Special Employment Credit is like a Godsend
Hiring of aged people in Singapore was a thorn in the flesh for employers in Singapore, due to the increased CPF contributions that the employers have to foot for every employee they have. In the year 2012 however, the government introduced the Special Employment Credit program, meant for cushioning the employers from heavy expenditures as they pay the taxes.
Every employee who is above the age of 50 years and earns over $4,000 monthly is eligible for an 80% SEC. The program is meant to continue for a period of five years, hence it will end on 31st December 2016.
The Benefits of Special Employment Credit
The program in Singapore has a two-way advantage, both on the side of the employer and the employee as well. Business owners could previously want to employ aged people but the increase in the related taxes was a put-off, but with the introduction of the program that is meant to offset the wage, they can bring the aged citizens onboard.
The employees on the other hand don’t have to worry about the employment age limit since they are protected by this program.
How Special Employment Credit Program Works
The employers will simply ensure that their monthly payroll are in proper order. It is important that companies make regular CPF contributions on monthly basis for their workers, and then wait for the CPF Board to process the Special Employment Credit after automatic assessment of the eligibility of the employee in question. The board will later notify the employer through post before paying the related payments.
Even though the employer will make the contributions on a monthly basis, it is good to note that the SEC shall be paid twice annually, in the months of March and September. The amount of the SEC will be received in the bank account that the employer has registered with the CPF Board. If you have not set a payment arrangement with the board you will need to do so, otherwise the SEC amount will be paid to you by cheque.
The Re-employment of Aged Workers
Based on the 2015 budget, employers can now recall aged workers who are above the age of 65 years. With an additional 3% of wage offset, the total offset will stand at 11.5%, and the effective date was 1st January 2015, which will be in effect until the introduction of the new re-employment age.
The Singaporean employers can hence not claim that they lack manpower for the operations in their businesses, since they now have the opportunity to hire experienced workers without having to pay the increased CPF rates. The good thing is that the re-employment age limit will keep on being reviewed after every expiry of the set Special Employment Credit program.
The Physically Challenged Employees
Some employers may shun people with disabilities and the Singapore government supports the employment of such individuals through the SEC. since 2012, Special Employment Credit for persons with disabilities was set at 16% of the employee’s monthly wage, which can go up to $240 monthly. The high percentage encourages the employers to take in Persons with Disabilities (i.e. PWDs) by taking the burden of the CPF payment off the employers’ shoulders.
Special Employment Credit for Business Owners in Singapore
Based on the latest Budget 2016, the SEC will extend till 2019. It aims to help firms hire older workers. Whether you are an MNC or SME company, you should be aware that this SEC is taxable in the year of assessment where you received the cash payout. Having said that, J Accounting do provide payroll services and corporate tax services for your entity. Contact J Accounting Pte Ltd to assist you on this.
