Payment reconciliation (Statutory withholding) is a preventive measure in Talenox to ensure that Statutory Contributions are always set aside from each payment created.

Below is the list of the statutory contributions in Singapore we are referring to:

  • CPF contributions (Applies to Singapore Citizens and Permanent Residents)

  • SHG contributions (where applicable)

Payment Reconciliation helps employers avoid a situation where salary is paid out fully in parts with insufficient balance to contribute the month end employee's portion of statutory contributions. Having to claw back paid out salary from the employee can be unduly troublesome.

This is especially helpful for employers who make multiple payouts for employees in a month, more commonly pertaining to hourly-rated part-time staff.


How Does Payment Reconciliation Work in Talenox?

Payment Reconciliation was designed for employees in the following scenarios/criteria:

  1. Employees paid a Gross Salary of less than $750.00

  2. Employees who are paid weekly or more than once in a month

If payments made to employees fulfil any of the scenarios above, the system will do the following:

  • Withhold the maximum amount of employee statutory contributions from the employee's payment

  • Payment Reconciliation will then be triggered - Payment Reconciliation is the amount that we return to employees after accounting for the actual statutory amounts that employees need to pay out in the payroll month.

This process was created to ensure that when such employees resign, there will be enough buffer for employee statutory contribution payouts.


Where Do I Go to see my Employee's Payment Reconciliation Amounts?

If you strictly make payments only once a month, always remember to process the CPF total for the month and refer to the Payroll & CPF summaries for the final calculation of net salary payable, together with respective contributions.

Any amount that is withheld in excess after the month total processing is done will be reflected under Make Payment > Reconciliation Amounts (B).


How to include Payment Reconciliation in your Payments to Employees?

If you are processing payroll on a monthly basis, you can ignore the reconciliation amount.

Under Bank File (Advanced Settings) > Reconciliation Amounts (B), when you export bank file, do ensure that "include reconciliation" box is checked (default setting). 😄


How do my Employees Know that Statutory Withholding is Happening in their Payments?

If Statutory Withholding has occured for an employee and there is still Payment Reconciliation amounts yet to be paid out to them, our system will include this message into employee payslips during generation:

"A portion of net salary was withheld to provide a buffer in case additional CPF contribution is required. You may see this line if you have multiple payments in the same payroll month."


Examples of Statutory Withholding and Payment Reconciliation Scenarios

Scenario 1: Employees paid a Gross Salary of less than $750.00

Employee A is a Singapore Citizen (40 years old) and contributes to CDAC SHG group. He is paid once in a payroll month.

  • Gross Salary: $500

He has met the criteria above and Payment Reconciliation will automatically apply to him when processing payroll in Talenox.

1) Statutory Withholding

The system will withhold the maximum statutory amounts for this employee contribution based on his Gross Salary amounts:

  • CPF Contribution (Employee)*: 20% x $500 = $100

  • SHG Contribution (CDAC Group)**: $0.50

Total of $100.50 will be withheld from Employee A's salary.

2) Payment Reconciliation

Payment Reconciliation is the amount that we return to employees after accounting for the actual statutory amounts that employees need to pay out.

  • Payment Reconciliation: Statutory Withholding - Actual Statutory Contribution

When Employee A checks "includes withheld" in the bank file downloaded, Payment Reconciliation will automatically apply. These are how the calculations are done:

  • Payment Reconciliation: Statutory Withholding - (Actual CPF Contributions + Actual SHG Contributions)

  • Payment Reconciliation: $100.50 - ($0 + $0.50) = $100

3) Net Salary Payout

Total Net Salary paid out to employee after including reconciliation amounts:

  • Gross Salary - Withholding + Payment Reconciliation

  • $500 - $100.50 + $100 = $499.50

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Scenario 2: Employees who are paid weekly or more than once in a month

Employee B is a Singapore Citizen (40 years old) and contributes to CDAC SHG group. He is paid twice in a payroll month - 1st payment (15th) & 2nd payment (30th).

  • 1st Payment (15th): $500

  • 2nd Payment (30th): $1,000

He has met the criteria above and Payment Reconciliation will automatically apply to him when processing payroll in Talenox.

1) Statutory Withholding - 1st Payment

The system will withhold the maximum statutory amounts for this employee contribution based on his 1st payment in the system:

  • CPF Contribution (Employee): 20% x $500 = $100

  • SHG Contribution (CDAC Group): $0.50

Total of $100.50 will be withheld from Employee A's salary in his first payout (15th).

At this point, "include withheld" should be unchecked in the 'Make Payment' page in Talenox.

The Total Net Salary of $399.50 will then be paid out to employee in his first payment (15th).

2) Statutory Withholding - 2nd payment

  • CPF Contribution (Employee): 20% x $1000 = $200

  • SHG Contribution (CDAC Group): $3 (2nd payment onwards, we withhold maximum SHG amounts)

Total of $203 will be withheld from Employee B's salary in his second payout (30th).

3) Payment Reconciliation

At this point, "Include Withheld" should be checked because this is Employee B's final payout for the month.

The actual statutory contributions for the month will be calculated which will trigger Payment Reconciliation, if any, to be paid back to the employee:

Actual Statutory Contributions

  • Actual CPF Contribution (Employee): 20% x $1,500 = $300

  • Actual SHG Contribution (CDAC Group): $0.50

  • Total of $300.50 in actual statutory contributions for the month

Reconciliation

  • Payment Reconciliation: (1st Payment Withholding + 2nd Payment Withholding) - Actual Statutory Contributions

  • Payment Reconciliation: $100.50 + $203 - $300.50 = $3

4) Net Salary Payout

Total Net Salary payable to Employee B in his 2nd payment (30th) is:

  • 2nd Payment Gross Salary - Withholding + Payment Reconciliation

  • $1,000 - $203 + $3 = $800

Total Net Salary paid out to employee in the full month (15th + 30th) is:

  • 15th Payment: $399.50

  • 30th Payment: $800

  • Total: $1,199.50 (which coincides with the total net salary to be paid out in total to the employee for the month)

*CPF Rates found here.

**CDAC Rates found here.


Hope this helps with your Payment Reconciliation understanding in Talenox now!

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