Are CPF contributions payable on reimbursement given to my prospective employee for his payment in lieu of notice to his former employer for leaving the company before the end of notice period?
From October 2022, CPF contributions are not payable on the reimbursement given to your prospective employee for the payment in lieu of notice he made to his former employer in order to commence his employment with you earlier. This is in consideration of the fact that payment in lieu of notice is liquidated damages for the breach of contract.
For clarity, CPF contributions are also not payable if you make the payment in lieu of notice on behalf of your prospective employee directly to his employer. There is no change in the Board’s position on this.