In 2018, firms failed to pay over $600m in CPF to staff
Over the last five years, the Central Provident Fund (CPF) Board has forced Singapore employers to pay up to $2.7billion in unpaid contributions to employees.
According to reports, the biggest victims of CPF underpayments are low-income casual workers.
The CPF board discovered the discrepancies from employee complaints as well as audits.
In 2018, the board found that employers failed to pay over $600million in CPF contributions. This figure was $380million in 2014, reported The Straits Times.
Under the CPF Act, employers must pay CPF contributions for Singaporean and permanent resident employees. The Act covers part-time or casual employees, as well as family members of the business owner, if they are receiving wages for work done for the company.
However, there has been a trend of underpayments for both groups – casual employees and staff who are relatives. This tends to occur in industries like food and beverage (F&B) and security.
“It’s quite common in the F&B sector, where they are paid cash without any CPF,” said Zainal Sapari, labour member of parliament (MP). “They are usually local, low-income workers.”
The practice is also not unusual when relatives are employed. However, Sapari criticised this as business owners are required to treat it as an employer-employee relationship and uphold all workers’ rights. By underpaying staff, workers are thus “short-changed”.
“By right, this should be a relationship between employer and employee, because you specify the hours of duty, type of duties and provide equipment for the duties,” he said.
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According to the Ministry of Manpower (MOM), employers face the following penalties for not paying CPF:
- Late payment interest charged at 18% per annum (1.5% per month), starting from the first day of the following month after the contributions are due. The minimum interest payable is $5 per month.
- A fine of up to $5,000 and no less than $1,000 per offence. and/or up to 6 months jail.
- A fine of up to $10,000 and no less than $2,000 per offence, and/or 12 months jail for repeat offenders.
- Fine of up to $10,000, imprisonment of up to 7 years or both if you deduct your employee’s share of CPF contributions but fail to pay the contributions to CPF Board.
