All employers must pay CPF contributions based on the wages payable to employees even if your employees are concurrently employed by more than one employer. This is because the Ordinary Wage (OW) ceiling is applicable on a “per-employment” basis.
However, if an employee's total OW from employers exceeds the prevailing OW ceiling, they can apply to limit their share of contributions on OW. Employers have to pay their employer's share of CPF contributions on the full amount of wages at the prevailing rate, subject to the OW ceiling.
Conditions
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In order to get the OW ceiling with a $6,800 cap, the employee needs to inform the CPF board and get consent from the CPF board
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Employers will be informed by the CPF board
How the Ordinary Wage ceiling works
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The Ordinary Wage ceiling limits the amount of Ordinary Wages that attract CPF contributions in a calendar month. The Ordinary Wage ceiling is capped at $6,800 currently.
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If an employee’s Ordinary Wages for a calendar month is $7,000, his/her contribution would be computed based on $6,800. That means CPF contributions are not required for the remaining $200.
What do employers do if an employee is earning more than $6,800 across multiple employers?
While employees should only receive CPF contributions on the first $6,800 of their monthly salaries, this is on a “per employment” basis. The same logic also applies to the $37,740 CPF annual limit. For employers, this means they do not need to be concerned with what employees are earning elsewhere.
For example, if you are paying an employee $4,000 a month, and another company is paying the same employee $3,000 a month, it does not matter that they receive a combined CPF contribution on $7,000 of salary each month. Individual employers only need to be concerned with what they are paying their employees.
However, the employee can apply to limit their employee’s share of CPF contributions at the $6,800 salary mark. They can do so by informing the CPF Board. They will also have to consent to the CPF Board informing all their employers as the notification will go directly to employers when the application is approved. This may result in certain administrative work that employers need to attend to. Even if approved, this does not affect the amount the employers have to contribute – it only limits how much the employee has to contribute.
Note:
An employee can limit their share of CPF contribution by getting approval from the CPF board if they are employed by multiple employers. It takes effect only when the total wage is larger than S$ 750.00
Resources:
Steps to limit employee CPF contribution share in Swingvy
Step 1 - Click the employee name at the Payroll > People tab
Step 2 - Go to Bank & Statutory > Edit
Step 3 - Check the "Limit employee CPF contribution share" checkbox under CPF entitlement
Step 4 - Set the "max employee CPF share on OW"
Step 5 - Click on Save
Note:
1. The "Limit employee CPF contribution share" checkbox will only appear when CPF entitlement is set to Yes
2. Additional Wage share is applied as it is even when the Limit employee CPF contribution share is checked
The CPF contribution share limit applies to all types of payroll (Monthly/Mid-month/Ad hoc).
Note:
For mid-month payroll, CPF is calculated only when "Do you want to compute the statutory tax amount for Mid-month payroll?" is checked in Payroll > Settings > Payroll settings > Payday information