HRSINGAPORE Community Discussions
Payroll process with unpaid leave
Dear HR Practitioners
I would like to hear from you on the best practice for payroll processing.
As we have a cut-off date to process payroll (usually 18th) to be paid by 27th of each month, staff who applies for unpaid leave after 18th of the month will still get their pay for the current month.
It is however not correct, according to CPF, to deduct the unpaid leave in the next month. So we have to arrange re-process the staff's salary and apply for a refund from CPF.
This can be a hassle yet we cannot prevent staff from taking unpaid leave after the payroll cut off date (ie. from 18th to end of the month).
Would truly appreciate if you could share an ideal way to process monthly payroll if we only do one pay run each month.
REPLIES & COMMENTS
You may consider reprocessing the payroll for staff who has taken leave after the 18th. Deduct the unpaid leave so that the CPF contribution is correct and input a non-tax no CPF adjustment to ensure that the GIRO amount paid out to the staff tallies with the system.
Staff basic salary is $1500, after 20% employee CPF, $1200 nett paid on 27th.
$100 unpaid leave taken from 18th, hence, rightfully should be $1120 nett after deducting unpaid leave.
Input the overpaid $80nett ($1200-$1120) as an adjustment (non-tax, no-CPF) to tally the paid amount with your bank statement and deduct it from next month's salary (non-tax, no-CPF).
If your company is not so rigid, this should avoid the excess CPF payment.
I hope my suggestion provided you with a solution.
This is because the daily rate differs from month to month, so there might be errors in CPF contributions when you only process it in the next month.
We use payroll software. So we are able to key the unpaid leave into current month payroll, but process in next month payroll using the current month daily rate.
You can do this manually also, but need to be careful with calculations.
Alternatively, you can shift your cut off date. For e.g. payday on 27th, you can cut off on 22nd if your payroll is straightforward without many variables.
In any case, there is no way you can prevent staff from taking unpaid leaves after the cut off date. You can put in a policy to prevent this, but staff will definitely tell you it's not fair and it will be difficult to enforce.