All You Need To Know About Payroll in Singapore –part 2
Agenda Central Provident Fund u Employment Law u Calculating monthly pay u Annual Leave u Sick Leave u Maternity Leave u Shared Parental Leave u Adoption Leave u Paternity Leave u
Central Provident Fund
Central Provident Fund Definition of an Employer An employer is a person, company, association or body of persons, whether or u not incorporated, employing an employee. An employer can be: u u Any manager, agent or person responsible for the payment of wages to an employee on behalf of an employer u Any person trading in his own name or who has domestic worker(s). u The person must register under the name shown in his identity card or passport u Companies which employ foreign workers holding work permits in Singapore. u These employees are on the Foreign Worker Levy (FWL) Scheme and are exempted from contributing to CPF
Central Provident Fund Definition of an Employee An employee is any person who is employed in Singapore and any Singaporean u seaman who is employed by an employer under a Contract of Service or other agreement entered into in Singapore. Some of the factors which form the contract of service are: u u The control over payment u Duration of work u Dismissal u Substitution of workers u Method of work
Central Provident Fund Definition of an Employee CPF contributions are not payable by a foreign employee u Once a foreign employee obtains SPR status the contribution rates are u payable at a lower rate – graduated employee and employer contributions – for the first two years From the third year onwards the employer and employee pay the full rate of u CPF based on the employee’s age and earnings The date used is the date of the permit (Form 5 or 5a) u Year 1 runs from the date of SPR conversion to the last day of the month of u the first anniversary e.g. if the date of the Form 5 was 5 May 2016 Year 1 runs to 31 st May 2017 and year 2 from 1 June 2017 to 31 May 2018 The employee and employer can jointly apply for full employer and graduated u employee contributions or full employer and employee contributions
Central Provident Fund What are the employer’s responsibilities? Employers must collect the employees’ contributions from their wages/salary and u pay over the employee and employer’s CPF contributions each month for all employees (Singapore Citizens and SPRs) using the rates set out in the CPF Act. The contributions should be based on the employee’s actual total wages earned u for the calendar month CPF contributions are to be paid by the employee and employer by the end of the u month. Employers have 14 days after the end of the month to make payment of CPF u contributions to the authorities. Employers must apply CPF correctly and make the payments promptly for their u employees
Central Provident Fund The CPF contributions are allocated to 3 different funds: u u Ordinary account – housing, insurance, investment and education u Special account – old age and investment in retirement related products u Medisave account- for hospitalisations expenses and approved medical insurance u When an employee reaches 55 a retirement fund is also created Each fund attracts a minimum rate of interest and the actual rate is reviewed u on a regular basis The allocation across the funds is based on the employee’ earnings and age, u with a greater amount allocated to medisave as the employee gets older
Central Provident Fund Due to a a higher rate of unemployment in the over 55s and to encourage u employers to these workers the CPF contribution rates for both employer and employee had been reduced The reduction for employees in recognition that that wages might be lower and so u the overall earnings were being protected Unemployment rates have fallen significantly and the CPF rates will gradually be u equalised In 2016 the employee contribution rates for over 55s were increased to allow u greater savings for retirement The increase in employee contributions will go into the ordinary CPF account and u the employer contributions into the special account The CPF salary ceiling and supplementary retirement scheme contribution cap u were also raised Employers will therefore get additional tax deduction on the CPF contributions and u the employees get additional tax relief to mirror these changes
Central Provident Fund Determining CPF contributions: Establish which earnings attract CPF contributions – total wages (TW) u Classify the earnings in the pay period as ordinary wages (OW) and additional wages u (AW) Apply the CPF contribution rates to those earnings based on age and employee type u Employer contributions are deemed to be total contributions less employee share u Total CPF contributions are rounded to the nearest $ and and amount of 50 cents u should be rounded up Employee share is whole dollars only i.e. any cents are dropped u Contribution calculator of Singapore citizens and SPR in 3 rd year u https://www.cpf.gov.sg/eSvc/Web/Miscellaneous/ContributionCalculator/Index?isFirstAndSecond Year=0&isMember=1 Contribution calculator of Singapore citizens and SPR in 1 st and 2 nd years u https://www.cpf.gov.sg/eSvc/Web//Miscellaneous/ContributionCalculator/Index?isFirstAndSecon dYear=1&isMember=1
Central Provident Fund CPF payable wages/earnings CPF non-payable wages/earnings Basic salary Reimbursements that are amounts not exceeding the actual expense incurred and supported by official receipts Bonuses Gifts in kind e.g. shopping vouchers Cash incentives e.g. good service Termination benefits e.g. retirement awards gratuity, retrenchment pay, ex gratia pay, pay in lieu of notice Allowances e.g. meals, laundry, transport Commissions e.g. sales Overtime NSmen make-up pay
Central Provident Fund Classifying wages as ordinary wages (OW) or additional wages (AW) CPF contributions are based on the total wages u Ordinary wages are: u u Wages due or granted wholly, exclusively in respect of an employee’s employment that month and u Wages payable before the due date of CPF contributions that month u Ordinary wages are capped, the current monthly cap is $6, 000 Additional wages are: u u Wages which are not wholly and exclusively for the month or u Wages made at intervals of more than one month u Examples include leave pay and annual bonus payments u Additional wages are capped at $102, 000 – total OW subject to CPF for the year u Where $102, 000 is equal to 17 months x the OW cap of $6, 000 u Employers must monitor the AW cap and it applies per employer u https://www.cpf.gov.sg/eSvc/Web/Services/CPFAdditionalWageCeiling/Index
Central Provident Fund Errors in CPF calculation are often due to: u u Incorrect classification of ordinary and additional wages u Non-payment of contributions on allowances and NSmen make-up pay u Underpayment where wages are not paid monthly u Common mistakes by employers: https://www.cpf.gov.sg/Assets/employers/Documents/MistakesbyEmplo yerswhenDeterminingCPFContributions.pdf u Adjustments and refunds of CPF - these would be claimed by the employeehttps://www.cpf.gov.sg/Employers/EmployerGuides/employer- guides/paying-cpf-contributions/adjustment-and-refund-of-cpf-contributions
Central Provident Fund The tables used to calculate CPF contributions depend on the status of the u employee and the earnings and include: Private sector and public sector non-pensionable employees u u Singapore citizen u Singapore permanent resident (SPR) from the 3 rd year and onwards of obtaining SPR status u SPR during the first 2 years of obtaining SPR status where jointly applied with the employer to contribute at full rates Private and public sector non- pensionable employees during the first 2 years of u obtaining SPR status Public sector employees u Pensionable employees in statutory bodies and aided schools u For your information and reference we have included the most used tables u Details of the deductions and the allocation rates can be found at www.cpf.gov.sg/Assets/Members/Documents/Jan2016_Con_Rate_Page.pd
Private sector and non pensionable employees (Ministries, Statutory Bodies and Aided schools) – Singapore citizens and SPR 3 rd year onwards Employee age Employee total Total CPF contributions Employee CPF wages for the contributions month 55 and below Up to $50 Nil Nil >$50 - $500 17% TW Nil >$500 <$750 17% TW + 0.6% in excess 0.6% TW in excess of of $500 $500 >$750 37% OW* + 37% AW 20% OW* + 20% AW * Max of $2, 220 *Max $1, 200 Above 55 -60 Up to $50 Nil Nil >$50 - $500 13% TW Nil >$500 <$750 13% TW + 0.39% TW in 0.39% TW in excess of excess of $500 $500 >$750 26% OW* + 26% AW 13% OW* +13% AW *Max of $1, 560 Max $780
Private sector and non pensionable employees (Ministries, Statutory Bodies and Aided schools) – Singapore citizens and SPR 3 rd year onwards Employee age Employee total Total CPF contributions Employee CPF wages for the contributions month Above 60 -65 Up to $50 Nil Nil >$50 - $500 9% TW Nil >$500 <$750 9% TW + 0.225% in 0.225% TW in excess of excess of $500 $500 >$750 16.5% OW* + 16.5% AW 7.5% OW* + 7.5% AW * Max of $990 *Max $450 Above 65 Up to $50 Nil Nil >$50 - $500 7.5% TW Nil >$500 <$750 7.5% TW + 0.15% TW in 0.15% TW in excess of excess of $500 $500 >$750 12.5% OW* + 12.5% AW 5% OW* +5% AW *Max of $750 Max $300
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