Singapore and Thailand the Simplest Places for HR and Payroll in APAC: Report

December 3, 20204:18 pm1874 views
Singapore and Thailand the Simplest Places for HR and Payroll in APAC: Report
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If you are a business leader looking to expand your market reach, you might be wondering, “What are the best countries to start a business?” Among other things, paperwork and legal implications often emerge as the most complicated factors that will influence your decision.

The latest research commissioned by TMF Group has placed Singapore as one of the simplest jurisdictions in terms of human resources (HR) and payroll in Asia Pacific (APAC), a stark contrast to major Asian economies like China and India which are found to be among the most complex globally.

The report ‘HR & Payroll: Navigating complex requirements in turbulent times ranks 77 jurisdictions by the complexity of HR and payroll, exploring the theme of employer and employee relations across four areas:

  • Hiring and terminating employees;
  • The ongoing management of HR and payroll;
  • The relationship between international workforces and local rules; and
  • Technology as an enabler for both employers and employees.

See also: The Cost of NOT Being Ready in Your Payroll

Trailing a little behind New Zealand, Singapore is found to be one of Asia Pacific’s least complex markets and is tied on the same ranking as Thailand. By contrast, Malaysia, China, India and Indonesia were seen as the most complex for multinational companies when it comes to HR and payroll practices and legislations.

For businesses, complexity in this area is ultimately about a jurisdiction’s approach to the relationship between employer, employee and government. COVID-19 has added a further level of complexity to the debate, as governments have responded differently to workers’ needs throughout the crisis.

Some jurisdictions have made short-term changes to their benefits rules during COVID-19 to protect employees from the economic shock of lockdowns. In Singapore, more than 140,000 employers have received payouts under the government’s Jobs Support Scheme. Totalling over S$21.5 billion, the payments will help subsidise the wages of more than 1.9 million local employees.

“The severity of the pandemic has varied from one industry to another, and even within industries a lot has depended on the approach that individual firms have taken. Some businesses have had to massively downsize or even close, while other employers have tried to cope with the situation at their best”, said Edmund Lee, Managing Director for Singapore and Malaysia at TMF Group.

“Companies that were taking care of their employees before the pandemic have been the most likely to continue to have a good relationship throughout. It will be interesting to see whether HR and payroll legislation will shift to offer a safer, more protective working environment for employees – while still attracting foreign businesses in order to regrow their economies.”

While employment and payroll guidelines are fairly transparent in Singapore, the Central Provident Fund (CPF) Board regularly updates and provides clarification around CPF treatments. It is important for employers to stay up-to-date on the type of payments that attract CPF contributions and the way those contributions are calculated. Complexity arises because CPF contributions differ depending upon whether individuals are foreign workers under an Employment Pass, a Permanent Resident or Singapore citizens.

See also: HR Tips for Easy Payroll Process in Every Season

At the other end of the scale, Malaysia is the most complex in terms of HR and payroll in APAC, while China, India and Indonesia are also in the top 10 most complex markets out of the 77 jurisdictions around the world. Malaysia’s complexity is primarily attributable to the large number of Public Rulings under the Malaysia Inland Revenue Board, adding a layer of complexity around guidance and interpretation of tax laws in respect of salaries, benefits in kind and their tax deductibility.

Some of the report’s key findings for APAC include:

  • APAC places the most stringent requirements on its companies in terms of restrictions on foreign labour with nine out of 10 jurisdictions (93%) within APAC requiring companies to hire only foreign workers that comply with certain skill frameworks (compared with 68% globally), and seven out of 10 (71%) specifying that workers coming to their jurisdictions must fall within a certain salary threshold (38% globally);
  • Jurisdictions in APAC also lead the way in many aspects of payroll and benefits, including mandating workplace pensions, with 86% of jurisdictions legally requiring them for permanent workers;
  • Three quarters (76%) of jurisdictions surveyed worldwide require businesses to submit payroll data to the government electronically, up from 71% in 2019, and this growth is driven by APAC jurisdictions, where the proportion requiring this increased from 50% to 86% between 2019 and 2020.

Read also: Payroll Continuity Plan during COVID-19 Crisis

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