HR’s Guide to Singapore Hiring

According to a recent survey, 75% of employers admitted to hiring the wrong person, costing them nearly $17,000 on average. These bad hires failed to deliver quality work, had a negative attitude, or misrepresented their abilities. 

Additionally, there are costly penalties for violating employment laws and regulations, many of which are not commonly known. Hiring in Singapore comes with many rules and regulations, especially if you are wondering how to hire foreign worker in Singapore. 

This article aims to explore how to hire the right employees in Singapore to enhance productivity and retain them for longer durations.

Laying the Groundwork for Hiring in Singapore

hiring in Singapore

Before we move on to the stages of hiring in Singapore, let’s lay the groundwork covering the legal frameworks, competitor analysis, and sourcing the right talent. 

Here are certain legal frameworks you need to keep in mind when hiring in Singapore to ensure compliance and avoid penalties. 

Employment Act

The Employment Act is Singapore’s main labor law, outlining the terms and conditions for all employees. By familiarizing themselves with this act, employers can understand their obligations, ensuring compliance and avoiding legal issues when hiring in Singapore.

The act covers minimum wages, working hours, annual leave entitlements, and termination procedures. It also outlines specific responsibilities towards employees, including maintaining a safe working environment, upholding fair employment practices, and ensuring timely salary disbursements. Adhering to these regulations will keep your employees engaged and your organization safe from legal issues. 

Foreign Manpower Act

If you are a business in Singapore hiring foreigners, understanding the Foreign Manpower Act is crucial. This law outlines the responsibilities, offenses, and penalties related to hiring in Singapore. 

For example, foreign employees are required to have an employment pass. Hiring without one can result in fines from S$5,000 to S$30,000 or up to one year of imprisonment. 

The Act also covers salary, working hours, public holidays, and leave for foreign employees. Therefore, it’s crucial to review the Act thoroughly before hiring foreign workers to comply with regulations.

Personal Data Protection Act (PDPA)

Singapore’s Personal Data Protection Act (PDPA) sets rules for how personal information can be collected, used, and shared. Organizations must ask for permission before gathering or using personal details, which should be used for specific, valid purposes with consent.

Employees have the right to know why their data is used, access their information, and request corrections. Organizations are responsible for safeguarding data from unauthorized access or misuse. Non-compliance can lead to fines up to S$1 million.

Relevant read: 5 Ways Employee Database Software Elevates Your Business

Work Injury Compensation Act (WICA)

The Work Injury Compensation Act (WICA) in Singapore establishes a framework for compensating employees for work-related injuries or illnesses, regardless of fault. 

Under the act’s provisions, employers are mandated to compensate affected employees to cover medical expenses, loss of earnings, and permanent incapacity arising from work-related incidents. Employers must notify the Ministry of Manpower (MOM) and their insurer of accidents resulting in more than three days of medical leave, hospitalization, serious injury, or death. 

As for compensation, employees can file claims with their employer or the employer’s insurer. Employers are responsible for processing these claims and providing compensation per the WICA.

Assessing the market 

When hiring in Singapore, it’s essential to stay informed about your competitors’ activities. Here’s how:

Competition 

It’s vital to grasp how competitors attract, recruit, and retain talent to stay ahead in the market, whether it is businesses in Singapore hiring foreigners or locals. Begin by researching their websites, job postings, and social media profiles to uncover the roles they’re advertising, preferred skills, and employee benefits. Dive into their social media presence, noting recruitment posts, testimonials, and company culture insights. 

Additionally, analyze employee reviews on platforms like Glassdoor and Indeed when hiring in Singapore. These insights enable you to refine your recruitment strategies for better competitiveness.

Additional reading: Recruitment Fees Explained: Types of Structures You Can Expect

Cultural nuances

Hiring in Singapore requires an understanding of diverse cultural preferences and norms to tailor job descriptions effectively. For instance, Singapore’s workforce includes individuals from various ethnicities, religions, and cultural backgrounds, making it important to understand the nuances of each.

This aspect becomes even more important as businesses in Singapore hiring foreigners rise. In such scenarios, employers who understand cultural nuances can implement recruitment strategies that celebrate diversity, attract candidates from different cultural backgrounds, and promote a sense of belonging within the organization. 

Cost of living 

Knowing the cost of living in particular locations is essential for setting an appropriate salary budget for your employees. Conducting salary benchmarking studies helps compare compensation packages with industry standards and local market rates. 

Providing competitive salaries is crucial for attracting and retaining top talent in the organization. The cost of living in locations like Singapore is steadily increasing. Here’s a brief overview of the cost of living as of March 2024 for your reference. 

Sourcing and attracting talents

Hiring in Singapore becomes easier when you are aware of the best sources of attracting talent in your organization. If you are wondering how to hire foreign workers in Singapore and local workers who are efficient with their jobs, here are some best sources: 

Local universities and institutions

According to Statista, Singapore recorded one of the highest unemployment rates compared to other countries in the Asia-Pacific region. In such a situation, partnering with local universities and institutions allows employers to connect with fresh graduates and entry-level talent. Institutions often offer specialized programs and courses tailored to specific industries or fields of study.  

You can leverage these programs to recruit candidates with specialized skills, knowledge, and expertise that align with your hiring needs. Participating in career fairs, hosting recruitment events, or offering internships can help you attract promising candidates eager to kick-start their careers. 

Professional networking 

Attending industry events, conferences, seminars, and workshops allows you to meet new people and expand your network. Online platforms like LinkedIn also facilitate networking by connecting professionals globally and enabling you to join industry-specific  groups and discussions. 

For instance, you can join the Executives Global Network on Linkedin when hiring in Singapore. This network conducts frequent meetings and events that help build a professional network focused on learning and connecting. 

Networking is more than just collecting business cards or forming superficial connections. It allows employers to reach a broader pool of potential candidates beyond traditional recruitment channels when hiring in Singapore. By connecting with professionals in their industry or related fields, employers can access passive candidates who might not be actively job hunting but possess the desired skills and experience.

Employer branding 

Your organization’s reputation in the eyes of the outside world and potential candidates is crucial, especially when it comes down to how to hire foreign worker in Singapore. A strong employer brand focuses on creating a solid impression, essential for turning passive job seekers into active candidates when hiring in Singapore. Many companies overlook this aspect and make mistakes that can harm their reputation.

Focus on cultivating a positive reputation that reflects your company values, making it an attractive employer. Potential candidates are drawn to companies known for treating employees well, offering competitive salaries and benefits, and creating a supportive work environment. 

Learn more: Top 5 AI Tools for Recruitment

Employment pass system

The Employment Pass (EP) system is a work visa scheme designed to smoothen the process for organizations in Singapore hiring foreigners. It’s designed for foreign professionals including managers, executives, and specialists. It allows them to live and work in Singapore for a set period, typically one to two years, with the option to renew. 

  • Eligibility: Candidates must meet a two-stage eligibility framework to qualify for EP applications. They need to earn an EP-qualifying salary, which is $S5,000 for most sectors and S$5,500 for the financial services sector. Additionally, they must pass the complementarity assessment framework (COMPASS) and score at least 40 points based on salary, qualifications, diversity, and support for local employment.
  • Minimum salary requirements: The Singaporean government sets minimum salary thresholds for different Employment Pass categories. These thresholds are regularly reviewed to ensure competitive salaries based on skills and experience. 
  • Validity period: Employment Passes are typically issued for one to two years, depending on qualifications, job role, and employer’s track record. Renewal is subject to continued employment and meeting eligibility criteria.
  • Employer sponsorship: An Employment Pass application must be sponsored by a registered Singaporean employer. Employers are responsible for submitting EP applications and ensuring compliance with immigration regulations.

Key Stages of Hiring in Singapore

hiring in Singapore

Now that we’ve covered the basics, let’s explore the three key stages of hiring in Singapore: 

1. Compliance

HR professionals in Singapore must comply with the Employment Act as mentioned previously. They also need to ensure compliance with Singapore’s work permit and visa requirements for foreign hires. Different types of work passes, such as EP and S Passes, have specific eligibility criteria and application processes.

Employee benefits, such as healthcare coverage, CPF contributions, and statutory leave, should comply with Singaporean regulations. It’s important to keep up with these laws as they are regularly updated.

Fair employment practices must be followed to prevent discrimination based on race, gender, religion, or nationality. Additionally, maintaining accurate records of all hiring-related documents, including job descriptions, resumes, interview notes, and employment contracts, is essential for showcasing compliance with legal requirements and facilitating audits if necessary.

2. Interviewing

During a screening interview when hiring in Singapore, HR professionals review candidates’ resumes and prepare questions tailored to the role’s requirements. Instead of asking typical questions, consider posing situational inquiries that prompt examples of problem-solving, teamwork, and leadership qualities. For instance, you can ask them these questions: 

  • Tell me about a time when you had to make a difficult decision under pressure. How did you weigh the options and arrive at a solution?
  • Can you share an example of a conflict you encountered while working in a team? How did you handle it, and what was the outcome?
  • Have you ever taken on a leadership role in a project or team? Can you describe the situation, your approach to leadership, and the results achieved?
  • What aspects of our company culture resonate most with you, and why? How do you envision contributing to and thriving within our culture?
  • In your opinion, what are the most important cultural aspects of a workplace? How do you ensure cultural alignment and harmony within a team or organization?

Your questions should motivate candidates to share stories that demonstrate the skills you are seeking. Candidates should not only match the skill-based aspects of the job but also align with the company’s values, culture, and work environment.

Read next: Build Impactful Teams: 10 Google Interview Questions to Inspire Your Hiring Process

3. Offer letter and contracts

When hiring in Singapore, it is important to draft a comprehensive offer letter outlining the job title, salary, benefits, start date, and any contingencies. Include clear instructions for accepting the offer. 

Craft an employment contract that complies with Singaporean laws and reflects the agreed-upon terms, covering probationary periods, notice periods, termination conditions, and confidentiality agreements. 

Have legal counsel review offer letters and contracts to ensure compliance with relevant regulations and mitigate legal risks. 

Once everything looks good, communicate offer details clearly and promptly, allowing room for negotiation within reasonable boundaries. Maintain transparency throughout the process to build trust with the candidate.

Navigating Post Hiring in Singapore

After successfully hiring in Singapore, HR professionals must focus on effective onboarding and ongoing compliance for a smooth transition and adherence to legal requirements:

1. Onboarding

When it comes to how to welcome new employees, it’s all about making them feel like part of the family from the get-go by delivering the best onboarding experience. Start by introducing them to the company culture, values, and key team members. Provide thorough training on essential tools, systems, and processes relevant to their role to ensure they can contribute effectively from the start. 

To prevent new employees from feeling left out or isolated, pairing them with a mentor or buddy can facilitate integration into the team and provide ongoing support. Encourage open communication and feedback to address any questions or concerns they may have. Celebrate their successes and milestones to foster a sense of belonging within the organization.

Additional resource: Download our free Onboarding Kit!

2. Ongoing compliance

Maintaining compliance post-hiring in Singapore requires staying updated with labor laws and regulations. Start  by establishing clear policies and procedures that align with local legislation, covering areas like employee contracts, working hours, leave entitlements, and workplace safety. Regular audits and reviews of these policies help identify any gaps or updates needed. 

Providing continuous training and education on compliance for employees and managers is also critical to maintaining adherence to regulations. Staying connected with legal experts or consultants who specialize in Singaporean labor laws can provide additional support in navigating any compliance challenges that may arise. 

For a detailed guide on compliance areas to monitor, refer to our 2024 HR compliance checklist!

Achieving Strategic Advantage for Singapore Talent Acquisition

Navigating the complexities of hiring in Singapore requires a thorough understanding of the country’s labor laws and regulations. By following best practices and staying updated with legal requirements, HR professionals can ensure a smooth and compliant hiring process. 

Omni helps you streamline and automate your process of hiring in Singapore, enabling you to attract, screen, and hire the best talent. Our platform allows you to sync all candidate applications in one place and easily collaborate with hiring managers to schedule interviews, send impactful communications, and analyze interview feedback.

With Omni’s recruitment workflows, you can send offers or rejections with just a few clicks, coordinate candidate interviews, share candidate feedback among management, and swiftly transition successful candidates into the onboarding process to ensure top performance and engagement.

Omni manages and automates time-consuming manual tasks to allow you and your recruitment team to focus on what’s really important: crafting impactful interview questions, establishing parameters to interpret responses, and ultimately hiring award-winning candidates.

Book a demo with our team today to learn more about how Omni can help revolutionize your Singapore hiring process.

Complete Overview: Human Resources in Singapore

No matter your location, adapting to the unique aspects of your work environment is crucial. For HR professionals, knowing the specific differences and how to manage them is absolutely essential to their roles, so they know they are providing the top employee wellness, and actively contributing to their organization’s success.

It’s no different in Singapore, where the unique culture, geographical location, and diverse workforce mean there’s a lot HR professionals need to be aware of. If you work in Human Resources in Singapore, here’s everything you need to know to make sure you’re making the most of your role:

HR Functions and Responsibilities

Human Resources in Singapore

HR plays a vital role for employee welfare and business success in Singapore. Here are some of the core responsibilities you can expect to take on for Human Resources in Singapore:

Recruitment

Human Resources in Singapore are responsible for attracting and hiring qualified talent to meet your organization’s staffing needs. This includes writing job descriptions, sourcing candidates through available channels (like recruitment websites, job fairs, etc.), conducting interviews, and facilitating the hiring process.

The mandate of recruiters has expanded over the years, as remote work has made for a larger (and increasingly competitive) talent pool. Finding new ways to connect with remote talent, especially given Singapore’s global business appeal, will be an important part of your job function.

Relevant readings: Is Your Business Prepared to Work With Gen Z and Gen Alpha?

Onboarding

Another important function and responsibility of Human Resources in Singapore is onboarding, which is essential for welcoming new employees into your organization and setting them up for success. Your HR team will need to oversee the onboarding process, which starts with orientation, onboarding documents completion, introduction to company culture and policies, and initial training.

Even great talent can stutter if onboarding isn’t made a top priority for you and your team. Put extra emphasis on demonstrating an inclusive company culture, which will help the diverse pool of talent available in Singapore onboard more smoothly.

Performance Management

Your HR department is tasked with implementing performance management processes to monitor and evaluate employee performance. Examples of this are setting performance goals and expectations, conducting regular performance reviews, providing feedback and coaching, and recognizing and rewarding high performers.

Effective performance management is perhaps the HR function with the most moving parts, and has some of the most data to track and act on. Leveraging technology to help your Human Resources in Singapore is a great idea.

Additional resource: Download our Total Performance Review Kit to enhance your performance review process!

Compensation and Benefits

Your HR team manages compensation and benefits programs to ensure competitive pay and attractive benefits packages that align with industry standards and meet the needs of employees. This includes salary benchmarking, administering payroll, managing employee benefits such as health insurance and retirement plans, and addressing compensation-related questions.

Read next: The Cost of Recruitment: HR’s Guide to Creating, Tracking and Implementing a Salary Budget

Training and Development

Human Resources in Singapore oversees training and development initiatives to enhance employee skills and capabilities.You’ll want to consider training needs, designing and delivering training programs, facilitating skills development workshops, and promoting continuous learning opportunities for employees.

Educating and training your talent pool isn’t only a great idea because it makes for a more skilled workforce—employees who feel they’re invested in are more likely to have higher employee engagement and productivity.

Employee Retention

Retaining top talent is a major priority for Human Resources in Singapore. You’ll need to implement strategies to enhance employee engagement, job satisfaction, and reduce attrition rates. This involves conducting employee satisfaction surveys, implementing employee recognition programs, and addressing workplace issues or concerns promptly.

Employee retention is definitely not a one-size-fits-all issue—taking a variety of approaches, including considering extrinsic value such as increases in competition to keep up with inflation is necessary to retain your best talent.

Read next: 12 Employee Recognition Examples to Keep Your Team Engaged All Year

Compliance

Staying compliant with labor laws and regulations is a critical responsibility for Human Resources in Singapore. You’ll have to stay updated on employment laws, regulations, and industry standards to ensure that organizational policies and practices are in compliance with legal requirements. This includes managing employment contracts, leave entitlements, working hours, and workplace safety regulations.

Laws Governing HR in Singapore

Human Resources in Singapore is governed by a number of laws and regulations aimed at protecting the rights of employees and ensuring fair treatment in the workplace. Having a keen understanding of these laws and the documents that contain them is necessary for HR professionals working in Singapore. Here are some of the key laws you need to be aware of:

Employment Act

The Employment Act is the main labor law for Human Resources in Singapore, providing basic employment rights and protections for employees covered under the Act. It deals with key areas such as employment contracts, working hours, overtime pay, annual leave, public holidays, and termination of employment.

Central Provident Fund (CPF)

The Central Provident Fund is a mandatory social security savings scheme for Singapore citizens and permanent residents. Both employers and employees are required to make monthly contributions to the CPF, which is used to fund retirement, healthcare, and housing needs.

Foreign Manpower Act

The Foreign Manpower Act regulates the employment of foreign workers in Singapore. It sets out the requirements and laws for employers hiring foreign employees, including the necessary valid work permits and passes and comply with foreign worker levy requirements.

Personal Data Protection Act (PDPA)

The PDPA governs the collection, use, and disclosure of personal data in Singapore. Human Resources in Singapore must ensure compliance with the PDPA when handling employee personal information, including obtaining consent for data collection and implementing measures to protect personal data from unauthorized access or disclosure. 

Work Injury Compensation Act (WICA)

The WICA provides compensation for employees who suffer from work-related injuries or occupational illnesses. It requires employers to provide compensation for medical expenses, lost wages, and other benefits to employees injured during their employment, regardless of who’s at fault.

It’s important that you and your team stay up to date on all of the above regulations and laws. Like elsewhere, labor laws in Singapore are prone to change and updates, and staying on top of them will ensure you stay compliant and avoid any penalties.

Common HR Challenges in Singapore

HR professionals everywhere must face a variety of challenges inherent to their role. But when it comes to Human Resources in Singapore, there are also several unique obstacles you’ll need to be aware of so you can strategize effectively on how to overcome them. These include:

Aging population

Singapore’s population is aging rapidly, leading to a shrinking workforce and an increased demand for healthcare and eldercare services. Human Resources in Singapore must address the needs of an aging workforce, including succession planning, knowledge transfer, and implementing policies to support older employees.

And as more and more members of your workforce reach retirement age, you’ll need to consider how to replace them. In the long term, a robust recruitment strategy will be required, but in the meantime consider how to implement technology that reduces manual workload, increases automation and boosts efficiency to compensate for a contracting workforce.

Rising labor costs

Singapore has one of the highest labor costs in Asia, driven by factors such as tight labor market conditions and increasing wages. You and your HR team will need to manage labor costs effectively while ensuring fair compensation and benefits for employees to remain competitive in the market.

You’ll also have to consider inflation—it remains high globally but particularly so in Singapore. This effectively eats into your employees’ real wage value, and needs to factor into your understanding of their compensation.

Skills gap

The rapid pace of technological advancements and industry transformations has created a skills gap in Singapore, with employers struggling to find candidates with the right expertise. Human Resources in Singapore can play a crucial role in identifying skill gaps, implementing training and development programs, and upskilling existing employees to meet evolving business needs.

Attracting and retaining talent

With a highly competitive labor market, attracting and retaining top talent is a significant challenge for organizations in Singapore. Your HR department will  need to develop effective employer branding strategies, offer competitive compensation packages, and create a positive work culture to attract and retain skilled employees.

Managing remote and hybrid work arrangements

The pandemic has accelerated the adoption of remote and hybrid work models in Singapore. More frequently than ever, employees are going to expect some sort of remote component to their work, and for many of them this is a significant benefit.

To remain competitive, you’ll need to consider policies and practices to support remote work, ensure employee productivity and engagement, and address challenges related to communication, collaboration, and work-life balance in a virtual environment.

Ways to Stay Ahead of Human Resources in Singapore

Human Resources in Singapore

Staying ahead in Human Resources in Singapore requires you to be proactive, innovative, and adaptable. You need to be able to stay on top of the changing needs of your workforce and the evolving laws and regulations that protect them. Here are some strategies to stay ahead in HR:

Implementation of HR Technology

Consider HR technology solutions such as Human Resource Information Systems (HRIS), Applicant Tracking Systems (ATS), and Performance Management Software to streamline HR processes, improve efficiency, and enhance employee experience. 

This tech also helps Human Resources in Singapore automate manual processes that are not only time consuming but prone to human error. With the right HR solution, you’ll not only be able to save time and do work more efficiently, you’ll be able to do so with the confidence you’re remaining compliant with local regulations.

Data-driven decision making

HR technology allows you to use data analytics and metrics to make informed decisions, identify areas for improvement, and measure the effectiveness of your HR initiatives. 

You can analyze employee data to understand workforce demographics, performance trends, and engagement levels, helping your team to develop targeted strategies to address challenges within your organization.

Create positive employee experiences

With HR technology, you can prioritize employee experience by using it to enhance your positive work environment by promoting work-life balance, and providing opportunities for career development and growth. 

It will also allow you to implement employee engagement initiatives, recognition programs, and wellness initiatives, while allowing your workforce to self-serve and access their info easily and at their discretion.

Read next: Leveraging Singapore’s Mental Well-Being Programs to Improve Employee Mental Health

Embrace diversity and inclusion

You’ll also be able to foster a culture of diversity and inclusion by promoting equal opportunities, celebrating diversity, and creating a supportive and inclusive workplace environment. This can be done by establishing DEI policies, starting diversity and inclusion training programs and unconscious bias training, available to employees through their HR platform. This will help to address systemic barriers and promote diversity at all levels of your organization.

Adapt to changing laws and regulations

Stay up to date with any changes in employment laws, regulations, and industry standards in Singapore. With the right technology, you can proactively update your HR policies and practices to ensure compliance with Singapore legal requirements and maintain ethical and fair employment practices. 

When in doubt, seek professional advice and engage with industry associations to stay informed about regulatory changes and best practices in Human Resources in Singapore.

Building a Competitive Edge with HRIS

Human Resources in Singapore play a critical role in driving organizational success through effective talent management, compliance with labor laws, and fostering a positive workplace culture. 

Omni frees HR teams from administrative cycles by automating the entire end-to-end employee lifecycle — from recruitment and onboarding to employee engagement and payroll — allowing you to redirect your time to strategic work that drives business growth.

Powering Asia’s fastest-growing, modern companies, Omni scales alongside your company so you can customize and leverage the system to meet your business exactly where you are — as well as where you’re going. 

With a full suite of modules to support every aspect of your business, Omni’s platform offers an intuitive and fully customizable platform that integrates with your team’s favorite tools for a seamless and timely adoption.

Start your 14-day free trial and learn how Omni can help you build a competitive edge for Human Resources In Singapore.

What is Benchmarking in HR?

You likely have access to data analytics regarding your business, such as employee absenteeism rates, time to hire, and overtime hours. However, interpreting these figures can be challenging, as you may struggle to determine whether they are objectively positive or negative, and what targets to set for the future.

It’s not surprising that only 5% of small business owners achieved their goals in a Clutch survey, largely due to lack of attention to benchmarking. The situation is similar for mid-sized businesses and enterprises. In this article, we explore the concept of benchmarking and provide guidance on how to implement the benchmarking process effectively in your company.

What is Benchmarking in HR?

To answer the question of “What is benchmarking?,” this technique compares the key HR metrics between or within businesses, industries, teams, roles, sectors, processes, and practices. It can also involve comparing current data with past data.

Using quantitative and qualitative data, you can identify the best business practices, get feedback that helps you improve your people’s practices, and modify current processes by incorporating these practices.

If you’re still unclear about the meaning of benchmarking, it involves comparing your company’s policies and practices to those of another similar company. This comparison helps you to determine the benchmark, or the target you aim for.

Conducting the benchmarking process regularly is essential for continuous improvement in your business practices. 

Types of HR Benchmarking

To fully understand the question “What is benchmarking?” we must consider the nuance in the meaning of benchmarking, which encompasses two types. Understanding these types will help you interpret the data you generate. 

Internal Benchmarking

You can conduct internal benchmarking, meaning that you compare metrics across teams, groups, and departments within an organization. For example, you might compare two departments in terms of profitability or employee engagement. By continuously monitoring these metrics, you can track changes.

Shareholders, managers, and analysts often take an interest in these comparisons, as they reveal trends in business performance and enable them to anticipate future results.

The benchmarking process also allows you to calculate the average engagement rate across teams, providing insight into the average performance for a specific metric. This data helps you classify each team as either below or above average, aiding in the development of a suitable employee engagement plan.

External Benchmarking

In an external benchmarking process, what is benchmarking? It involves comparing your business with a similar one in a particular regard, enabling you to calculate an average or industry norm. 

This perspective helps you determine whether your business falls above or below the average and provides insight into its competitiveness.

Goal of Benchmarking

benchmarking process

Now that we’ve clarified the question of “What is benchmarking?,” let’s explore what you can achieve with it to ensure your efforts are focused on your goals.

Identify Areas of Improvement

What is benchmarking if not a method to uncover organizational issues? By comparing against industry benchmarks or a competitor’s averages, you can readily determine whether your company’s performance falls below or exceeds those standards.

Whether the issue is disengagement or turnover, the benchmarking process detects areas for potential improvement. This enables you to prioritize these areas in your strategy or even initiative specific initiatives to address them.

Set Realistic Goals

You’re likely familiar with SMART goals, where the A stands for Achievable. The data-driven insights from the benchmarking process can assist you in setting realistic goals. 

These goals will be grounded in your current performance levels and can be compared against industry benchmarks, competitor rates, or your company’s historical data (depending on your focus). 

Read next: Performance Review SMART Goals: 18 Examples to Drive Results

Develop Best Practices

You can design the best industry practices via the benchmarking process, meaning that you can compare HR metrics to see what works and what doesn’t. This appraisal helps you find the best methods, adjust them to your organization, and refine existing practices.

Let’s say a competitor has much higher employee engagement levels. Taking inspiration from their company-wide employee appreciation campaign can inspire you to develop the best recognition techniques for your company.

Make Informed Decisions

The benchmarking process enhances the value of data and centralizes its interpretation, enabling you to make informed decisions. By comparing certain metrics with those of your competitors, industry averages, or your company’s past data, you can determine the right direction for your company.

What is benchmarking? It’s a way of spotting effective policies and those that require modification. Periodic external benchmarking, which is ongoing, allows you to monitor industry trends and the evolving nature of customer demands. 

Advantages & Disadvantages of Benchmarking

When considering the question ”What is benchmarking?” we aim to provide a comprehensive overview by examining its pros and cons. This approach helps you implement the strategy effectively. On one hand, the benchmarking process offers the following advantages:

  • Enhanced business impacts: Benchmarking involves examining your workforce practices and linking them to business results, providing insights into how these practices affect overall performance.
  • Improved HR practices: Benchmarking allows for objective evaluation of HR processes, highlighting weaknesses and facilitating improvements.
  • Industry trends tracking: Regular benchmarking enables the identification of industry trends and shifts, helping in strategic planning to maintain competitiveness. 
  • Better employee experience: Utilizing benchmarking insights to enhance HR practices increases employee engagement and overall work experience.
  • Talent attraction: A positive work experience, achieved through the benchmarking process, attracts high quality candidates and retains current employees, supported by competitive compensation and benefit programs.
  • Effective training: The benchmarking process reveals the skills employees in similar businesses possess and their training durations, enabling you to offer sufficient training programs.

However, the benchmarking process also has its drawbacks that you need to take note of:

  • Inaccurate comparisons: Comparing data between different teams within your company or with other organizations can be challenging due to varying factors and circumstances. Therefore, it’s important to consider HR benchmarking along with other indicators for more precise assessments.
  • Terminology standardization issues: In benchmarking, clarity in meaning can be elusive, as HR metrics may not have consistent names or measurement systems across organizations.

Process of HR Benchmarking

benchmarking process

In this section, we’ll guide you through HR benchmarking, enabling you to follow these steps to attain the advantages outlined above.

1. Define your goals and objectives

“What is benchmarking, and where do I start?” Before anything, what is your purpose from the HR benchmarking process? Maybe you want to enhance your budget distribution or the composition of your workforce. The benchmarking process works for all HR processes, but focusing your efforts on specific areas makes them more impactful.

2. Identify relevant benchmarks

You’ve identified specific areas of benchmarking, focusing on relevant benchmarks or metrics for comparison across or within companies. For example, you might address employee engagement by benchmarking the attrition rate and retention rate. Other benchmarks include:

  • Quality of hire
  • Quality of work
  • Average compensation per employee
  • Market index

3. Collect and analyze date

What is benchmarking if not detailed data collection and analysis? If you’ve decided to track certain metrics, such as turnover and retention rates, you’ll need to collect this data internally.

Many HR software tools offer reporting features for workforce data, including the ability to create custom reports with selected metrics for benchmarking, streamlining the process. These tools also provide access to historical data through their employee database software system.

After collecting internal data, you’ll need to collect the data for comparison, which is either internal data (from other departments or past year) or external (from other companies).

For external data, target mid-sized businesses in your industry and region, preferably those open to benchmarking. However, accessing such data can be challenging due to confidentiality practices. 

Even if you visit other organizations, obtaining authentic information can be difficult, which undermines the credibility of benchmarking. Therefore, purchasing benchmarking reports from reputable research institutions can be a helpful workaround to ensure accuracy.

Finally, analyze your internal data against the selected benchmarks to determine if it falls within, above, or below average.

4. Interpret the results

During this phase of the benchmarking process, you compare metrics by examining a spreadsheet or report containing two sets of metrics. You identify similarities and significant gaps between the numbers. 

Benchmarking aims to help you understand these deviations. You should determine whether the deviations are positive or negative and analyze the processes, factors, and practices influencing them.

5. Develop an action plan to implement changes 

What is benchmarking revealing to you? Insights from the benchmarking process may highlight performance gaps that require attention. Establish a project timeline, specific Key Performance Indicators (KPIs), and assign responsibility for implementation.

Develop a tailored benchmarking plan that aligns with your company culture for seamless implementation. Seek support from your company’s executive leaders. 

6. Analyze long-term results

You have the specified metrics for benchmarking, enabling you to monitor progress over time and evaluate the effectiveness of your HR plan. To do this, you’ll recreate the spreadsheet or report used earlier and repeat the benchmarking process.

Review the changes and adjust your plan as needed for your HR benchmarking process. What is benchmarking lacking as a strategy? 

Benchmarking and Company Culture

What is benchmarking in relation to company culture?

Benchmarking and company culture are closely related, as the success of the benchmarking process often depends on the organization’s company values and norms. 

A strong company culture that values innovation, collaboration and continuous improvement is more likely to embrace benchmarking as a tool to drive positive change. Employees in such cultures are more open to sharing information and best practices, which is pivotal for successful benchmarking. 

Conversely, a weak company culture can hinder benchmarking efforts, as employees may be reluctant to collaborate or share information. Therefore, creating a culture that supports benchmarking can lead to more effective use of benchmarking data and improve business performance. 

Curious about creating a vibrant company culture?

Transforming Data into Actionable Strategies

The benchmarking process plays a crucial role in modern businesses by providing valuable insights for decision-making and driving continuous improvement. 

By comparing performance metrics against industry standards or competitors, businesses can identify areas of growth and implement strategies to stay competitive – which is highly pivotal in this ever changing landscape. 

With all-in-one HR software like Omni, you can leverage automation and streamline your processes while gaining actionable insights for continuous improvement and team effectiveness.Through leveraging the power of automation, Omni allows HR teams and managers access to custom reports on specific metrics in the benchmarking process and swiftly address potential issues and drive company performance. 

To join the 83% of Omni customers who have unlocked new, actionable insights after using our solution, book a free demo with our team today.

Understanding and Administering Salary Adjustments

A Pew Research study revealed that 63% of respondents cited low pay as a key reason to quit their jobs, with 42% seeking better pay and promotion opportunities. While company culture, leadership, and work-life balance are important, competitive salaries are crucial for retaining employees. 

Salary adjustments are essential for recognizing and rewarding high performers, but they should not be based solely on performance. Market forces must also be considered to ensure competitiveness with industry standards. Let’s explore how to understand and administer salary adjustments for a motivated and successful workforce. 

Understanding Salary Adjustments

Salary adjustments refer to the changes made to an employee’s compensation based on various factors, including performance metrics, shifts in job roles, and changing market conditions. These adjustments typically manifest as salary increases through bonuses, raises, or promotions. However, they may also entail reductions in pay during periods of financial strain within the company. Companies maintain workforce stability and improve employee motivation by opting for salary adjustments instead of resorting to layoffs during lean periods. 

Reasons For a Salary Adjustment

Salary adjustments can occur for various reasons, such as an increase in job responsibilities, changes in industry standards, or shifts in organizational structures. 

Performance-based

Your top performers should be financially rewarded for meeting targets, contributing innovative ideas, and demonstrating exceptional leadership. Regular performance reviews are essential to accurately recognize and compensate these employees. Failing to do so could lead to high cost of recruitment. Conversely, underperformance may warrant a salary decrease. 

Market forces

To attract and retain talented employees, it’s crucial to provide competitive salaries that match industry standards for similar positions. Offering below-market salaries can make it difficult to recruit qualified candidates and may cause high-performing employees to seek better opportunities elsewhere, affecting attrition rates.

Internal adjustments

Internal adjustments refer to changes within a company that impact employees’ salaries, such as shifts in job responsibilities or company structure. For example, a promotion to a higher position with more responsibilities would warrant a salary increase. 

Similarly, if the company reorganizes its departments, salary adjustments would align with the new structure. These adjustments ensure employees’ salaries reflect their roles and contributions within the company.

Types of Salary Adjustments

Let’s explore the types of salary adjustments to ensure comprehensive coverage for employee satisfaction

Merit increases

Merit increases are awarded to employees for exceptional work, meeting or exceeding goals, and going beyond set expectations. These salary adjustments are based on individual performance and contributions to the company. They serve as incentives for employees who consistently excel. An average merit increase is anywhere between 3% to 5% and motivates employees to strive for excellence. They can be awarded annually or directly tied to performance. 

Cost-of-Living Adjustments (COLA)

To ensure your employees can maintain a decent standard of living, it’s essential to offer salaries that match this high cost. For example, Singapore stands out as the priciest city in Asia, with a cost of living surpassing that of 94% of cities worldwide. Monitoring inflation and the rising cost of living in specific geographic regions is essential to prevent employee stress and burnout due to low payouts. Implementing period salary adjustments will help retain top talent and keep them thriving in their roles. 

Market adjustments 

HR departments should conduct and analyze salary surveys, job market reports, and benchmarking data from similar organizations. This data is then compared to the current salary structure to identify any discrepancies. 

Salary adjustments are recommended to align the organization’s salaries with market rates. This may involve increasing salaries that are below the market average or adjusting salaries downward if they exceed market rates.

Equity adjustments

Equity adjustments are made to ensure pay parity and fairness among employees within an organization. It is important that employees in similar roles or with similar skills and experience are equally compensated. 

These adjustments become necessary when disparities exist, such as significant salary differences among employees in the same department. They are intended to rectify pay inequities and eliminate gender discrimination and other biases in the workplace. Organizations must actively identify such issues to promote an equitable working environment. 

Read next: 10 DEI Policies Your Organization Needs and How to Implement Them

Key Considerations for a Salary Adjustment

salary adjustment

While making salary adjustments, it is important to consider the following:

Budgeting

When planning for salary adjustments, it is essential to establish a HR budget that takes into account the organization’s financial resources and constraints. Determine the amount that can be allocated towards salary adjustments without compromising other financial commitments. 

Focus on critical job roles that are at higher risk of turnover due to salary disparities. Additionally, maintain flexibility in the budget to accommodate unforeseen circumstances or new priorities that may arise during the year.

Communication

Employees require clear explanations for salary adjustments within the organization, especially if there are reductions or raises for specific positions. Communicate these adjustments in a timely manner, ideally shortly before or when they will take effect, such as the beginning of a fiscal year or performance review cycle.

Consistency

Ensure employees do not perceive favoritism or unconscious bias during salary adjustments by establishing clear guidelines and criteria. Maintain consistency across different departments, roles, and levels. Regularly review salary structures and adjustment processes to identify and address any disparities in compensation.

Compliance

Organizations must ensure that the salary adjustment complies with applicable labor laws, anti-discrimination regulations, and contractual obligations. Thorough audits and reviews of salary adjustment practices can help mitigate compliance risks and ensure alignment with legal standards. 

Confidentiality

Maintaining salary confidentiality prevents gossip and feelings of unfairness among employees. In fact, many jurisdictions have laws governing this. Ensure confidentiality during salary adjustments by: 

  • Limiting access to salary information to HR and relevant managers.
  • Using secure communication channels like encrypted emails or password-protected documents.
  • Emphasizing confidentiality with employees involved in the process.
  • Establishing clear policies for handling salary information.

Steps to Administer a Salary Adjustment

Administering salary adjustments requires focusing on many different areas to ensure the calculation and implementation align with the business objectives. Here’s how:

1. Set objectives and budget

What are your salary adjustment goals? Do you aim to reduce turnover by offering competitive packages to enhance employee engagement or boost employee morale by rewarding high performers? Clarifying these objectives helps determine who receives adjustments, how much, and when. Communicating these goals ensures transparency.

After setting your objectives, budget for adjustments within your means. For example, to stay competitive, a 5% increase might be necessary. Calculate your total salary expenditure for the upcoming year. For example, if it’s $10 million, a 5% increase would require a $500,000 budget for adjustments. Distribute this based on performance and market competitiveness.

2. Define criteria and policies

Clarity is crucial among all stakeholders regarding who will receive salary adjustments. Clear guidelines and policies should be in place, considering factors like performance metrics, experience levels, internal equity, and more. 

When setting criteria, ensure policies are in place to manage salary adjustments: 

  • Allocate the total adjustment budget annually based on priorities and financial capabilities.
  • Maintain pay parity for fairness among employees in similar roles.
  • Determine increment percentages based on demonstrated improvement.
  • Make adjustment decisions through comprehensive reviews considering performance and goals.
  • Ensure salary adjustments comply with relevant employment laws and regulations.

3. Collect data and conduct reviews

With your budget set, gathering employee information is key for salary adjustments. Identify top performers with critical roles and assess their improvement. Use credible sources like:

  • Performance evaluations: supervisor reviews provide insights into contributions, strengths, and areas for growth
  • Employee records: review tenure, promotions, and past salary adjustments to ensure fairness
  • Employee feedback: gather input through employee satisfaction surveys or meetings to gauge perceptions of compensation relative to contribution

Analyze this data for trends and patterns. Discuss findings with HR, department managers, and senior leaders to determine adjustments. 

Calculate and communicate adjustments

With clarity on which employees will receive salary adjustments, use the collected data to calculate each adjustment based on set criteria. Ensure adjustments align with budgetary constraints while keeping top talent satisfied. 

After calculating salary adjustments, notify employees promptly and clearly. Schedule individual meetings or send personalized communications to discuss adjustments confidentially. Clearly communicate the factors considered in the calculation and the effective date of the adjustments.

Omni Tip: Keep precise records of each employee’s salary adjustments, supported by data, for future reference.

Implement adjustment and monitor

After approval, HR oversees salary adjustment implementation. Update records and payroll systems accurately, which can be simplified with payroll systems

Monitor adjustments for fairness, transparency, and policy adherence. Regularly review decisions for compliance with performance criteria, budgets, and tenure guidelines. Ensure fair distributions across departments or demographics.

Perform reviews and adaptation

Regularly review the salary adjustment process to ensure alignment with organizational goals. The process should enhance current employee satisfaction and attract potential talent.

Involve relevant stakeholders, including HR managers and employees, to gather diverse perspectives and improve the process.

Harnessing HRIS for Efficient Salary Adjustment

salary adjustment

Administering salary adjustments requires careful planning, clear communication, and adherence to policies and regulations. While this can pose a challenge, utilizing the rightHR tools can streamline the process, ensuring efficient management of salary adjustments.

All-in-one HR softwares like Omni can help you and your company efficiently tackle salary adjustments. By streamlining processes and gathering valuable insights through data analytics, our software can provide an ideal framework for businesses invested in creating a fair and transparent workplace. 

Omni allows you to design, schedule, and conduct performance reviews that offer insights on promotions and advancement. From defining performance metrics to conducting evaluations, our solution provides you with real-time feedback to enhance salary adjustments, foster high performance, attract top talent, and drive growth for your modern business. 

To explore why Omni is the preferred tool for modern businesses aiming to cultivate an inclusive and fair culture, book a demo with our team today.

Inflation is a challenging economic situation. It puts the squeeze on consumers for everything from the petrol they fill their cars up with, to the groceries they buy. When inflation spikes, it also means that the wages employees earn have less purchasing power—basically handing them a salary cut.

In HR, this is a tricky situation to navigate. Naturally, your employees are going to be interested in a salary inflation adjustment, but not every organization can accommodate a company-wide raise that actually keeps up with inflation.

Even when a salary inflation adjustment is feasible, it may not fully diminish the feelings of anxiety and low morale that inflation can create for your team. Fortunately, it’s not the only option that organizations can take. There are a few tactics that organizations can rely on to ensure they’re helping their workforce to the best of their ability during periods of high inflation.

Here, we dive into what inflation is, how it impacts HR professionals, and what exactly you can do to keep employee engagement high and reduce attrition rates during tough economic times.

The Basics of Inflation

When referring to inflation, we’re talking about the general increase in prices of goods and services over time, resulting in a decrease in the purchasing power of money. When inflation occurs in a given economy, each unit of currency buys fewer goods and services than it did before. For example, if the inflation rate is 3% annually, a product that cost $100 last year would cost $103 this year.

The unfortunate reality for many around the world is that 3% inflation is a pittance compared to what’s actually happening. In Singapore, for instance, inflation rose by 7.4% in 2023 which is actually down nearly a percent from 2022—but still far too high, and noticeably increasing the cost of living there.

The impact of inflation is far-reaching and affects all aspects of the economy, including your organization and its ability to maintain pay fairness among employees. As the cost of living rises due to inflation, your employees will experience a decrease in their real wages if their salaries don’t keep pace with inflation. This can lead to dissatisfaction and morale issues within your workforce, and it’s not necessarily an easy fix—it would be nice to have a company-wide salary inflation adjustment, but that isn’t always financially feasible.

During periods of inflation, your organization will face the challenge of balancing the need to remain competitive and profitable while also ensuring employees are fairly compensated for their work. Failure to address pay fairness during periods of high inflation can result in talent retention issues and hinder overall employee morale and productivity. Therefore, it is essential for businesses to understand the basics of inflation and implement strategies to address pay fairness effectively.

Impacts of Inflation on HR

salary inflation adjustment

Of all the sectors hit hard by inflation, few feel its effects as intensely as Human Resources. While HR has plenty of tools to solve other problems, inflation often feels like a force of nature that little can be done about. Here’s how inflation tends to affect HR professionals: 

Recruitment and retention

Inflation can significantly impact your organization’s ability to attract and retain top talent. As the cost of living rises, job seekers may seek higher salaries to maintain their standard of living, making it more challenging for your company to recruit within HR budget constraints. Similarly, existing employees may feel compelled to seek better-paying opportunities elsewhere if they fail to receive a salary inflation adjustment. HR teams must adjust recruitment strategies to remain competitive in the job market and implement retention initiatives to retain valuable talent.

Also, as cost of living goes up locally, employees may seek to move to more affordable communities, leaving the footprint of your organization. And while remote work might be an option, it’s one more problem to solve caused by a spike in inflation.

Read next: The Cost of Recruitment: HR’s Guide to Creating, Tracking and Implementing a Salary Budget

Employee morale and engagement

Inflationary pressures can also affect employee morale and engagement. When salary inflation adjustments aren’t possible and employees feel their pay isn’t keeping pace with the cost of living, it can lead to frustration, demotivation, and disengagement. Your HR team has to proactively address these concerns by keeping open communication channels, listening to employee feedback, and implementing initiatives that demonstrate the organization’s commitment to supporting its workforce during times of economic uncertainty. 

Creating a company culture that has clear channels for growth within your organization is a great way to combat inflation-caused uncertainty. When your team sees a path for growth and a brighter future, they’re less likely to be overburdened with the anxiety of the moment.

Performance management and development

When inflation hits, your organization might need to take a reevaluation of performance management and development strategies. Your HR team may need to recalibrate performance metrics and goals to account for changing economic conditions and ensure that employees are appropriately incentivized and recognized for their contributions

Also, investing in employee development programs becomes increasingly important to upskill and reskill workers during inflationary periods. Demonstrating that your organization is invested in the career and personal growth of its employees, even when there are economic pressures, is a great way to maintain engagement and morale.

Compensation and benefits

Among all HR functions, compensation and benefits management is perhaps the most directly impacted by inflation. Rising inflation erodes the purchasing power of salaries, making it imperative for your organization to periodically review and conduct a salary inflation adjustment to ensure its compensation structures remain competitive. 

Your team needs to conduct a comprehensive market analysis to benchmark salaries against evolving industry standards and ensure that your employees are fairly compensated relative to their peers. You’ll also need to consider revisiting benefits packages to include provisions that help alleviate financial strain, such as cost-of-living adjustments, healthcare benefits, and retirement plans, which can enhance employee satisfaction and maintain healthy retention levels during a period of inflation.

Strategies for Salary Inflation Adjustment

As your organization looks to navigate this period of high inflation, your HR team is going to play a crucial role in ensuring that employee compensation remains fair and competitive. Here are five strategies for you to consider, that will help manage salary inflation adjustment:

1. Transparency and communication

Maintaining open and transparent communication with your employees about the impact of inflation on compensation is essential. Your HR team should clearly communicate the organization’s approach to managing salary inflation adjustment, including the factors considered, timelines, and rationale behind decisions. Providing your employees with regular updates and opportunities to ask questions can help alleviate concerns and build trust within the workforce. 

Make sure that it’s not just talk, though. As you outline your action plans and give updates, clearly show the steps taken, and act on employee feedback gathered during your Q and As.

Relevant reads: 15 Employee Satisfaction Survey Questions You Need to be Asking

2. Perform data-driven analysis

Data-driven analysis is necessary for making informed decisions about salary inflation adjustments. Your team should leverage market data, industry benchmarks, and internal compensation metrics to make sure you have the full picture about the impact of inflation on your employee salaries. 

By analyzing trends and identifying areas where adjustments are most needed, your organization can allocate resources to where they’re needed most and ensure that compensation remains competitive in the market.

3. Perform targeted pay adjustments

This is probably the go-to strategy for a lot of organizations, and certainly what most of your employees will be interested in. But rather than implementing across-the-board salary inflation adjustments, consider targeted pay adjustments based on individual employee performance and circumstances. 

For instance, high-performing employees, those with critical skills, or those in roles that are particularly affected by inflation may warrant higher adjustments. This approach allows your organization to allocate resources strategically while recognizing and rewarding top talent.

4. Provide alternative benefits and support

In addition to conducting a salary inflation adjustment, consider offering alternative benefits and support to help mitigate the impact of inflation on your employees’ finances. This could include enhanced healthcare benefits, flexible or hybrid work models, additional paid time off, or financial wellness programs. 

Providing real, tangible support beyond salary increases demonstrates your organization’s commitment to supporting its workforce during challenging economic times. It also might be easier to extend to everyone than across-the-board raises, making for a cost-effective alternative.

5. Proactive planning and communication

Effective salary inflation adjustment strategies require proactive planning and communication. Your HR team should anticipate inflationary pressures by keeping up to date with economic projections and develop contingency plans well in advance. 

By staying ahead of market trends and economic indicators, your organization can implement timely and well-calibrated adjustments that meet both the top-down business objectives and real employee needs. Regular communication with your employees throughout the adjustment process keeps things transparent and helps develop a sense of trust and engagement within the workforce.

Harnessing HRIS to Navigate Salary Management

salary inflation adjustment

Implementing effective strategies for salary inflation adjustment is crucial for maintaining competitiveness and retaining top talent. 

Affordable, functional, and suitable for modern growing businesses—HRIS solutions like Omni can significantly ease the salary inflation adjustment process. By offering real-time data, automated calculations, and compliance assurance, our comprehensive payroll solution is designed to meet your unique b business needs, no matter where you operate. 

Ready to enhance your salary management? Schedule a demo with us today. We’ll walk you through the platform’s features and demonstrate how Omni can streamline your processes, saving time, reducing administrative workload, and enhancing overall efficiency for your team.

What is FTE and How is it Calculated?

Having a comprehensive understanding of your workforce is absolutely essential as an HR professional. As part of this, calculating a Full Time Equivalent (FTE) count is essential. It paints the full picture of working hours and labor at your organization and breaks it down to a simple number.

While the outcome is simple and easy to understand and use, the steps you need to take to actually calculate your Full Time Equivalent can be a bit complicated. Here, we break down the steps to do so with detailed examples, and a thorough understanding of the benefits of FTEs.

What is a Full Time Equivalent?

When used in HR, a Full Time Equivalent refers to the total number of working hours contributed by an employee or a group of employees on a full-time basis. Essentially, FTE represents the total workload (or the equivalent) of one full-time employee.

FTE is an incredibly useful metric for organizations looking to assess and quantify the total labor resources available within their workforce. It provides a standardized measurement that companies can use to compare the productivity and capacity of their different departments, teams, or projects.

As the name implies, calculating Full Time Equivalent involves converting the working hours of part-time or temporary employees into the equivalent of a full-time position. This calculation is necessary for accurate HR budgeting, resource allocation, and workforce planning purposes. By understanding the FTE count, organizations like yours can make informed decisions about staffing levels, hiring needs, and project allocations to meet all the goals your business has set out.

How is Full Time Equivalent Calculated?

If you’re looking for an accurate accounting of your organization’s FTE, there are six steps you need to take, each one important for determining the organization’s workforce capacity. Here’s what you need to do for an accurate picture of your FTE:

  1. Compile a list of all employees and total hours worked: Gather data on all your employees, including full-time, part-time, and temporary workers. Record their total hours worked over a specific period, such as a week, month, or year.
  2. Define the total number of hours for a full-time position: Determine the standard number of hours constituting a full-time position in your organization. This typically ranges from 35 to 40 hours per week, depending on your company’s policies and local regulations.
  3. Calculate the annual hours worked for all employees: Multiply the total hours each of your employees worked by the number of weeks or months they worked during the period you’re looking at. This yields their annual hours worked.
  4. Add up annual hours worked for both full and part-time employees: Sum the annual hours worked for all your employees, regardless of their employment status (full-time or part-time).
  5. Determine the part-time FTE: Divide the total annual hours worked by part-time employees by the standard number of hours for a full-time position. This gives you the FTE value for your part-time employees.
  6. Calculate the total FTE: Sum the FTE values for both full-time and part-time employees. This provides the total FTE count for your organization, representing the equivalent number of full-time employees based on the total hours worked by all employees.

Example of Full Time Equivalent Calculation

To help you fully understand how Full Time Equivalent is determined, let’s take a look at a hypothetical example of FTE calculations and break down the math step by step.

Step 1: Compile a list of all employees and total hours worked

  • Example: Suppose your organization has three employees:
    • Employee A: Full-time, works 40 hours per week
    • Employee B: Part-time, works 20 hours per week
    • Employee C: Part-time, works 30 hours per week

Step 2: Define the total number of hours for a full-time position

  • Example: Assuming a standard full-time workweek of 40 hours.

Step 3: Calculate the annual hours worked for all employees:

  • Example:
    • Employee A: 40 hours/week × 52 weeks = 2,080 hours/year
    • Employee B: 20 hours/week × 52 weeks = 1,040 hours/year
    • Employee C: 30 hours/week × 52 weeks = 1,560 hours/year

Step 4: Add up annual hours worked for both full and part-time employees

  • Example: Total annual hours worked = 2,080 (Employee A) + 1,040 (Employee B) + 1,560 (Employee C) = 4,680 hours

Step 5: Determine the part-time FTE

  • Example: Calculate the FTE for each part-time employee by dividing their annual hours worked by the standard full-time annual hours (2,080 hours):
    • Employee B: 1,040 hours / 2,080 hours = 0.5 FTE
    • Employee C: 1,560 hours / 2,080 hours = 0.75 FTE

Step 6: Calculate the total FTE

  • Example: Add the FTEs of all employees:
    • Full-time Employee A: 1 FTE
    • Part-time Employee B: 0.5 FTE
    • Part-time Employee C: 0.75 FTE

 Total FTE = 1 + 0.5 + 0.75 = 2.25 FTE

By using the above example as a reference, and taking it step by step, you simply need to expand it to encompass your entire workforce, and you’re on track for an accurate look at your organization’s FTE.

Struggling to calculate your Full Time Equivalent?

Benefits of Calculating Full Time Equivalent

When it comes to workforce management, having comprehensive and accurate information is paramount. To make the right decisions, you need the right data, and a calculation of your Full Time Equivalent is an essential tool in your box. Benefits include:

Assess staffing needs

An FTE calculation will help your organization determine the right number of employees needed to meet the demands of your organization. This assessment helps prevent understaffing and overstaffing, ensuring cost-effective resource utilization, including recruitment fees

Identify gaps and inefficiencies

By comparing actual Full Time Equivalent counts with targeted FTEs, your organization can identify gaps in its workforce coverage and weed out any inefficiencies. This insight allows you to address staffing imbalances, reducing potential burnout and enhancing productivity.

Analyze team performance

FTE data enables your organization to analyze team performance by comparing productivity levels across different departments or teams. This analysis helps you identify high-performing teams and areas requiring improvement, meaning you can make targeted interventions to enhance overall performance, without any major disruptions where there doesn’t need to be.

Relevant readings: How Managers Can Help Low-Performing Employees?

Cost analysis

Understanding FTE counts allows your organization to conduct cost analyses related to labor expenses, and ultimately update the recruitment budget accordingly. By calculating FTE-related costs such as salaries, benefits, and overhead expenses, your organization can optimize its budgeting and financial planning processes for the most efficient spending strategy.

Tracking FTE calculation over time enables your organization to identify workforce trends and anticipate future staffing needs. This insight is very important for strategic workforce planning, expansion initiatives, and continued, sustainable growth over time.

Regulatory compliance

Many regulatory requirements, like compliance with labor laws and benefit programs, are based on Full Time Equivalent counts. Accurate FTE calculations ensure your organization remains compliant with legal obligations and eligibility criteria for government programs and support that look at FTE.

Improved communication

FTE data serves as a common metric for communication and decision-making across departments and organizational levels. Clear and consistent communication about staffing levels is important for a company culture of transparency and alignment with top-level strategic goals.

Read next: Strategies and Tools for Defining Culture in the Workplace

Frequently Asked Questions

Full Time Equivalent

1. What is the difference between full-time equivalent and full-time employee?

While a full-time employee typically works a standard number of hours per week, a Full Time Equivalent is a unit that measures the total workload of multiple part-time or full-time employees. FTE considers all of your employees, regardless of their hours worked, on a standardized scale to represent the equivalent of one full-time employee.

2. What is the difference between full-time equivalent and headcount?

Headcount refers to the total number of people employed by your organization, including both full-time and part-time employees. In contrast, FTE calculates the total workload based on the number of hours worked by employees, converting part-time hours into the equivalent of full-time hours to provide a standardized measure of workforce capacity.

3. Are interns taken into account when calculating FTE?

Interns may or may not be included in Full Time Equivalent calculations, depending on their employment status and your organization’s policies. If interns are considered employees and their hours contribute to your organization’s workload, they should be included in FTE calculations. That said, if interns are classified differently or their hours are not counted toward operational capacity, they should be excluded from your FTE calculations.

4. What does FTE 1.0 represent?

FTE 1.0 represents the workload equivalent to one full-time employee. It means that an employee is working the standard number of hours expected for a full-time position within your organization. FTE values that are greater than 1.0 represent a greater workload that goes beyond a single full-time employee, while values less than 1.0 represent part-time workloads.

5. How does FTE impact the payroll process?

Full Time Equivalent calculations are an important part of the payroll process because they help determine the total cost of labor being spent by your organization. Payroll calculations look at FTE values to determine employee compensation, benefits eligibility, and payroll taxes. FTE data also informs decisions related to staffing levels, budgeting, and resource allocation.

FTE Calculations Made Easy with Omni

Full Time Equivalent

Full Time Equivalent calculations are crucial for determining staffing needs and optimizing resource allocation. By leveraging HRIS like Omni, organizations can elevate this process to the next level. 

Omni helps you track, analyze and gain actionable insights from employee data through an automated and digitized platform. Easily and quickly gather the data you need to calculate your organization’s FTE so you can spend more time on the strategic planning necessary to drive business outcomes. 

For more support in calculating your organization’s Full Time Equivalent, download our free FTE Template and streamline your staffing calculations for efficient resource allocation.

If you’re ready to take your workforce management to the next level, book a demo with us today. We’ll walk you through the platform’s features and demonstrate how Omni can transform your processes, saving you time, reducing administrative burden, and enhancing overall efficiency for your team.

To free up HR staff to perform their more strategic role and to ensure employees receive the information they require, many of the operational tasks related to information provision activities are now performed using human resource information systems (HRIS).

An employee self-service portal (ESS) is a system that enables employees to access HR information from their end, reducing the range of administrative tasks performed by modern HR teams.

While employee self-service portals streamline information access and reduce HR workload, their benefits extend far beyond mere efficiency. These portals can improve employee engagement, creating a more connected and productive workforce. In this article, we explore the potential of employee self-service portals as a key to unlocking employee engagement. We delve into their functionalities, benefits, and how they can empower your employees.

Understanding the Employee Self-Service Portal

An employee self-service portal is a software that provides a means for a company’s employees to access its HR services and information.

With an ESS portal, employees can perform various tasks and transactions using the data stored in the HRIS system. Besides updating personal and banking information, employees can manage other aspects of their employment, such as benefits and time off, through the platform.

These portals can range from simple websites that allow employees to access static HR policies, such as safety requirements, to sophisticated softwares that allow employees to access and edit their individual information.

Functions of Employee Self-Service Portal

Employees use the HRIS system on a self-service basis to obtain personal information. For instance, they can look up paycheck information or check to see how much vacation time they have available. Training programs can be advertised via an employee self-service portal. They can enroll in any program of their choice and gain access to internal and external courses.

ESS portals are also used to bring HR tools and information to remote workforces. This enables organizations to ensure that recruitment selection, performance management, leave management and other HR activities are conducted in line with the organization’s policies and practices, irrespective of the location at which these activities are taking place.

Through an employee portal, employees can submit requests for vacation, sick leave, and other forms of time off, as well as track their remaining time balances. The portal can serve as a central hub for receiving and managing job applications, allowing candidates to easily submit their resumes and cover letters online. This eliminates the need for manual application processing and saves time for HR teams.

Employee self-service portals benefit both employees and employers. Employees can manage their work lives with more autonomy and convenience, while employers can benefit from increased efficiency, reduced administrative costs, and an empowered workforce.

Benefits of Employee Self-Service Portals for HR

employee self service portal

Reduce administrative burden

An employee self-service portal streamlines all your processes and reduces the workload for your HR department. For example, managers and HR leaders can save time and reduce frustration by avoiding scheduling issues, time off requests, and open enrollment questions. You can easily communicate employee handbook policy changes or other updates to employees, this improves communication and collaboration at all levels.

Additional resources: Welcome new hires effectively with our free Employee Handbook template!

Improve data accuracy and compliance

ESS portals allow employees to review and update their personal information. This reduces the time HR spends doing data entry and further simplifies the process. By allowing employees and managers to enter their information, data entry errors and mistakes can be avoided. They can regularly review their data through the portal and identify any mistakes, which further heightens data accuracy.

Provide better insights for decision making

Employee self-service portals can collect data on employee leave usage, training completion, and performance reviews. HR can then analyze this data to identify trends, optimize staffing levels, and make informed decisions about benefits and training programs. The use of an ESS allows HR teams to create HR strategies that play a more significant role in strategic business decision-making.

Importance of Employee Engagement

An engaged workforce is one of the major drivers of organizational growth and profitability, and an employee self-service software portal could be a tool for facilitating the employee engagement process.

Highly engaged employees tend to:

Be more productive and efficient. When employees derive greater satisfaction at work, they perform better and your business grows.

Show greater creativity and innovation. Engaged employees are more likely to think outside the box, be creative, and come up with innovative ideas.

Provide better customer service. Organizations with highly engaged employees boast 10 percent higher customer metrics than those whose employees are less engaged.

Stay with the company longer. When people are engaged in their work, they’re also more likely to work hard, get better at their jobs, and stay longer at the company, reducing attrition rates and absenteeism.

Be stronger ambassadors for the company. Engaged employees are more likely to speak positively about the company culture and company mission to others, acting as brand advocates and attracting top talent during recruitment.

Foster a more collaborative and positive work environment. Their enthusiasm and dedication can be contagious, creating a ripple effect of positive energy and collaboration within teams. This positive environment further enhances engagement and organizational well-being.

Overall, your company’s bottom line depends on the satisfaction and happiness of your workforce.

Impact of ESS on Engagement

An employee self-service portal (ESS portal) can significantly impact employee engagement in several ways:

Empowerment and ownership

Increased autonomy: Employees can complete tasks and access information without relying on HR or managers, increasing their autonomy and control over their work. This software portal makes employee’s lives easier. Giving employees efficient tools to work with, reduces their dependence on laborious and manual processes, which improves their experience. More engaged employees tend to be more loyal to their company as well as more productive.

Easy access to information: Having direct access to the right information improves employee satisfaction and engagement. Benefits information, company policies, training materials, or any other resources they might need can be accessed at a time convenient to the user, without the employee coming to the office. This saves time and frustration, leading to a more positive and engaged workforce. They can also see information regarding opportunities, training and advancement, which will give them more control over their careers. Many seek out opportunities to improve themselves and their skills, making them more valuable employees and helping to reduce employee turnover.

Improved communication and collaboration

Centralized platform: An employee self-service portal is a digital hub that centralizes various functionalities and resources for employees. It acts as a central location for them to manage personal information, view and manage benefits information, check their leave entitlements, pay records, performance assessment, and professional development plans. The portal also streamlines communication by keeping employees informed about company updates and policies. This fosters transparency and trust within the organization.

Increased transparency and recognition

Performance feedback: The portal can be used to conduct training and knowledge transfer. With a directory filled with training materials, tools for acquiring new skills and internal and external courses, an employee portal helps employees become better at their jobs which improves their performance, reduces performance gaps and makes them work efficiently.

Recognition programs: Employees are no longer content with having a ‘middle man’ that speaks for them. As companies grow, it can be difficult for each voice to be heard, and accomplishments to be recognized. An employee self-service portal can be used to implement and manage recognition programs, publicly acknowledging employee achievements and contributions, which boosts morale and engagement.

Read next: 12 Employee Recognition Examples to Keep Your Team Engaged All Year

Enhanced user experience

Personalized experience: Depending on the features and functionality of an ESS software, some portals can be customized to meet individual needs and preferences, providing a more relevant, and engaging experience for each employee. For example, employees can create their personal experience by selecting from a menu of options including the display of key performance indicators (KPIs) and objectives and key results (OKRs) relevant to their role, or gain quick access links to information and tools they use frequently, and personal items such as news, internet search tools and more.

Gamification elements: Gamification elements make completing tasks within the portal more enjoyable and interactive, leading to increased usage and employee engagement. Points, badges, and leaderboards in games have positive effects on learning. Trainees may be motivated by the goal, leading to higher engagement, increased attendance, and participation. Integrating gamification elements into your employee self-service portal is a great tactic to entice employees to engage, learn and grow.

Revolutionize Your Employee Engagement with HR Tools

employee self service portal

Employee self-service portals make it a breeze for employees to tackle their HR tasks with ease. These portals not only simplify administrative tasks but also serve as catalysts for fostering a culture of transparency, open communication, and accountability within the organization.

Omni’s employee self-service portal empowers employees to submit their time off requests, which automatically routes to the appropriate manager thanks to customizable approval workflows. To make things easier, Omni seamlessly integrates with your team’s favorite work tools such as Slack, enabling managers to receive and manage time off approvals directly within the messaging platform, removing time-consuming steps from leave management with a quick push of a button.

With automated calculations, employees and managers can easily view leave balances in real-time, and track how many vacation days they have left without having to go through HR.

Book a demo with us today to learn how leveraging Omni’s powerful automation and ESS portals can create a more engaged and productive work environment, leading to improved employee retention and overall business success.

Slack Tips and Tricks for More Productive HR Teams

Managing growing teams of people can be overwhelming, especially when there are many ways to stay connected.

Recently, Slack has been progressively replacing email for internal communication within workplaces, and for good reasons — a high degree of customization and a broad set of collaborative features.

For many remote workforces, Slack is at the forefront of enhancing their remote team communication. Whether remote or not, employees and HR teams use it as often as emails, hence the need for easy-to-use HR hacks for Slack.

If you’re looking to increase productivity as an HR team, here are our top 10 Slack tips that will help you stay ahead of the game.

Let’s dive right in.

What is Slack?

Slack has become one of the most widely used workplace communication platforms since its 2013 public launch. Their report shows that over 100,000 organizations, including 77 Fortune 100 companies, use Slack.

Its instant messaging capabilities provide faster and often more casual communication than email, making it gain traction. Slack has earned a reputation for its integration. Over 2,000 integrations exist, including Omni, Salesforce, Google Calendar, GitHub, and Loom.

Besides internal communications, you can use Slack for employee onboarding, conveying company culture in a virtual space, collaborating with other companies, and managing project workflows.

What are Slack Channels?

Slack channels are one of Slack’s main features and the simplest way to organize teams around a shared goal. With channels, you and your team get a shared view of the work done, making progress easier to track.

The two types of channels on Slack are public channels and private channels.

In the public channels, everyone on the team can view the messages. Public channels can be things like #General, for general work-related conversations, or #Random, which can be used for non-work related activities.

Private channels — identified with a padlock icon in front — are not open to all team members. They are primarily for specific teams within the company; someone must invite you to the private channel before you can access it.

Channels are created based on their relevance in building a good workspace atmosphere, especially for fully remote teams and employees working from home. Slack tips can make navigating these channels easier, especially for new employees.

Ways to Make the Most Out of Slack for HR Team Productivity

Now that we’ve established the basics, let’s dive into the Slack tips curated for HR teams. These tips are great for enhancing productivity and fostering collaboration, ultimately improving the efficiency of HR operations.

1. Establishing dedicated channels

An effective practice in Slack is to create channels tailored to specific projects, topics, or teams. This approach brings together relevant people and information, making it easier for idea-sharing, decision-making, and moving work forward.

For example, creating a private channel dedicated to employee onboarding can provide new hires with a platform to get more information regarding the process or ask questions. To create a new channel, simply click on the “add channel” button and provide details about the channel’s purpose and members.

Not sure what to include in your employee onboarding channel?

2. Integrating HR features with Slack

Slack’s real-time messaging and collaboration features make it easier for employees to communicate and collaborate on HR-related tasks.

Integration is a crucial feature that every HR software must have. For example, Omni integrates seamlessly with Slack. This integration allows managers to receive and manage time off approvals directly within the platform, simplifying leave management with just a click.

These features not only streamline HR processes but also boost productivity and efficiency across the entire team.

Slack tip

3. Jump on a huddle and share your screen with ease

As remote work becomes increasingly prevalent, work calls are on the rise. With Slack, it’s easier to join huddles, sort out issues, provide updates, and catch up with team members.

Huddles allow for quick discussions and the gathering of multiple perspectives, speeding up the decision-making process. They are also more engaging than long meetings, encouraging employee participation and boosting employee engagement.

Additionally, you can use the huddle feature to easily share your screen for real-time visual guidance. This feature can be beneficial for HR professionals during the onboarding process as it allows them to guide new hires through company policies, software tools, and other essential information virtually. It can also be a fantastic way to host brainstorming sessions.

For desktop users, a useful Slack tip is to use the shortcut “Ctrl + Shift + H” to initiate a huddle instead of clicking the huddle button on a person’s profile, saving time and streamlining communication.

4. Implementing workflow automation

Another valuable Slack tip on our list is to take advantage of Slack’s Workflow Builder, which simplifies daily tasks for you and your modern HR team by automating repetitive tasks and streamlining workflows.

HR teams can create workflows for various tasks such as onboarding, leave requests and performance evaluations.

For example, a workflow can be set up to welcome new employees with personalized messages and links to relevant resources and information upon joining a team channel, saving time on manual introductions.

Additionally, connect Workflow Builder to Google Sheets and get automated updates on employee information or track progress on onboarding tasks within a shared spreadsheet, improving data visibility and collaboration.

5. Conducting advanced searches

Mastering advanced search techniques in Slack can be a great boost for HR team productivity by enabling quick information retrieval in the vast pool of data. This feature saves time and effort, ensuring that important information is easily accessible when needed.

Here’s a Slack tip for finding information quickly across:

Slack channels

  • For Mac: “Command + G”
  • For Windows or Linux: “Control + G”

To search within a channel or direct message: 

  • For Mac: “Command + F.”
  • For Windows or Linux: “Control + F”

You can also use search filters such as people, dates, and conversations to refine your search results. In the “More filters” section, you can leave out bots, apps, and workflows to prevent other apps’ updates from cluttering your search results.

Additionally, combine keywords with Boolean operators such as “AND,” “OR,” and “NOT” to refine searches further. For example, search for messages containing “marketing” AND “experience” but NOT “intern” to identify candidates with relevant marketing experience excluding internship roles.

6. Leveraging polls and surveys

One of the essential ways to build workplace culture is by directly asking for feedback from team members.

Surveys are vital for representing your team’s views, measuring effectiveness, and clarifying expectations. It also provides a platform to explore development opportunities, ensuring that employees’ voices are heard.

For example, HR teams can conduct employee satisfaction surveys to improve performance. While Slack doesn’t offer a built-in polling or survey feature, you can easily create a poll using emojis as a simple Slack tip. Here’s how:

  1. Write the question for the poll you want to conduct.
  2. Format the text appropriately for better readability.
  3. Send the poll to the channel, allowing everyone to respond with their reactions.
  4. To initiate the vote, reply to the message with the available emoji options first and encourage others to participate.

By using Slack for polls and surveys, it allows for real-time feedback and promotes employee engagement. This data collected can help drive informed decisions, and integration with other tools ensures seamless workflows.

7. Setting up or pausing notifications for focused work time

Managing notifications is key to staying focused. You can pause notifications and mentions as needed to minimize distractions and concentrate on tasks at hand. Another helpful Slack tip is to schedule notifications for specific times, allowing you to control interruptions.

When you resume notifications, you can review messages received during your focused time. Team members will see a “do not disturb” icon next to your name if they message you, but they can send urgent messages that will override the pause once a day.

To switch on this feature:

  • Click on your profile picture.
  • Then click “Pause notifications.”
  • Select a timeframe from the list, or click Custom to set your own. To turn it off, use this same step and select “Resume notifications.”

Alternatively, use the command “/dnd” followed by the duration you want to pause notifications for.

8. Personalize settings to highlight unread channels

One of Slack’s most beloved features is its high level of customization, allowing users to personalize virtually every aspect of their experience.

Sorting unread messages is a particularly useful Slack tip for enhancing productivity.

You can do this on your desktop by:

  • Clicking the “menu” at the top of the “Unread messages” bar to sort messages into a sidebar.
  • The messages are displayed in descending order, from newest to oldest.

9. Using commands to boost productivity

Shortcuts are invaluable for boosting efficiency, and these Slack tips and tricks will help in your navigation:

  • /invite [@username] [#channel]: To invite someone to a specific channel
  • /collapse: To collapse long messages, making them easier to read
  • /mute: To temporarily put all messages in a channel on mute
  • /who: To show the members of a channel and their status
  • /status: To set your status easily
  • /expand: To expand all collapse message
  • /remind: To remind yourself, someone else or the whole channel about something

When you need to recall available shortcuts, simply use: /shortcuts to display all keyboard shortcuts.

10. Updating your status to indicate if you’re OOO

Showing that you’re “out-of-office” on Slack has become simpler, as you can now easily set your status to inform colleagues that you’re unavailable. Here’s how:

  • Click your profile picture in the sidebar and select “Set a status.”
  • Choose “Out of office” from the list
  • Select when your out-of-office status should be removed under “Remove status after… “
  • Optionally, tick the box next to “Pause notifications” to switch off notifications until your status clears.
  • You can also add an “Out-of-office message” to display on your profile or when someone mentions you in a channel.
  • Click Save.

Another helpful Slack tip is to use the shortcut “Ctrl + Shift+ Y,” to quickly bring up the pop-up.

Importance of Communication Tools for HR Teams

Slack tip

Effective communication is essential for modern HR teams to operate effectively. Communication tools like Slack can significantly enhance HR productivity by streamlining communication, fostering collaboration, and enabling quick access to information.

Slack’s well-loved features, such as channels, direct messaging, and integrations with other HRIS tools like Omni, can help HR teams stay organized, informed, and responsive.

Omni frees HR teams from administrative cycles by offering HR automation for the entire end-to-end employee lifecycle — from recruitment and onboarding to employee engagement and payroll — allowing you to redirect your time to strategic work that drives business growth.

Omni also seamlessly integrates with Slack, enabling managers to receive and manage time off approvals directly within the messaging platform, removing time-consuming steps from leave management with a quick push of a button. With automated calculations, employees and managers can easily view leave balances in real-time without the intervention of HR.

Book a demo with us today to learn more about how Omni can transform your processes, saving you time, reducing administrative burdens, and enhancing overall efficiency.

Employer’s Manual for Taxation in Singapore

According to Deloitte’s survey, 46% of respondents find tax compliance and reporting requirements in Singapore to be straightforward. This percentage is among the highest in the region, trailing only behind Hong Kong, Macau, and Mauritius.

With that in mind, income tax Singapore filing doesn’t need to be stressful, and the different Singaporean taxes doesn’t have to be overwhelming. All you need is a reliable guide on taxation in Singapore to get you started. By doing so, you can ensure your business remains compliant and safeguards its reputation and revenue.

Key Taxes Applicable to Employers

Understanding the SG taxes and Singapore tax rate regulations that the Inland Revenue Authority of Singapore (IRAS) sets out, helps keep your business compliant.

Corporate Income Tax

The IRAS collects the Corporate Income Tax Singapore on business profits sourced in the country. The income tax Singapore mandates is a flat rate of 17%. Partial tax exemptions and three-year start-up tax exemptions apply to qualified startups when it comes to this Singapore tax rate.

Goods and Services Tax (GST)

Aside from income tax, Singapore mandates the GST: a consumption tax that you file for the supply of goods and services and the goods imported into Singapore.

If you run a GST-registered business, you have to pay such SG taxes for the selling price of your goods and services at a Singapore tax rate of 9%.

Property Tax

The property tax, another of the required SG taxes, applies to the ownership of immobile properties in Singapore. For your company, a non-residential property, you’re taxed at a flat Singapore tax rate of 10%.

To calculate your property tax, you multiply this Singapore tax rate by the Annual Value (AV) of that property. The AV depends on the value of similar or comparable market rentals.

Payroll Taxes

In Singapore, SG taxes or payroll taxes encompass all tax rates applied to various forms of compensation. While you are responsible for filing your own annual income tax declaration in Singapore, the taxation system does not require you to withhold SG taxes for your employees. 

However, despite not having to file taxes like income tax, Singapore’s Employment Act mandates that you withhold certain contributions and levies.

Read more: Payroll Singapore Reference Guide: Everything You Need to Know

Employer’s CPF Contributions

For monthly wages exceeding S$750, employers are required to make contributions to the Central Provident Fund (CPF). This CPF is a government-managed social security fund that supports retirement, housing, and healthcare, funded by contributions from both you and your eligible employees (at a variable Singapore tax rate).

The specific Singapore tax rate deducted from your employee’s salary is determined by their age. Additionally, you are required to make certain CPF contribution rates from your own funds to your employees’ CPF accounts.

Foreign Worker Levy

The system of taxation in Singapore incorporates the Foreign Worker levy as a way to regulate the number of foreign workers in the country.

You pay this monthly income tax Singapore or, more accurately, levy for every employee in your company with a Work Permit or S Pass. The exact Singapore tax rate differs according to your industry, employee qualifications, and the ratio of foreign employees to total employees in your company.

Read next: Singapore Employment Pass: Updates & Requirements in 2023

Skills Development Levy (SDL)

The fund provides support for workforce upgrading programs and offers training grants for when you enroll your employees in training under the National Continuing Education Training. You’re obliged to pay the SDL, which is a Singapore tax rate of 0.25% deducted from your employees’ monthly wages, subject to minimum and maximum contribution limits.

Employer Responsibilities

taxation in Singapore

As an employer, it’s important to incorporate these compliance practices for SG taxes into your business operations to ensure adherence to regulations to the Singaporean Employment Act.

Registering for taxes

Before you can pay your income tax, your company needs to be registered for Singaporean taxes. Fortunately, Singapore is ranked as the second easiest country to do business in and the fourth best country to start a business in. To register your business, you’ll need to register with the Accounting and Corporate Regulatory Authority (ACRA) and also register for GST.

Filing tax returns

Tax returns are income tax Singapore forms used to report income, expenses, and other details related to taxes. According to the IRAS, “employers are required by law (S68(2) of the Income Tax Act) to prepare Form IR8A and Appendix 8A, Appendix 8B or Form IR8S (where applicable) for employees who are employed in Singapore by 1 Mar each year.”

The system of taxation in Singapore requires businesses to file tax returns by 15 April each year, with the possibility of later deadlines in some cases. E-filing using the IRS Free File and tax preparation software are available options for filing your taxes.

Paying taxes

This guide to taxation in Singapore aims to assist you in meeting all income tax requirements promptly and accurately. To do so, you must calculate the Singapore tax rate and accurately process and report all payroll components, including benefits, wages, and deductions.

If managing SG taxes seems overwhelming, don’t worry. Payroll software can automate the process, ensuring precise payroll calculations for you.

Maintaining record

Record keeping is crucial when it comes to income tax Singapore. The IRAS says that you should keep records for five years so that you can easily determine the claimed income and business expenses.

Records relate to income or sales and claims or expenses. To authenticate these records, keep receipts, invoices, payslips, vouchers, and other relevant documents to SG taxes. Aside from information about income tax, the regulation requires you to keep records about employees, including the following information:

  • Employee Address
  • Gender
  • Employee NRIC or Work Pass number and date of expiry
  • Date of joining of employment
  • Employment date of leaving
  • Working hours (including breaks duration)
  • public holidays and leaves used

Withholding taxes

A unique aspect of taxation in Singapore is that you are not required to withhold SG taxes from your employees’ monthly salaries. However, you must withhold certain Singapore tax rate variations, such as contributions and levies.

Reporting foreign workers

According to the IRAS, you must submit employment income information for foreign workers in Singapore for the respective year.

Employers are required to use the Foreign Identification Number (FIN) issued to foreign employees by the Ministry of Manpower (MOM) or Immigration and Checkpoints Authority (ICA) in their AIS submissions. This reporting enables you to pay the relevant Singapore tax rate, known as the Foreign Worker levy.

Struggling to understand the Singaporean Employment Act?

Key Steps for Preparing Employee Income Tax

If you’re still uncertain about taxation in Singapore, let’s get straight to the point and provide you with the steps for preparing employee income tax, Singapore edition.

1. Understanding your responsibilities as an employer

Understanding your responsibilities as an employer makes Taxation in Singapore straightforward. You must file employee earnings, submit specific tax forms, and ensure accurate application of the correct Singapore tax rates.

2. Determine tax withholding for your employees

Now is the time to calculate the amount you should withhold for SG taxes, including contributions, deductions, and levies on behalf of your employees. Unless the Singapore tax rate is fixed, you’ll need specific data, such as employee age or qualifications, to determine the IRAS rate. 

3. Stay updated with tax regulations

Tax regulations get updated regularly, and their complexity and the pace by which they change has increased. Staying up to date with taxation in Singapore enables you to file the correct documents and pay the correct Singapore tax rate.

You can check the IRAS Overview of Tax Changes for the financial year 2024, which includes changes to tax incentive schemes, tax deductions, and the Singapore tax rate.

4. Utilize payroll software

As you may have discovered, payroll software simplifies the management of taxation in Singapore. With payroll software, you can calculate the income tax Singapore regulations require you to pay, subtract deductions, calculate benefits, bonuses, and paid leave, generate payslips, and easily store, access, and manage payroll and employee data. 

Additionally, it automates various payroll processes, ensuring accuracy and compliance, and saving you time and money on SG tax management.

5. Prepare for reporting deadlines

Preparing for reporting deadlines for taxation in Singapore requires careful planning and organization.

It is essential to keep accurate records of income, expenses, and other financial transactions throughout the year. Employers should ensure that they have the necessary information and forms ready for reporting deadlines, such as Form IR8A for employee income. 

Understanding the specific deadlines set by IRAS is crucial to avoid late filing penalties.

Ensuring Compliance with Singaporean Tax

taxation in Singapore

The primary objective of understanding taxation in Singapore and abiding by SG taxes is to avoid penalties, fines, and legal action. Here are some ways on how you can ensure compliance:

Stay updated with regulations

Staying updated with regulations is crucial for managing taxation in Singapore.

Fortunately, certain payroll providers stay abreast of regulatory changes to income tax Singapore and notify you about every update. What’s more, some all-in-one HR systems offer real-time compliance updates. 

Register with IRAS

Taxation in Singapore starts with registering your business. The Accounting and Corporate Regulatory Authority (ACRA) enables you to register your business online in one to two days. The process looks like this:

  • Getting the business name approved
  • Preparing the needed documents
  • Submitting the application to ACRA

Note that you’ll have to register for the GST Singapore tax rate. This process is composed of the following steps:

  • Choosing the GST registration type
  • Completing the e-learning course
  • Submitting the GST tax application

Maintain accurate records

You’re aware of the need to maintain records of your income/sales, claims/expenses, income tax Singapore forms, and employee information (including source documents and bank statements) for five years. However, managing every Singapore tax rate manually without encountering false, missing, or outdated data can be difficult. 

Fortunately, the IRAS provides a checklist for record keeping. Also, payroll software solutions help ensure error-free records by creating digital copies of employee payslips, assisting with timesheet management, and calculating your employees’ time off and attendance.

Identify applicable taxes

Identifying the SG taxes that apply to your business and employees is crucial to ensuring that you pay the correct amount. It is also important to identify any tax breaks, deductions, and grants that apply when calculating each Singapore tax rate. For instance, you must pay the Foreign Worker Levy for your foreign employees.

File returns and pay taxes on time

To manage taxation in Singapore, you must make tax payments and file returns on time, which is one month after you receive the Notice of Assessment (Tax Bill). If you don’t make the deadline the income tax Singapore requires, you may be subjected to a 5% penalty and enforcement action, such as a travel restriction order or legal action.

Train your employees

It is crucial to train your employees to ensure compliance with SG tax regulations. Proper training can help them understand their roles and responsibilities regarding tax reporting and payment, reducing the risk of errors or non-compliance. 

Additionally, training can help employees stay updated with changes in Singapore tax laws and regulations, ensuring that your business remains compliant. By investing in training, you can help your employees perform their tax-related duties accurately and efficiently, ultimately avoiding penalties and legal issues. 

Conduct regular reviews

Tax reviews are routine assessments that encompass all facets of taxation in Singapore. They enable you to verify compliance with obligations, identify opportunities for tax savings, reduce the tax burden, and manage risks effectively.

Utilize payroll software

Streamline the process of taxation in Singapore with payroll software services. These services automate numerous payroll processes such as calculating SG taxes, deductions, bonuses, benefits, and hours worked, issuing payslips, generating the necessary forms for income tax Singapore demands, and storing data securely.

This approach helps reduce errors, ensures data security, promotes compliance with tax regulations, and facilitates effective filing of SG taxes. 

Automating Singapore Tax Compliance with Omni

Managing taxation in Singapore is a complex and detail-oriented task that demands a deep understanding of the region’s unique legal requirements and a commitment to accuracy and compliance. That’s why it’s important to have the right technology on your side.

Omni offers a comprehensive payroll solution tailored to Singapore’s specific requirements. With features like support for SGD, automated tax calculations, and managed CPF contributions, Omni can help HR teams simplify their payroll processing and ensure compliance with ease. 

Omni’s suite of features makes the requirements for running a compliant and efficient payroll system in Singapore easy. With secure and centralized employee records, HR teams can swiftly access employment contracts and essential documents that support payroll practices.

Our time and attendance features empower teams to automate data and produce accurate reports in minutes, making payroll calculations seamless and accurate. And with payroll solutions that support SGD and pay schedules, Omni offers an entire suite of solutions to make your payroll system Singapore seamless. 

If you’re ready to take your payroll Singapore management to the next level, book a demo with us today. We’ll walk you through the platform’s capabilities and demonstrate how Omni can transform your payroll processing, saving you time, reducing administrative burdens, and enhancing overall efficiency.

The Pay Parity Guide for HR

Pay disparity is an ongoing problem, with women earning 16% less than men on average. This problem affects workers across various industries and demographics. 

This guide aims to delve into the concept of pay parity, its advantages, and the strategies necessary to achieve it. It will distinguish between pay parity and pay equity while emphasizing the essential role that HR professionals play in closing the gap.

Understanding Pay Parity

pay parity

Pay parity signifies a workplace where individuals are compensated equally for equal work, irrespective of characteristics. This means employees in the same or similar roles, possessing comparable skills, experience, and responsibilities, receive the same base salary, benefits, and opportunities for advancement.

In simpler terms, pay parity eliminates pay gaps based on self-identifying characteristics like gender, race, ethnicity, sexual orientation, or any other protected characteristic. It promotes fairness and equity in the workplace, ensuring everyone is valued and rewarded based on their contributions and performance, not their identity.

Importance of Pay Parity

In recent years, there has been a growing movement towards closing the gender pay gap. Many employers are actively transforming their workplaces to be fairer and more inclusive by addressing these gaps. 

This shift aligns with data from the U.S. Department of Labor, which reveals persistent pay disparities across industries and job titles, with women consistently earning less than men in comparable roles within the same organization. 

Read next: How to Eliminate Gender Discrimination in the Workplace

Pay disparities do not affect women alone, as minority groups also face pay discrimination at work. Employees might face pay discrimination based on other factors such as, race, ethnicity, religion, education levels, sexual orientation, disability, and any other unique identifiers. 

According to a recent government report, the gender pay gap worldwide is more significant for specific racial groups and also varies based on their education level. On average, women earn about 82 cents for every dollar earned by men. 

The report also showed that women faced pay discrimination based on educational levels; women earned significantly less than men in the workforce, with a pay gap of 34 cents on the dollar for those with less than a high school diploma and 30 cents on the dollar for those with a bachelor’s degree.

Companies who establish pay parity practices do so not for moral obligations but because it has a profound impact on business outcomes. Diversity across gender and ethnicity correlates with business performance. The most diverse companies are now more likely to outperform less diverse peers on profitability, according to a comparison study by McKinsey. 

Investors and consumers are increasingly looking to support companies that reflect their values and perspectives. HR teams must work together with business leaders to ensure that transparent and data-driven compensation practices are implemented, ensuring fairness and building trust among employees.

Difference between Pay Parity and Pay Equity

Pay parity and pay equity are often used interchangeably, but while they both aim to address inequality in the workplace, they have different approaches. 

Pay parity emphasizes achieving identical pay for the same work, regardless of any personal characteristics like gender, race, or any other protected class.

For instance, two employees in the same company, John and Mary, are doing the same job with the same qualifications and experience. An equitable workplace dictates that both John and Mary must receive the same salary without any difference based on their gender.

Pay equity focuses on fair and consistent pay across the entire workforce, considering relevant factors like job responsibilities, skills, experience, and performance. While striving to eliminate discrimination, it acknowledges that different jobs may have different values and require different skills, warranting potentially different pay scales.

Also, for instance, a company has two departments: engineering and customer service. Both departments are crucial for the company’s success, but they require different skill sets. Pay equity ensures that engineers and customer service representatives are paid fairly within their respective departments based on their qualifications and contributions, even if the average pay between the two departments might differ.

Benefits of Pay Parity

For individuals

Financial security and equality: When there is a significant pay gap in the general workplace, it directly affects the income of employees who are underpaid compared to their counterparts. By ensuring fair compensation, this allows employees to earn what they deserve based on their work, providing them with a stable income. This translates to greater financial security. 

Read next: What is Performance Based Pay? Pros and Cons Explained

Increased job satisfaction and motivation: Employees who receive fair pay are more likely to be satisfied and motivated in their job roles, leading to lower attrition rates

Reduced stress and anxiety: Financial insecurity and unfair treatment can be significant sources of stress and anxiety. Pay parity alleviates these concerns, contributing to better mental well-being and reduces employee burnout.

Career advancement opportunities: When pay is not based on discriminatory factors, individuals have an equal chance to compete for promotions and career advancement based on their merit and qualifications.

For organizations

Attract and retain top talent: Companies who establish fair compensation practices and policies in the workplace become a leading magnet for the best employees. Retaining top talents is easier when there is no pay disparity. In a Glassdoor survey, 58% said they would not be able to apply at a company where a pay gap existed. 

Increased productivity and efficiency: The feeling of being undervalued and unfairly compensated can negatively impact employee motivation and morale. Pay parity contributes to a boost in performance and productivity of teams which overall impacts the growth of the organization. 

Reduced legal risks and costs: Pay discrimination is illegal in many countries. For example, the Equal Remuneration Act of 1976 mandates equal pay for men and women for work of equal value. Failing to adhere to the laws can lead to costly lawsuits and reputation damages.

Boosted employee morale and collaboration: When employees feel valued and respected, they are more likely to be engaged in their work and collaborate effectively with colleagues. Pay parity leads to a more positive work environment and improved overall performance.

Improved innovation and creativity: Research has shown that engaged employees tend to work harder, stay longer, and contribute creative ideas. Diverse teams are more likely to share innovative ideas and solutions, which can help organizations stay ahead of their competition.

Strategies to Achieve Pay Parity in the Workplace

Transparent and fair compensation policies

Reviewing your organization’s compensation policies and practices can help reduce the pay gap. Define the company’s values regarding pay equity and establish clear principles for determining compensation, such as basing it on objective factors like job responsibilities, experience, performance, and market data. 

Implement inclusive recruitment practices

Unfair hiring practices also contribute to the pay discrimination employees face in the workplace. To address this issue, business leaders must ensure fairness in the recruitment and promotion process by removing identifying information from resumes during the initial screening process to reduce the influence of unconscious bias. Encourage diverse perspectives by actively soliciting input from all panel members during deliberations and avoiding groupthink.

Conduct regular pay audits

HR leaders shouldn’t just react to pay gaps with fair policies. They should take a proactive approach by investigating the root causes of these inequities. Conducting regular pay audits would be the right way to go about this. Through in-depth analysis of compensation data, pay audits help organizations identify any existing pay disparities. If discrepancies are found, investigate the root cause and take corrective action to adjust compensation accordingly. 

Standardize performance review practices

To ensure pay parity in the workplace, companies must adopt a fair and unbiased approach to reviewing employees’ performance. Managers should be trained on unconscious bias and must understand how to conduct objective and consistent evaluations. Define performance expectations and evaluation measures that are specific, measurable, achievable, relevant, and time-bound (SMART).

Foster an inclusive workplace culture

Create a company culture where pay transparency can be discussed among employees. To increase transparency, consider organizing company-wide town halls or Q&A sessions. These sessions can shed light on the company’s compensation philosophy and salary structures, allowing for open and honest discussions with employees.

Provide equal mentorship and professional development opportunities

The unconscious bias or the perception of being ‘less valuable’ due to lower pay can hinder employees’ advancement opportunities. Here’s how you can combat this: Encourage senior leaders to sponsor employees from underrepresented groups, providing them with guidance and support for career advancement. Additionally, offer all employees equal access to training programs, mentorship, and other opportunities for professional development. 

Impacts of HRIS on Pay Parity

pay parity

Working towards creating a business environment where pay gaps are non-existent is a multi-pronged approach. According to the World Economic Forum, it could take another 151 years to close the gender pay gap. Here is how you can take advantage of HRIS (Human Resource Information Systems) to fast-track this process for your organization. 

Data analysis and reporting

HRIS streamlines this procedure by analyzing intricate data sets across various identifiers such as sex, race, ethnicity, and religion. There are advanced HRIS systems with built-in analytics features. Your HR teams can further identify discrepancies analyzed within the data sets, and instantly pull together a report, eliminating the need for manual manipulation. These reports provide stakeholders with clear insights into the extent of pay gaps, their root causes, and areas that require attention.

Transparency and communication

Promoting fair compensation practices requires pay transparency and communication. HRIS provides employees with easy access to information regarding their compensation, including salary, bonuses, benefits, and any other relevant components. This transparency helps build trust and reduces uncertainty among employees regarding their pay.

Objective performance management

Conducting fair and thorough employee performance reviews becomes easier with an HR system. HRIS can integrate performance data with compensation systems, ensuring that pay decisions are based on objective performance metrics rather than subjective factors.

Closing the Pay Gap with Omni

Achieving pay parity is crucial for fostering a fair and inclusive workplace environment. This guide has highlighted the importance of understanding pay parity, its benefits, and strategies for implementation. As mentioned, bridging the gap requires more than just awareness – it demands actionable steps and effective tools.

HRIS like Omni can play a crucial role in bridging the gap by providing tools for tracking gender diversity metrics, identifying areas for improvement, and implementing policies that promote work-life balance and gender equality. 

Our comprehensive payroll solution provides impactful insights to seamlessly review, address, and prevent pay parity issues. Advanced performance management modules provide real-time performance data, helping HR teams swiftly identify and address skill gaps, so you can provide your teams with the training and tools they need to help boost overall performance and nurture talent.

Join the 83% of Omni customers who have unlocked new, actionable insights after using our modern HR solution, book a demo with our team today.

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