An Employer’s Guide to Reimbursement of Expenses and Claims
As an employer, you may have had to reimburse your employees when they incurred an expense on behalf of the company. You might also have encountered issues when you yourself were claiming reimbursement for employee benefits like maternity leave from the government.
This article will cover:
- What is a reimbursement? How is it different from a disbursement?
- For which employee expenses are employers required to and not required to reimburse?
- Do employers need to pay CPF contributions for reimbursements?
- Can an employer refuse to reimburse employees?
- Can employers claim reimbursement for employee benefits/compensation and from whom?
What is a Reimbursement? How is it Different from a Disbursement?
A reimbursement is a sum of money paid by a company to an employee who has incurred an expense as a principal – in other words, when the employee contracts with a supplier in their own name or capacity on the company’s behalf.
For example, if employees A and B, in the course of procuring goods for ABC Company, had to travel to meet a supplier and therefore incurred expenses in the form of taxi fares, they may claim reimbursement from ABC Company. This is because A and B had paid for the transport fares in their own name when they personally rode in the taxis to contract with a supplier on behalf of the company.
On the other hand, a disbursement is a sum of money paid by a company to someone when he or she incurred an expense as an agent – in other words, when that person contracts with a supplier in the name of the company or another person.
Take for example if Company A engages organiser B to plan an event for Company A, and Company A orders door gifts from Company C under Company A’s name. When the gifts arrive at the event, Company A authorises organiser B to pay for the gifts.
Organiser B may claim a disbursement from Company A for the payments made for the gifts afterwards because Organiser B had made these payments under Company A’s name.
For which employee expenses are employers required to and not required to reimburse?
Employers may choose to reimburse employers for a range of expenses, with the most common being transport and medical expenses. However, employers are legally required to reimburse medical expenses under certain circumstances.
Transport expenses include parking fees, taxi fares and fixed monthly transport allowances. Whether or not your company reimburses employees for their transport expenses is based on your company policy and the terms of your employee’s employment contract.
Do note that if you have given an employee an advance on travelling expenses, you are not allowed to recover the advance amount from your employee’s salary.
Under the Employment Act, if an employee has worked for you for at least 3 months, then his or her employer must pay for the employee’s medical consultation fee if:
- It results in at least 1 day of paid sick leave; and
- It arises from a medical certificate given to the employee by a medical practitioner who is either from an approved public medical institution (such as a polyclinic or public hospital) or appointed by your company.
On the other hand, employers are not required to:
- Pay for the cost of medicine
- Grant paid sick leave or reimburse medical fees if your employee falls sick during public holidays, while on annual leave, or on their rest days or non-working days
- Grant paid sick leave or reimburse medical fees if your employee visits a doctor to undergo a cosmetic procedure. Whether or not a procedure is for cosmetic reasons will be based on the assessment of the doctor performing the examination
Nonetheless, employers may provide reimbursements beyond what the Employment Act provides for. For example, if your company policy states that employees may be reimbursed for certain cosmetic medical procedures, your employee should be able to claim reimbursement if they undergo such procedures.
Do Employers Need to Pay CPF Contributions for Reimbursements?
If an employee is claiming reimbursement for an expense incurred by him and the expense is supported by official receipts or claim forms, then employers do not need to pay CPF contributions for such reimbursements.
For example, if your employee submits a receipt to claim a meal expense incurred while working overtime and your company policy is to reimburse your employees for such expenses, you do not need to pay CPF contributions for this reimbursement.
On the other hand, employers need to pay CPF contributions for allowances that are part of an employee’s wage. For example, if your employee is paid a fixed monthly transport allowance as part of his wage, no matter how much he or she spends on transport fares every month, you will need to pay CPF contributions for this monthly transport allowance.
Read our other article to learn more on the kinds of payments that attract CPF contributions.
Can an Employer Refuse to Reimburse Employees?
If you do not reimburse employees for their medical consultation fees even though they are entitled to this under the Employment Act, you might be found guilty of a criminal offence and face a fine up to $5,000. Repeat offenders face a fine up to $10,000 or to imprisonment for a term up to 12 months, or to both.
If you fail to reimburse other expenses as required under your employee’s employment contract, your employees may be able to file a contractual salary-related claim against you in the Employment Claims Tribunals (ECT).
During proceedings, the ECT will consider:
- The nature of the claim,
- The monetary value of the claim,
- Whether the claim is made out based on the supporting documents, and
- The efforts made by you and the employee to settle the claim.
At the end of proceedings, the ECT will decide whether to require you to pay money to the employee, or dismiss the whole or any part of the claim.
Can Employers Claim Reimbursement for Employee Benefits/Compensation and from Whom?
As an employer, you must continue paying your employees’ salary while they are on family leave (i.e. maternity, childcare and paternity leave). However, you can claim reimbursements for employee benefits for family leave from the government.
Employers are also required to compensate their employees for light duties arising from work injury, or work accidents. However, they can claim a reimbursement for this from their insurer for those insured under an insurance policy approved under the Work Injury Compensation Act.
If your employee meets the eligibility criteria for Government-Paid Maternity Leave (GPML), the government will reimburse you for at least 8 weeks of your employee’s 16 weeks of paid maternity leave for your employee’s first and second births, and the entire 16 weeks of paid maternity leave for her third or subsequent births.
The GPML reimbursement amount is capped at $10,000 per 4 weeks.
If your employee meets the eligibility criteria for Government-Paid Paternity Leave (GPPL), you will be able to be fully reimbursed for your employee’s 2 weeks of paid paternity leave.
The GPPL reimbursement amount is capped at $2,500 per week.
If your employee meets the eligibility criteria for Government-Paid Childcare Leave (GPCL), you will be reimbursed for the 4th to 6th day of your employee’s 6 days of paid childcare leave per year.
The GPCL reimbursement amount is capped at $500 per day.
Procedure for claiming family leave
Before you can successfully claim reimbursement for family leave, your employee must give you his or her declaration form at least 1 week before the start of the family leave.
Unless your company has its own declaration forms:
- The declaration form for maternity leave is Form GPML1
- The declaration form for paternity leave is Form GPPL1
- The declaration form for childcare leave is Form GPCL1
Once your employee returns from family leave, you will have to submit your claim for reimbursement at the GPL Portal within 3 months of your employee’s last day of family leave.
From 1 September 2020 onwards, employers must compensate their employees who have been put on light duties after getting injured in a work-related accident.
An employer covered under an insurance policy approved under the Work Injury Compensation Act (WICA) will be able to claim reimbursement for light-duty compensation from their insurer.
To claim such reimbursement after your employee has been injured or received a diagnosis of a work-related disease, you will need to submit a Notice of Accident to the Ministry of Manpower (MOM). The Notice will require you to provide the details of the incident, the details of the injured employee, and supporting documents like medical documents.
You will then have to pay for the employee’s medical leave wages and medical expenses, and your employee has to submit a claims processing form to MOM to claim compensation under WICA. MOM will then issue a Notice of Assessment to inform you, the employee, and your insurer of the compensation amount.
After paying this amount, you will have to submit a claim on your insurer’s website to be reimbursed. You will likely need to submit documents such as your employee’s details, his/her medical documents, the Notice of Accident, and the Notice of Assessment.
Note that the procedure for claiming reimbursement for light-duty compensation might differ based on your company’s insurer. It is best that you check with your insurer on the procedure to follow, and the necessary documents involved, before submitting a claim for reimbursement to them.
As an employer, you have to reimburse your employees for medical expenses, and may choose to reimburse them for other expenses such as transport or meal expenses. You may also be able to claim family leave-related reimbursements from the government, and light-duty compensation from your insurer, in certain circumstances.
If you are facing a salary-related claim for allegedly failing to reimburse an employee, you are recommended to consult an employment disputes lawyer for legal advice on your options for resolving the dispute.
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