Are CPF contributions payable on gratuity and ex-gratia payments?
CPF contributions are payable on gratuity and ex-gratia payments that are given in respect of your employee’s employment. For example, if the payment is to:
- reward your employee's good performance,
- reward your employee for the completion of a contract/project,
- entice your employee to remain in employment, or
- recognise your employee's service with you.
CPF contributions are not payable on the gratuity and ex-gratia payments if they are compensations given for termination or loss of employment.
Retirement gratuity given to retired employee who is subsequently re-employed
CPF contributions are not payable on retirement gratuity if it is given to your employee without any condition, i.e. it is given regardless of whether he is subsequently re-employed by you under a new employment contract.
However, CPF contributions are payable if it is given on the condition that he takes up the new employment with you. This cash payment will be considered as wages as it is given in respect of his new employment.