Introduction
Advance salary payment refers to an arrangement where an employer pays part of an employee’s salary before the regular payday. With Payboy, this can be managed easily through the Payroll module by creating additional pay items.
Article Content:
CPF Guidelines on Advance Salary
According to CPF regulations, if an advance salary is paid before it is actually due, CPF contributions are not required at the time of payment. Instead, CPF contributions must be made in the month when the salary is officially payable to the employee.
Setting Up Pay Items in Payboy
To handle advance payments correctly, you will need to create two new pay items in Payboy:
(Refer to this article: How do I create more Pay Items to be displayed on the itemized Payslip)
Pay Item 1 – Advance Payment
Description: Advance Payment (customisable)
Category: Addition
CPF Type: No CPF
IR8A Code: Gross salary
Pay Item 2 – Deduction
Description: Deduction (customisable)
Category: Deduction
CPF Type: No CPF
IR8A Code: Gross salary
Note: Setting CPF Type as “No CPF” ensures that CPF contributions are only made in the month the salary is actually payable.
For further details on CPF types and IR8A codes, please check directly with the respective authorities.
Processing Advance Salary Payments
Case 1: Advance Salary Within the Same Payroll Month
Example Scenario:
On 17 September, Byeon Woo Seok requests part of his salary in advance because his car unexpectedly breaks down and he needs urgent repairs to commute to work. His employer processes an Advance Payment of SGD 1,000 mid-month.
At the end of the month (30 September payroll), the company generates the normal payroll and uses the Advance Recovery pay item to offset the SGD 1,000 that was already given.
Mid-month (Advance Payment):
Generate an Adhoc Payment for the employee (see guide).
Edit the payroll generated.
Select the Advance Payment pay item from the “Add More Pay Item” dropdown.
Enter the amount to be paid in advance.
End of month (Normal Payroll):
Generate the normal payroll.
Edit the payroll for the employee.
Select the Deduction pay item from the dropdown.
Enter the deduction amount (i.e., the advance amount already paid).
Case 2: Advance Salary Across Different Payroll Months
Example Scenario:
On 29 September, Lee Hyuk Jae asks for part of his October salary in advance because he needs to pay a deposit for his new apartment before moving in. His employer processes an Advance Payment of SGD 3,000 and records it under September’s payroll.
When October payroll is generated on 31 October, the company uses the Advance Recovery pay item to deduct the SGD 3,000 that had already been paid in September.
First month:
Generate the normal payroll for that month.
Edit the payroll for the employee.
Select the Advance Payment pay item from the dropdown.
Enter the advance amount.
Second month:
Generate the normal payroll for that month.
Edit the payroll for the employee.
Select the Deduction pay item from the dropdown.
Enter the deduction amount (i.e., the advance amount already paid in the previous month).
This setup ensures compliance with CPF regulations while giving you the flexibility to support employees who require part of their salary earlier than payday.
Should you encounter any difficulties, please feel free to contact us via the support chat icon on the bottom right of the screen or by emailing support@payboy.biz.