2025 payroll readiness: Are you prepared for SEA’s new regulations?

As HR and payroll professionals, you know that staying ahead of regulatory changes is no small feat. The payroll landscape in Southeast Asia (SEA) is evolving rapidly, and 2025 will bring new challenges for organisations across the region. From minimum wage adjustments to leave entitlements, governments in Malaysia, Singapore, Indonesia, Thailand, Vietnam and the Philippines are introducing a wave of new regulations that will significantly impact payroll processes.

Are you ready?
Payroll changes in Southeast Asia for 2024-2025

Higher wages and recommended income growth: Rising standard across SEA

Minimum wage adjustments are a common theme across the region, impacting payroll calculations and employee compensation.

• Malaysia: Minimum monthly wage to RM1,700 from February 2025.
• Singapore: Minimum monthly wage for Employment Pass (EP) candidates to $5,600 for most sectors and $6,200 for the financial sector.
• Thailand: Minimum daily wages now range from THB337 to THB400, based on region.
• Vietnam: As of July 2024, the minimum monthly wage for civil servants has increased to 2.34 million VND, while minimum hourly and monthly wages for employees under labour contracts have been adjusted based on region.
• Indonesia: Provincial-level adjustments will increase minimum wages by 6.5% for 2025.
• Philippines: Minimum wages vary by region and sector, but have been revised upward.

Provident funds contributions: Sustaining retirement security

Provident funds is another area of change, with governments updating rates and thresholds to reflect economic conditions.

• Malaysia: The Employees’ Provident Fund (EPF) contributions for non-citizen workers expected to be mandatory in 2025.
• Singapore: The Central Provident fund (CPF) contributions for workers aged 55–65 earning over $750 monthly increase by 1.5% from January 2025. CPF Ordinary Wage (OW) continues to increase, raised to $7,400 in 2025, and $8,000 by 2026.
• Indonesia: The maximum retirement age increases to 59, and is planned to reach 65 by 2043.
• Philippines: The Social Security System (SSS) contributions reach 15% starting January 2025.
• Thailand: Social Security contribution rates will be temporarily reduced for six months (October 2024 to March 2025), with rates decreasing from 5% to 3% for employees under Section 33 and from 9% to 5.9% for employees under Section 39 in the affected provinces.

Expanding welfare funds: Enhanced employee safety nets

Governments are also expanding welfare funds to provide greater protection for workers.

• Malaysia: The Social Security Organisation (SOCSO) introduces a new salary ceiling of RM6,000, starting October 2024.
• Thailand: Organisations with ten or more employees will be required to register their employees with the Employee Welfare Fund (EWF) by October 2025.
• Vietnam: With the increase of the minimum salaries, the new cap of Social Insurance (SI) and Health Insurance (HI) base is 46.8 million VND from July 2024.

Tax threshold adjustments: Equitable changes

Tax thresholds are being revised to reflect inflation and fund public services:

• Malaysia: Individual tax exemption of up to 12 months to eligible women returning to work after a 24-month career break.
• Singapore: From the Year of Assessment 2024, income exceeding $500,000 and $1million will be taxed at 23% and 24%, respectively, up from the current rate of 22%.

Leave entitlement enhancements: Supporting employee well-being

Employee well-being remains a key focus, with governments enhancing leave entitlements.

• Singapore: Fathers gain four weeks of paternity leave, with a new Shared Parental Leave scheme of 10 weeks shared between both parents starting 1 April 2025.
• Thailand: Additional public holidays have been announced for 2025 and 2026: 2 June 2025, 11 August 2025, and 2 January 2026 added to the official list of public holidays.

Why payroll compliance is essential

Non-compliance with payroll regulations can lead to severe penalties, including hefty fines and even prison sentences of up to six months.

According to Thailand’s Ministry of Labour, failure to pay wages in accordance with the Wage Committee’s Minimum Wage Rates announcement may result in criminal penalties, including imprisonment of up to six months, a fine of up to THB100,000, or both. In Malaysia, violations of payroll regulations without a specified penalty can result in fines of up to RM50,000. In Singapore, non-compliance with CPF contributions is a criminal offence, with penalties ranging from late payment interest and composition fines to court-imposed fines and imprisonment, depending on the severity of the violation. Beyond financial consequences, non-compliance can result in legal action, operational disruptions, and reputational damage.

Ensuring payroll accuracy isn’t just about avoiding penalties, it is about protecting your business, staying compliant, and maintaining employee trust. With regulations constantly evolving, staying ahead is more critical than ever. Here are some of the main challenges HR and payroll teams will face:

• Updating payroll systems:
• Ensuring payroll systems reflect the changes in minimum wages, tax brackets, and contribution rates, with thorough testing of configuration updates before the statutory compliance deadline.
• Adapting to frequent changes in regulations across multiple countries.

• Ensuring compliance:
• Avoiding penalties by ensuring timely remittances and accurate calculations.
• Tracking compliance across multiple welfare schemes and tax regulations.

• Workforce planning:
• Adjusting workforce planning to accommodate leave entitlements.
• Managing employee expectations while maintaining productivity.

Staying compliant with payroll regulations is more than a legal requirement; it builds trust, enhances efficiency, and protects organisations from financial risks.

How can Variance Monitor from EPI-USE Labs help?

With so many changes looming on the horizon, ensuring payroll compliance may seem daunting. Variance Monitor can help to:

• Speed up testing of payroll calculation changes: Variance Monitor automates the comparison of payroll results before and after changes, quickly identifying the discrepancies. By highlighting unexpected variances, it reduces the need for manual verification and speeds up the testing process.
• Automate error detection in wages, tax and contribution adjustments: Variance Monitor verifies the payroll results by comparing these against previous period and minimum threshold values, quickly identifying potential errors.
• Streamline data validation during compliance audits: Variance Monitor simplifies payroll audits by providing detailed variance reports that highlight data inconsistencies, reducing the time and effort needed for compliance checks, making audits more efficient and transparent.

Variance Monitor can transform your payroll processes and keep you ahead of the curve. Watch this on-demand webinar to learn how Variance Monitor simplifies your payroll compliance in 2025.