Must You Pay the Skills Development Levy? How Much is It?
Other than the well-known CPF contribution that employers have to make, employers have to make other employer contributions, such as the Skills Development Levy (SDL). If you are an employer seeking to understand what the SDL is and how much you have to pay for it, do read on.
This article will cover:
- What is the SDL
- Whether employers must pay SDL for all employees
- How to calculate how much SDL to pay every month
- How to pay the SDL
- What happens if you paid the SDL late
- What happens if you have financial difficulties that prevent you from making full SDL payment
- What happens if you have underpaid or overpaid the SDL
- The administrative requirements employers have to fulfil when paying the SDL
- Other compulsory payments employers have to make
What is the Skills Development Levy?
The Skills Development Levy (SDL) is a mandatory levy that all employers have to pay for their employees working in Singapore.
The SDL funds will be collected by the Central Provident Fund (CPF) Board and channelled into a Skills Development Fund. Managed by the SkillsFuture Singapore Agency (SSG), these funds will be used to support workforce upgrading programmes under the national Continuing Education Training (CET) system.
Your company will also benefit as such monies from the Skills Development Fund can be granted to you when you send your employees for eligible training programmes under the CET.
Must I Pay the Skills Development Levy for All Employees?
Employers must pay the SDL for all employees working in Singapore. This is regardless of their employment type (e.g. full-time, part-time, contact-based, casual or temporary) and nationality. This also includes Work Permit holders and Employment Pass holders.
However, there are a few exceptions made for certain employees, such as interns or students concurrently enrolled in a local university and are employed in that university under an approved training programme.
How Do I Calculate How Much Skills Development Levy I Have to Pay Every Month?
As a starting point, the SDL is payable at a rate of 0.25% for up to the first $4,500 of an employee’s total monthly wage. The maximum amount of levy payable for an employee is hence $11.25. However, there is a minimum amount of $2 payable under the levy.
Therefore, if you have any employee(s) earning $800 or less a month, you will have to pay a minimum of $2 for the SDL of each of such employees, even though 0.25% of their monthly wage is less than $2.
To better understand what forms part of the employee’s monthly wage that you need to pay SDL for, you may refer to this useful resource.
After tabulating the SDL payable for each employee, add up the total amount of SDL payable for your company and round this figure down to the nearest dollar.
Below is a table that illustrates the amount of SDL payable by a hypothetical company with five employees earning between $400 and $7,000 per month:
|Jane||$400||$2||Minimum SDL payable is $2|
|Rahul||$600||$2||Minimum SDL payable is $2|
|Sean||$900||$2.25||Calculated by: 0.25% x $900 = $2.25|
|Xiao Huang||$4500||$11.25||Maximum SDL payable is $11.25|
|Aisha||$7000||$11.25||Maximum SDL payable is $11.25|
|TOTAL SDL PAYABLE||$28 (rounded down to the nearest dollar)|
The SSG has also provided an SDL Calculator that can assist in your calculations of the monthly SDL payment.
How Do I Pay the Skills Development Levy?
All SDL funds payable can be paid together with the employee’s CPF contributions, either at CPF e-submit@web or CPF e-submit @AXS (for employers with 10 or fewer employees).
However, if you employ only foreign employees and do not need to pay any CPF contributions, payment for the SDL should be made directly to the SSG.
Note that the SDL must not be deducted from the employee’s salary as it is ultimately a contribution made by the employer (rather than the employee).
What Happens If I Paid the Skills Development Levy Late?
You must remember to pay the SDL to the CPF Board by the 14th day of the following month. Otherwise, there will be a penalty of 10% per year for late contributions on the outstanding amounts.
Additionally, it is important to ensure that the payment is accurate and that you have not given any false and/or misleading information relating to the payment of the levy.
An employer who negligently or without excuse gives false information that affects his or anyone’s ability to pay the SDL will be found guilty of an offence under section 11(1)(b) of the Skills Development Levy Act.
If convicted, the employer will be liable to a penalty equal to the amount of the SDL due and unpaid. The employer will also be liable for a fine of up to $2,500, up to 6 months’ jail or both.
What If I Have Financial Difficulties That Prevent Me From Making Full Payment of the SDL?
If you have difficulties making payment, you can request to pay through instalment payments. To do so, you may submit your request under the SSG Feedback Portal.
You will need to provide information such as:
- The amount of SDL in arrears
- Reason(s) for your difficulty to make payment in one lump sum
- Number of instalments required
What Happens If I Have Underpaid or Overpaid the Skills Development Levy?
If you have not been paying the SDL, or have mistakenly been paying an insufficient amount, you may make a lump-sum back-payment to the CPF Board or SSG as soon as possible.
In the event that you believe you may have overpaid the SDL, you can request for an SDL E-Refund via the SSG website by logging in with your SingPass or CorpPass.
What Administrative Requirements Do Employers Have to Fulfil When Paying the SDL?
Under the Skills Development Levy Act, employers liable to pay SDL should keep in safe custody a register of all employees. The register should contain the following details:
- Employee’s full name
- Identity Card Number (NRIC/Work Permit)
- Nature of employment
- Rate and amount of remuneration
- Date of commencement
- Date of cessation of employment (if applicable)
- Other relevant records for the SSG to accurately ascertain the levy payable by the employer. These records will be helpful for safekeeping as the SSG may also request for records such as the CPF Board’s Record of Payment (Form 90/90A) as documentary evidence of SDL payment.
Having properly updated payment records are necessary not only to ensure that the monthly SDL payments are correct, but also because officers from SSG may also conduct audits on SDL payments.
Other Compulsory Payments Employers Have to Make
Apart from the SDL, there are also other compulsory contributions or payments that employers have to make. Some Some of these may be deducted from their employees’ salaries. The following sections will briefly detail these compulsory payments.
Central Provident Fund
The CPF is a social security savings system to ensure self-reliance even after retirement. Other than the SDL, employers of Singapore registered businesses also have to make CPF contributions for their Singapore citizen and Permanent Resident employees who are working in Singapore and earning more than $50 a month.
If you require more information, we have an article that explains CPF contribution of employees in detail for employers.
Foreign worker levy
Employers hiring foreign employees do not have to make CPF contributions for such foreign employees. However, they will have to pay a foreign worker levy for Work Permit and S Pass holders.
Self-Help Group funds
In addition to the above payments, all employers may have to deduct a sum every month from their employee’s monthly wages for contributing to the Self-Help Group (SHG) funds. The SHG funds are intended to uplift less-privileged, low-income families.
While payment to such SHG funds are not compulsory, all employees will make contributions in accordance with their monthly income unless they choose to opt-out.
SHGs funds are made payable to different organisations in accordance with the employee’s race or religion. There are four SHGs in Singapore:
- Chinese Development Assistance Council (CDAC)
- Singapore Indian Development Association
- Eurasian Community Fund
The SDL is essential in allowing employees to undertake quality training to constantly upgrade their skills. In order for our industries and employees to benefit from such training and remain competitive, it is important that you, as an employer, promptly pay the accurate amount of SDL every month.
If you have additional queries, you can either call SSG’s customer service officer at +65 6785 5785 or submit your queries through the SSG Feedback Portal.
You may also engage a corporate secretarial firm to assist you with any administrative matters when paying the SDL.