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Singapore Payroll Guide: CPF, SDL & FWL Explained
Published 2026-05-14
Three Payroll Obligations Every Singapore Employer Must Know
Running payroll in Singapore involves more than calculating salaries and issuing payslips. Employers are responsible for three mandatory contributions that apply at different rates, to different employee types, and are paid to different government agencies. Getting any of them wrong can result in penalties, late interest charges, and in serious cases, prosecution.
For a comparison of running payroll in-house and using a provider, see our guide to outsourcing payroll in Singapore.
This guide explains each obligation — CPF, SDL, and FWL — with current 2026 rates, calculation examples, and the common mistakes that trip up employers.
CPF — Central Provident Fund
The CPF is Singapore’s mandatory social security savings scheme. Both employers and employees contribute a percentage of the employee’s monthly wages into the employee’s CPF account, which is used for retirement, housing, and healthcare.
Who must contribute: CPF contributions are required for Singapore Citizens and Permanent Residents (PRs). Foreign workers on Employment Passes, S Passes, and Work Permits are exempt from CPF.
CPF Contribution Rates (From 1 January 2026)
Rates for Singapore Citizens and 3rd-year+ Permanent Residents earning above S$750/month:
| Employee Age | Employer Rate | Employee Rate | Total |
|---|---|---|---|
| 55 and below | 17% | 20% | 37% |
| Above 55 to 60 | 16% | 18% | 34% |
| Above 60 to 65 | 12.5% | 12.5% | 25% |
| Above 65 to 70 | 9% | 7.5% | 16.5% |
| Above 70 | 7.5% | 5% | 12.5% |
2026 change: Rates for workers aged 55–60 increased to 34% total (from 32.5%), and rates for ages 60–65 increased to 25% total (from 23.5%). This is part of the government’s plan to strengthen retirement adequacy for older workers.
Permanent Residents (graduated rates): First-year PRs contribute at reduced rates (employer 4%, employee 5%, total 9% for age 55 and below). Second-year PRs move to employer 9%, employee 15%, total 24%. From the third year, full citizen rates apply. Employers and employees can jointly opt to contribute at full rates during the graduated period.
CPF Wage Ceiling
CPF contributions are not calculated on the full salary if it exceeds the wage ceiling.
Ordinary Wage (OW) ceiling: S$8,000 per month (increased from S$7,400, effective 1 January 2026). This is the maximum monthly ordinary wages on which CPF is payable. If an employee earns S$10,000/month, CPF is calculated on S$8,000 only.
Additional Wage (AW) ceiling: S$102,000 minus total ordinary wages subject to CPF for the year. For an employee earning at or above the OW ceiling for all 12 months, the AW ceiling is S$6,000 (S$102,000 − S$96,000).
CPF Payment Deadline and Penalties
Employers must pay CPF contributions by the 14th of the following month (or the next working day if the 14th falls on a weekend or public holiday). Late payment attracts interest at 1.5% per month (minimum S$5). Persistent late payers face composition amounts of up to S$1,000 per offence, and court conviction can result in fines of S$1,000 to S$5,000 and up to 6 months imprisonment on a first offence.
SDL — Skills Development Levy
The SDL is a levy that funds Singapore’s national training and skills upgrading programmes through the Skills Development Fund. It is collected by the CPF Board alongside monthly CPF contributions.
Who must pay: All employers for all employees — Singapore Citizens, Permanent Residents, and foreign workers. This is the key difference from CPF: SDL applies to every employee regardless of nationality or pass type.
SDL Rates
Rate: 0.25% of each employee’s gross monthly remuneration.
Minimum: S$2 per employee per month (for employees earning less than S$800/month).
Maximum: S$11.25 per employee per month (for employees earning more than S$4,500/month — SDL is effectively capped at wages of S$4,500).
The SDL for all employees is totalled at the company level and rounded down to the nearest dollar.
What it funds: The Skills Development Fund supports SkillsFuture training programmes and subsidies. When you send employees for government-subsidised courses, the training grants come from this fund — so your SDL contributions indirectly fund your own staff training.
FWL — Foreign Worker Levy
The FWL is a monthly levy that employers pay for each foreign worker employed on a Work Permit or S Pass. It does not apply to Employment Pass holders. The levy is calculated on a daily basis and billed monthly by MOM — it is separate from CPF and SDL.
S Pass Levy
Since 1 September 2025, the S Pass levy is a flat S$650 per month across all sectors. The previous tiered structure (Tier 1 and Tier 2) has been unified into a single rate.
Work Permit Levy
Work Permit levy rates vary by sector, worker skill level, and how many foreign workers your company employs relative to the quota. Here is a simplified overview for the two most common sectors:
| Sector | Tier | Higher-Skilled (R1) | Basic-Skilled (R2) |
|---|---|---|---|
| Services | Tier 1 (up to 10%) | S$300 | S$450 |
| Services | Tier 2 (10–25%) | S$400 | S$600 |
| Services | Tier 3 (25–35%) | S$600 | S$800 |
| Manufacturing | Tier 1 (up to 25%) | S$250 | S$370 |
| Manufacturing | Tier 2 (25–50%) | S$350 | S$470 |
| Manufacturing | Tier 3 (50–60%) | S$550 | S$650 |
Construction, marine shipyard, and process sectors have different rate structures. Check MOM’s Foreign Worker Levy page or use MOM’s online quota calculator for your company-specific rates.
Putting It All Together — Calculation Example
Here is what a typical monthly payroll looks like for a Singapore Citizen employee aged 35, earning S$5,000 per month:
| Component | Calculation | Amount |
|---|---|---|
| Gross salary | — | S$5,000.00 |
| Employee CPF (20%) | S$5,000 × 20% | S$1,000.00 |
| Net take-home pay | S$5,000 − S$1,000 | S$4,000.00 |
| Employer CPF (17%) | S$5,000 × 17% | S$850.00 |
| SDL (0.25%) | S$4,500 × 0.25% (capped) | S$11.25 |
| Total employer cost | S$5,000 + S$850 + S$11.25 | S$5,861.25 |
| Total CPF to remit | S$1,000 + S$850 | S$1,850.00 |
The employee takes home S$4,000. The employer pays S$5,861.25 in total — the S$5,000 salary plus S$850 employer CPF plus S$11.25 SDL. The S$1,850 total CPF (employer + employee share) plus SDL is remitted together to the CPF Board by the 14th of the following month.
If this employee were a foreign worker on an S Pass instead, there would be no CPF contributions. The employer would pay the S$5,000 salary, S$11.25 SDL, and S$650 FWL — total employer cost of S$5,661.25.
Payslip Requirements
Since 1 April 2016, all employers must issue itemised payslips to every employee covered by the Employment Act. Payslips must be issued at least once a month (or within 3 working days of salary payment) and can be in soft or hard copy.
Each payslip must include: basic salary, all allowances, all deductions (CPF, no-pay leave, etc.), overtime hours and pay, the salary period, the payment date, and the net salary paid.
Monthly Payroll Checklist
Here is what employers need to do each month:
1. Calculate gross pay — basic salary plus allowances, overtime, commissions, and any additional payments.
2. Deduct employee CPF — at the applicable rate based on the employee’s age and residency status.
3. Pay net salary — within 7 days after the end of the salary period (overtime within 14 days).
4. Issue itemised payslips — at least once a month or within 3 working days of payment.
5. Submit CPF + SDL — remit employer CPF, employee CPF, and SDL to the CPF Board by the 14th of the following month via CPF e-Submit.
6. Pay FWL — if you employ Work Permit or S Pass holders, the levy is billed separately by MOM.
Common Payroll Mistakes
Forgetting SDL for foreign workers. Many employers assume SDL only applies to local staff. It applies to every employee — citizens, PRs, and foreign workers.
Missing the CPF deadline. The 14th of the following month comes fast. Late payment interest (1.5% per month) starts from the day after the deadline. Set up GIRO auto-deduction through the CPF Board to avoid this.
Not updating CPF rates when employees turn 55. CPF rates change at age thresholds (55, 60, 65, 70). If your payroll system does not automatically adjust for age bands, you may over- or under-contribute.
Ignoring the OW ceiling increase. The Ordinary Wage ceiling rose from S$7,400 to S$8,000 on 1 January 2026. If your payroll system still uses the old ceiling, you are under-contributing CPF for employees earning between S$7,400 and S$8,000.
Calculating SDL on total salary instead of the capped amount. SDL is calculated on wages up to S$4,500/month only. For higher earners, the levy is always S$11.25 — not 0.25% of their full salary.
How Assembly Works Can Help
Payroll compliance in Singapore involves moving parts — CPF rate changes, wage ceiling updates, levy adjustments, and Employment Act requirements. Assembly Works handles monthly payroll processing for SMEs, including CPF calculations, SDL, payslip generation, and submissions to the CPF Board.
Learn more about our Payroll & HR service or contact us to get your payroll sorted.