HRSINGAPORE Community Discussions
Employer CPF contributions for Bonus
Dear HR Practitioners,
Would like to check if you, as HR, have encountered instance of employers proposing to deduct employers CPF contributions when paying out bonuses. Justification is as this is a pension and foreign employees do not have this, thus it must be fair.
Of course it is not in accordance to our CPF Act but then if this was already less out during the declaration, staff would not know.
What are your thoughts in a confidential position in HR?
Your company can fix the annual increment period, example: 1st Jun. All employees who have been working more than 1 year from date of joining until 1st Jun are entitled for annual increment. For those who worked less than 1 year, you can use pro-rate increment, example: for 6 months 50% increment rate compare to normal increment; 7 months (7/12*100=58%). Then the next year all the pro-rated employees are entitled for full increment.
Will justify that this is a bonus payout, not a pension payout, hence it will be in accordance to CPF regulation set forth. Pension also have certain set regulation, and can be taxable as well. Advice to include in contract, so to prevent future dispute.