Does your company pay for your CPF when you become PR?

[Just another expat]

Just want to find out something from those of you who have converted from expat to local package after getting PR? I'm married to a local girl and I'm thinking of getting my PR. Problem is my company refuses to pay for my CPF. In other words, I have to contribute to both the employee and employer's portion of the CPF. In the first two years it's not so bad but from the third year onwards, I'll be paying 36% of my gross salary to CPF! Is it illegal for the company to insist on that?

Any experieces to share?

[stonie]

hi, as far as I know it is illegial for the company not to pay your CPF. screw these bastards!!

[evehow]

A check on the CPF website will give you the answer you need:
http://www.cpf.gov.sg/cpf_info/Online/ContriRa.asp

It is an offence under the CPF Act if an employer does not pay to its employee CPF contribution which is due.

[fifa]

The company may consider that your package is an all inclusive one. Meaning that whatever they had "saved" in CPF payment had they hired a local/PR, they actually paid to you as an expat. This is more common than you think, and is often the reason why EP holders have a higher pay. You'll definitely have to negotiate this very clearly with your employers to sort it all out. I remember reading that several years ago when the govt cut the CPF contribution rate due to the poor ecnomy, some employers paid the CPF savings directly to staff instead.

If I understand correctly, as a new PR CPF contribution is graduated over the first 5 years. So you & your employers are not socked with the full 36% contribution off the bat.

Arm yourself with the necessary information and talk to HR about it.

[Just another expat]

Thanks for the advice. For most of you, did your employer bear your share of the CPF pls? If so, did you have to agree to a pay cut for them to do so?

[Imagine]

It is quite reasonable from your employer to expect you to pay for CPF yourself.
The employer part of CPF is 16%
That means that after you have your PR, suddenly you eill become 16% more expensive.

What your employer wants to do is this: cut your salary with 16%
After that you will have to contribute 20% to CPF out of your own pocket, and 16% will be paid by your employer.

Anyway, one you become PR you suddenly have 36% less 'on-hand' income to spend.

[Heart of Darkness]

The contribution is graduated, but you can opt to go in at the full rate. I asked my HR dept, whether this meant that the company had to pay the full rate - they said no. I spoke to the CPF ppl and they said that if I opted to pay the full employee contribution, then the company has no choice but to pay the full employer contribution. If your company tells you otherwise...then they are trying to screw you

[Just another expat]

Two main differing views here. On the one hand, I understand why companies are reluctant to pay the CPF for an expat-convert-to-PR. It is essentially a 16% pay rise. But what I want to know is, if I insist on getting a PR, is it actually LEGAL for them to refuse to pay for my CPF? I know they are sort of trying to screw me by refusing to pay for my CPF but is that "illegal screwing"?

[fifa]

No - employer contribution is mandated by law, they cannot not pay. But they can insist that your pay package be revised in light of your change in status, and effectively restructuring your pay to account for the 16% contribution.

[All bad]

FiFa is right.  They have to pay the CPF but they can always deduct it from your current pay.  This is quite common as companies don't want to be saddled with the extra expense. In my previous job, my company did not want to pay for my CPF so if I became a PR, they would have taken it out of my salary.  You need to work out whether it is worthwhile for you or not and whether you want to change companies.  Most of the time, as an expat, you are paid a premium because you don't have the CPF.

[Disagree]

Fifa and All bad,

Assuming one has a written employment contract, it cannot be changed without the consent of both parties.  Therefore, an employer cannot unilaterally deduct its legally-mandated cpf contribution from salary without the agreement of the employee.  Of course, they could elect to sack the employee, but then could have exposure to pay severence in lieu of notice, for example, if it is provided in the contract.  Yes, employees in Singapore don't have a lot of rights, but one right they do have is for the terms of their written contract to be observed.  If the contract is silent on the issue of the cpf contribution, and if the company drafted the contract (both nearly always the case), then a court would construe that the company did not intend to have the right to deduct eventual cpf from salary.  In fact, from a public policy point of view, the reason for the graduated cpf contributions is to ease the immediate burden on both the employer and employee.    

Just another expat:  stick up for your rights and insist that the terms of your employment contract be honoured.  There are plenty of HR people in Singapore who would love to try and take the piss on this issue, but they would be wrong, wrong, wrong.

[fifa]

I am merely pointing out what can happen, I've never said if it was right or wrong and encouraged the original poster to arm himself with the correct infor before speaking to HR. Without knowing what was in his employment contract or what is stated in some HR policy statement, who's to say what's right or wrong?

puleez.

[Imagine]

Disagree,

The contract that you mention is between an expat and a local employer.
In this contract are stated a number of benefits: housing, tickets?, allowances for insurance such as health.
Also it is stated that the employer pays for the costs of WP or EP.
Employer is also the financial guarantor for this expat.

In case this expat chooses to change his status to PR, it is clearly the choice of the employee to amend his contract.
Logically the expat will then also reject rights to tickets home (Singapore is now his home), housing allowance & healt insurance allowance.

A contract is a binding document. For BOTH sides!

Anyway, the present situation in Singapore is not in favor of the employee.
If employer decides to make it a legal issue, I really wonder if the government would be against termination of the contract.

Besides, the contract is offcourse silent about the CPF contribution as EP holders do not need to pay CPF.
However, if the CPF would have been an issue for this expat, there is such a thing as voluntary contribution to CPF.

Why then did this expat choose for all this time to pocket the CPF, and now once it is in his benefit wants the eployer to pay for it?

If the court of Singapore would rule in favor of this expat, I can tell that all future expats hired in Singapore will be presented with 16% less pay.
And all present expats will be presented with a new contract in which the employee has to sign for not applying for PR.
And THAT is exactly what the Singapore government does NOT want.

[This message has been edited by Imagine (edited 14-06-2003).]

[Disagree]

Imagine,

My explanation assumed an expat on a local contract with no expat benefits.  Therefore there are no changes to the contract terms by the employee when she becomes PR.  In fact, by doing so, she is also benefitting the employer in that the employer is no longer responsible for tax and repatriation obligations, which they undertake as part of the  EP process.  As far as an expat on an expat contract with all the bells and whistles, yes, I agree that an employer would have a legitimate beef providing certain expat perks (like housing, trips home, etc.) to a PR.

As to interpretation of contracts, in the common law system (US, UK, and Singapore), contracts that are ambiguous are generally construed against the party drafting the contract, on the basis that the drafter cannot take advantage of an ambiguity they created and could have addressed.

As fifa points out, it does depend on the contract, but if it's a "local contract", then the employer has no grounds for unilaterally changing its terms.  It would be breach of contract, and a rather clear cut case at that.  

What is obvious is that an employer can easily avoid this pitfall by providing a clause in the original employment contract indicating what will occur if an employee becomes a PR (e.g., a reduction in salary).  If they fail to do so, too bad.