5 March 2013

In response to queries following the introduction of the Wage Credit Scheme (WCS) in Budget 2013, the Ministry of Finance (MOF) has issued a statement clarifying the basis of calculating gross monthly wage under the WCS.

The gross monthly wage of an employee is calculated by dividing the total wages paid by the employer to the employee in the calendar year by the number of months in which CPF contributions were made.

Total wages comprise all allowances and payments for which contributions to CPF are required,. These include basic salary and additional wages such as overtime pay, commissions and bonuses. In other words, both fixed and variable components of wages qualify.

WCS therefore does not require employers to switch from variable to fixed components of wages in order to qualify, as all these components are considered under WCS. This is in line with the flexible wage system.

More details can be found on the MOF’s website.

Source: Ministry of Finance