Payroll : Deductions From Employee Salary
Warning to all business owners here…Watch what you deduct from your employee’s salary…
Allowable salary deductions
* you can deduct your staff salary only for specific reasons or if required by authorities :
1. By court order, or other valid authority.
2. If you are declared an agent for the recovery of income tax, property tax or goods and services tax (GST) payable by your employee
Types of deductions allowed :
* For absence from work.
* For damage or loss of goods or money. Your staff salary will be deducted if he or she has damaged or lose goods or money that he or she was responsible for. Before deducting your staff salary, you as employer should:
– Hold an inquiry to determine if he or she was directly at fault.
– Not make any deductions until your staff has had the opportunity to explain the cause of the damage or loss.
– deduct < 25% of your staff 1 month’s salary without installment
* For cost of meals supplied at your staff request.
* For supplying accommodation, amenities and services that your staff has accepted. Deductions must < value of the item supplied, and < 25% of your staff 1 month’s salary.
* For recovering advances, loans or overpaid salary.
– For advances, you as employer can deduct your staff salary in instalment spread over < 12 months. Each instalment < 25% of your staff salary
– For loans, you as employer can deduct your staff salary in instalment. Each instalment < 25% of your staff salary.
– For overpaid salary, you as employer can recover the full amount from your staff
– For CPF contributions.
* For contributions to a scheme at your staff written request. The scheme must be lawfully established for the benefit of your employees and approved by the Commissioner for Labor.
* For payments to any registered co-operative society with your staff written consent.
* For any other purpose. You as employer must first get approval for the deduction from MOM.
Maximum amount of deductions
You as employer only deduct < 50% of your staff total salary payable in any one salary period.
This does not include deductions made for:
* Absence from work.
* Recovery of advances or loans.
* Payments, with your consent, to registered co-operative societies for subscriptions, entrance fees, loan instalment, interest and other dues payable.
However, when your staff contract of service is terminated, any deduction from your staff last salary payment may > 50%. This enables you as employer to recover any sum of money your staff owes
If you have made wrongful deduction of your employee salary, he or she can lodge a claim with MOM for salary arrears or unauthorized deduction, as long as:
* He or she was not employed in a managerial or executive position earning above $4,500.
* He or she can lodge the claim within 1 year of the incident.
If you need help, feel free to contact us at :
(M) +65 90880669
