Cost of Hiring Your First Employee in Singapore (2026)

Hiring your first employee is a big moment. It's also the moment your company starts paying for more than a salary.

The offer letter says S$4,000. Your bank account will say something closer to S$4,690, and that's before insurance, leave and the admin that accompanies every pay run. This guide works through the real monthly cost at three salary levels, shows which costs are yours and which come out of the employee's pay, and lists the jobs you take on the day they start.

Who your first hire can be

The type of employee you hire decides which costs apply, so start here.

• A Singapore citizen or permanent resident. CPF and SDL apply. For many founders, this is the first hire.
• An Employment Pass (EP) holder. No CPF, no foreign worker levy and no mandatory medical insurance, but SDL still applies. The candidate must meet the EP minimum salary: S$5,600 a month for most sectors now, rising to S$6,000 for new applications from 1 January 2027 (MOM). Our Employment Pass guide covers COMPASS and the rest of the criteria.
• An S Pass or Work Permit holder. Usually not possible as a first hire. These passes are capped as a share of your total workforce, and only local employees paid at least the local qualifying salary of S$1,800 a month count in full (those earning S$900 to S$1,799 count as half). A founder-director on a CPF-paying salary counts too (MOM). In the services sector, S Pass holders can make up at most 10% of your workforce, so you need about nine qualifying local staff before you can hold your first one. S Pass and Work Permit holders also need mandatory medical insurance and attract a monthly levy. Our foreign worker levy guide explains the quotas.

The three statutory costs

1. Employer CPF: 17%

For citizens and third-year-onwards PRs aged 55 and below, you pay 17% of their monthly wage into CPF and deduct a further 20% from their pay. Only the 17% is your cost. The 20% is part of the salary you already agreed (CPF Board).

CPF is calculated on wages up to the Ordinary Wage ceiling of S$8,000 a month. Rates are lower for older workers and rise again for staff aged 55 to 65 from 1 January 2027. Newer PRs pay graduated rates for their first two years. Our CPF contribution rates guide has every table.

2. Skills Development Levy: 0.25%

SDL applies to every employee working in Singapore, including foreigners and part-timers. It's 0.25% of monthly wages, with a minimum of S$2 and a maximum of S$11.25 per person (CPF Board). Anyone earning above S$4,500 a month hits the cap.

3. Foreign worker levy: usually zero for a first hire

The levy applies only to S Pass and Work Permit holders. The S Pass levy is a flat S$650 a month. For an EP holder or a local hire, it's zero.

Self-help group contributions (CDAC, MBMF, SINDA and ECF) also appear on the payslip, but they're funded by the employee. You deduct and pay them over with CPF.

What it costs each month: three examples

Here's a worked comparison for a Singapore citizen aged 55 and below, plus an EP holder at the 2027 minimum.

For the S$9,000 hire, CPF stops at the S$8,000 ceiling, so both the employer and employee shares are capped. Take-home pay here is salary minus the employee's 20% CPF, before income tax and self-help group deductions.

Over a year

Many first-year budgets forget the bonus. If you pay the S$4,000 hire a one-month bonus in December, CPF applies to that too, at the same 17%. A year then looks like this:

• Salary: 12 × S$4,000 = S$48,000
• Bonus: S$4,000
• Employer CPF on both: S$8,840
• SDL: about S$121

That's roughly S$60,960, or 27% more than the S$48,000 on the offer letter. A bonus counts as an Additional Wage for CPF, with its own annual ceiling of S$102,000 minus the ordinary wages already subject to CPF that year. This salary stays well under that ceiling. A bonus or annual wage supplement (AWS) isn't compulsory in Singapore unless your contract promises one (MOM), so decide before you write the offer.

The costs that don't appear on the payslip

Work injury insurance

You must buy work injury compensation insurance for every employee doing manual work, and for non-manual employees earning S$2,600 a month or less (MOM). Many employers cover higher earners too, because the liability for a work injury stays with you either way.

Paid leave and medical costs

Under the Employment Act, an employee with at least three months' service gets at least 7 days' paid annual leave in their first year, rising with service (MOM). There are 11 paid public holidays a year. After three months, they're also entitled to paid sick leave. When a company-appointed or public-sector doctor certifies it, you reimburse the consultation fee too (MOM).

This means your first hire is paid for 18 or more days a year they aren't working, before any sick leave. Their salary doesn't change, but the work still needs doing. Plan for it.

Equipment, software and recruitment

A laptop, a software licence, a phone plan and a recruiter's fee (if you use one) all hit in month one. None of these are statutory, but they're real costs.

What you have to set up before the first pay run

Here's the admin a first hire brings:

1. Collect the employee's details: NRIC or FIN, date of birth, residency status, bank account and self-help group. Age and residency decide the CPF rate.
2. Issue key employment terms in writing within 14 days of the start date, covering salary, hours, leave and benefits.
3. Register your company with CPF Board as an employer. Your CPF Submission Number is based on your UEN.
4. Buy work injury insurance if the role requires it.
5. Pay salary within seven days of the end of each salary period, as the Employment Act requires, and issue an itemised payslip with it or within three working days.
6. Pay CPF and SDL by the 14th of the following month. Late CPF attracts interest of 1.5% a month.
7. File employment income with IRAS by 1 March each year. With five or more employees, you must file through the Auto-Inclusion Scheme; below that, you give each employee an IR8A form.
8. File IR21 before a foreign employee leaves. For EP holders, you notify IRAS at least one month before they stop work and withhold the money owed to them until tax clearance.

Our payroll guide for small businesses covers each step in detail.

When outsourcing payroll pays for itself

With one employee, payroll may take a founder an hour or two a month. The cost of getting it wrong is what matters: late CPF interest, a payslip that breaks the Employment Act, or an IR8A filed late.

Outsourced payroll in Singapore typically costs S$50 to S$70 per employee a month, covering payslips, CPF and SDL submissions and the annual IR8A. For a first hire, that's under 2% of a S$4,000 salary. It makes most sense when:

• you're adding a second or third hire within the year
• you're hiring a foreign employee, with the pass, IR8A and IR21 work that comes with it
• you'd rather spend the evening of the 13th on something other than CPF

If you'd like to set up payroll properly from the first hire, our payroll services in Singapore cover payslips, CPF, SDL and IR8A, run by the same team that keeps your books.

Frequently asked questions

How much does it cost to hire an employee in Singapore? For a citizen or PR aged 55 and below, budget the salary plus 17% employer CPF on wages up to S$8,000 a month, plus SDL of up to S$11.25. A S$4,000 employee costs about S$4,690 a month before insurance and leave.

Is the employee's 20% CPF an extra cost to the employer? No. The employee's 20% is deducted from their salary. Your cost is the 17% employer share on top of the salary.

Do I pay CPF for an Employment Pass holder? No. CPF applies only to Singapore citizens and permanent residents. You still pay SDL for EP holders, but no foreign worker levy.

Is a 13th-month bonus compulsory in Singapore? No. The annual wage supplement is only payable if the employment contract or a collective agreement provides for it. If you do pay one, CPF and SDL apply to it.

If I pay myself a salary, do I pay CPF on it? If you're a Singapore citizen or PR and the company pays you a salary under an employment contract, CPF applies to it like any other employee's. Director's fees voted at a general meeting are not subject to CPF (CPF Board).

Do I need insurance for my first employee? Work injury compensation insurance is mandatory for manual workers and for non-manual employees earning S$2,600 a month or less. Many employers cover all staff because the liability for a work injury stays with them.

Ready to hire? See how our payroll services work, or book a free consultation and we'll walk through your first pay run with you, no obligation.