Dear fellow HR professionals
I understand that most companies will have a new hire payroll cut-off.
So for any new hire who joined after the payroll cut-off, their wages will be processed in the next regular cycle.
And the backdated salary will trigger as Additional Wages (AW). instead of Ordinary Wages (OW) to calculate the CPF amount.
However, AW will incur higher salary deductions for CPF and employees may not be happy about that.
Given the tight payroll schedules, it is difficult to push every input on time and yet we need to ease employee frustrations about higher CPF deductions.
Is there a workaround for this situation?
Also, I found out from the CPF website there are exceptions given to include the backdated salary as part of OW rather than AW to calculate the CPF amount provided the root cause is due to administrative delays.
So my question is which option shown below is recommended to process new hires after the payroll cut-off?
Option A:
New hire after cut-off process in next cycle.
Next cycle payslips will show the current month's salary of 5,000 + backdated salary of 5,000 (OW)
CPF EE deduction = 1,200 (Max capping)
Option B:
New hire after cut-off process in next cycle.
Next cycle payslips will show the current month's salary of 5,000 + backdated salary of 5,000 (OW)
CPF EE deduction = 1,200 + 1,200 = 2,400 – appeal to CPF to void the penalty incurred due to late submission
Option C:
New hire after cut-off process in next cycle.
Next cycle payslips will show the current month's salary of 5,000 + backdated salary of 5,000 (AW)
CPF EE deduction = 1,200 + 1,000 = 2,200
Thank you in advance for your help.
Jenny
HR Poll: Which option do you suggest to process the new hire payroll cut-off?
Option A: 20.00%
Option B: 24.00%
Option C: 28.00%
None of the above: 28.00%
REPLIES & COMMENTS:
Option A is incorrect. Option B is not professional. Option C is correct but it will mean more cost for the company. We should pay the salary in the month that it is incurred. There are some employees who need their full salary. Even if we are outsourcing payroll, we still need to incur the additional cost for the processing of the new hire`s salary after the cut-off. - LSH
Under EA, employers are required to pay the salary within 7 days after the end of the salary period. Hence would advise processing 2 payrolls instead so that you may not need to backpay CPF. - Chng
Hi Jenny. You may want to consider another option - process the salary for all new hires separately at the end of each month so that you can consider them as OW. - Yong
