Govt punishes errant employers for underpaying CPF

In 2018, firms failed to pay over $600m in CPF to staff

Govt punishes errant employers for underpaying CPF

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.

READ MORE: Can you legally give staff a pay cut?

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.

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