across different CPF/PF age bands
- What payroll software must handle: correct statutory calculations (CPF/PF/ESI/TDS), automatic deadline tracking, payslip generation, year-end filing (IR8A/Form 16)
- Singapore-specific requirements: CPF EZPay integration, SDL calculation, Auto-Inclusion Scheme (AIS) for IR8A
- India-specific requirements: ECR generation for EPFO, ESIC challan, Form 24Q quarterly TDS returns, state-wise professional tax
- Red flags in manual payroll: inconsistent deduction amounts, missing payslips, CPF submission errors, late IR8A
- What Payub handles: end-to-end payroll for Singapore and India — CPF/PF/ESI/TDS auto-computed, submissions automated, payslips generated, year-end filings handled
The cost of payroll software is almost always less than the cost of a payroll compliance mistake — which can run into thousands in penalties, back-pay, and professional fees to clean up. Invest in the right tool early.
Set up payroll the right way from day one
Payub handles payroll for Singapore and India — CPF, PF, ESI, TDS, payslips, and year-end filings, all automated.
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