Salary payments are governed by the Employment Act (EA). Hence, an employer may only deduct an employee’s salary for reasons allowed under the act. Alternatively, he may also do so if there is a court order.

According to the act, authorised deductions can be made for the following reasons:

  • For absence from work (without valid reasons or notifications)
  • For damage or loss of goods or money that the employee was accountable for. But it must be noted that such deduction is allowed only after an inquiry is held and the deduction must not exceed 25% of the monthly salary of the employee. Such deductions can be made as a one-time deduction only.
  • For the cost of meals supplied at the request of the employee.
  • For the cost of accommodation, amenities, and services agreed and accepted by the employee such deduction cannot exceed the value of the supplies made and cannot be more than 25% of the monthly salary.

 

For recovery of advances, loans, or overpaid salary. It must be noted that for advances and loans, deductions can be made in installments spread over a period that does not exceed 12 months and each deduction cannot exceed 25% of the monthly salary. In the case of overpaid salary, the overpaid amount can be fully deducted from the employee.

The maximum amount of deduction for a salary period is limited to 50% of the total salary. This does not include any deductions made for absence from work, recovery of advances/loans, income tax, and payments to the registered societies which the employee has consented. However, in case of termination, the cap on deductions is not applicable, and the employer is allowed to deduct all outstanding amounts owed by the employee. Such deductions can be made for the following purposes.

  • CPF contributions
  • Approved schemes
  • Payment to any registered cooperative society, with the employee’s consent
  • Any other purposes approved by the Ministry of Manpower

 

If you are looking for payroll-related advice, you may contact a MOM-registered employment agency. If there is a need, you may outsource payroll-related matters to service providers like our company.

When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.

Yours Sincerely,
The editorial team at Singapore Secretary Services

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