5 Things Business Owners Must Know About CPF Violations In Singapore
What if you have violated CPF rule ?
If you are a caring business owner, these must be the 5 burning questions you keep asking yourself constantly regarding CPF :
Question #1 : What happens if i pay CPF late or fail to pay CPF for my employees?
Answer :
* Upon detection of late payment or non-payment of CPF contributions, actions will be taken to recover any arrears or CPF contributions owing.
* Interest on late payment & a composition amount may be imposed on the defaulting employers.
Question #2 : So, exactly how does CPF Board calculate interest on late payment?
Answer :
* Interest on late payment is calculated daily at the rate of 1.5% per month, starting from the first day of the following month after the contributions are due (e.g. interest for January contributions will be calculated from 1 February). The minimum interest payable is $5 per month.
For eg,
Gungho Pte Ltd (name fictitious) made a CPF contribution of $3,000 for the month of October on 20 November 2016. This payment is late by 19 days. Therefore, the amount of late payment interest will be:
= $3,000 x 1.5% x 19/30* = $28.50
*Number of days the payment is late/number of days in the month.
Note :
* The cents should be dropped for the interest.
* Hence, the late payment interest payable will be $28.
Question #3 : What is composition of offences?
Answer :
* It is a criminal offence under the CPF Act for late &/or non-payment of CPF contributions.
* The composition offer is to encourage defaulting employers to pay the CPF contributions & to settle the late payment offence out of court.
* Legal action will be taken against employers who do not settle the CPF arrears & compound the offense out of court, before the deadline given.
Question #4 : What are the penalties if employers do not comply with the CPF Act?
Answer :
* If employers are late in paying or did not pay CPF contributions for their employees, they may be subject to:
a) Late payment interest charged at 18% per annum (1.5% per month)
b) Composition amount of <= $1,000 per offence
c) <= $5,000 court fine & > $1,000 per offence &/or < = 6 months’ imprisonment for 1st conviction
d) Up to $10,000 court fine & > $2,000 per offence and/or < =12 months’ imprisonment for subsequent convictions
* If employers deducted the employee’s share of CPF contributions from their employee’s wages & failed to submit the CPF contributions to the Board, they may be subject to < = $10,000 court fine &/or < =7 years’ imprisonment
Question #5 : What are the penalties if employers do not comply with the Employment Act?
Answer :
* Employers may be subject to:
a) Up to $5,000 court fine &/or < 6 months’ imprisonment for 1st conviction
b) < $30,000 court fine &/or < 1 year’s imprisonment for subsequent conviction
PM me if you are unsure. Will be glad to share more on how to avoid falling into the above “CPF” booby traps.
Good Luck !
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