Are retrospective salary increments classified as Ordinary Wages (OW) or Additional Wages (AW)?
Retrospective salary increments are increments which are decided later, but retrospectively applied from an earlier month. The back-dated amount will be considered as Additional Wages (AW).
If the salary increment was not applied retrospectively, but was paid late due to an administrative delay, it will be considered as Ordinary Wages (OW) and late payment interest may apply.
Example:
If your salary increment was decided only in April, but your employer decided to back-date the increment to commence from February, the salary increment for the period from February to March will be considered as AW for April.
However, if your salary increment was payable since February, but was not paid out until your employer realises the administrative error in April, your employer will have to compute the CPF shortfall for February and March and make the payment as soon as possible. Late payment interest will apply as the CPF contributions are late.
