A Guide for
TIPS
?
Employers are encouraged to
provide pay slips with salary
deduction calculations to their
employees to avoid any
misunderstanding.
MORE QUESTIONS?
Answers to your questions
could be just a click away!
Business
Employer
I want to know
about authorised
salary deductions.
What should I do?
Make sure that any authorised
salary deductions are stated in
appointment letter and employees are aware of the deductions.
http://www.mom.gov.sg
This brochure is updated on 7 May 2014.
LR 11
WHAT YOU NEED TO DO...
Employers can deduct salary for reasons allowed under the
Employment Act, or if ordered by the Court….
What are the allowed deductions?

Absence from work. This deduction is based on the
gross rate of a monthly–rated employee. The formula:
12 X Monthly Gross Rate of Pay
52 X Average number of days an Employee work in a week
 Damage or loss of goods/ money incurred by the company which the employee is responsible for. The employer needs to conduct an inquiry and give a chance
for the employee to explain before any deductions are
made. Deduction should not exceed 25% of the employee’s one month salary and on a once-off basis.
Exceptions may be given with permission by the Commissioner of Labour.
 Cost of meals supplied by the employer requested by
the employee.
 House accommodations, amenities or services given by
the employer and accepted by the employee. The deduction must not exceed the value of the item supplied by the employer and shall not exceed 25% of the
employee’s one month’s salary.
 Recovery of advances, loans or overpayments of salary. The deduction can be in installments spread over
a maximum of 12 months and each installment is limited to 25% of the employee’s salary for the particular
month.
 Income tax.
 Central Provident Fund (CPF) contributions.
 Contributions to any schemes/ funds for the benefit of
the employee, approved by the Commissioner of
Labour.
 Payments to any registered co-operative society.
 Any other purpose approved by the Minister for Manpower.
Maximum amount of deduction that is allowed...
 The maximum deduction amount for one salary period is
50% of the total salary.
 It still does not include:
a) Absence from work
b) Payment of income tax
c) Recovery of advances/loans
d) Payments for a co-operative society (with employee’s consent).
 The deduction can exceed 50% in the employee’s last salary
payment. This is to allow the employer to recover any
money owed by the employee.
Common authorized deductions from Employers
 Excessive penalties/ fines for absence from work. The
amount should be based on gross rate of pay according to
the allowable deduction.
Common unauthorized deductions from Employers
(applicable for foreign workers)
 Work pass renewal fees
 Security deposit
 Saving monies kept by employer
 Levy and Agent payments
 Air ticket for repatriation of work permit holders
 Training courses such as Construction Safety Orientation
Course (CSOC) or Shipyard Safety Instruction Course (SSIC)
 Cost of medical insurance or medical examinations for
work permit holders
WHAT’S NEXT...
If an employer makes an unauthorized salary deduction, the
employee can make a claim with MOM. The employee must
meet the following criteria…
 The person is working for the company under a contract of
service.
 Workman earning not more than $4,500 basic monthly
salary. Generally, a workman is an employee whose work
involves manual labour. Some examples of workman are
lorry drivers, construction workers, kitchen helpers, machine operators
 Employee not earning more than $2,500 basic monthly
salary.
 Managers and executives earning up to $4500 basic
monthly salary.
Frequently Asked Questions
Q: I have an employee working as a Manager
and earning $7000 a month. Can I deduct my
employee’s salary for travelling expenses incurred?
A: Check your employment contract with your
employee for travelling allowances. As your employee is not covered under Employment Act,
you may consider consulting a lawyer to assess if
your employee breached the terms of your employment contract.
Q: My employee has signed a training bond
with my company to work for at least 6
months. The employee wants to resign after
working for 4 months. Can I deduct the employee’s salary?
A: No. Recovery of compensation for breaking
bond is not covered under the Employment Act.
You should discuss and reach a mutual agreement with your employee, or seek legal advice
from a lawyer.
Q: My employee has damaged the company
vehicle and some goods due to carelessness.
Can I deduct my employee’s salary to pay for
the damages?
A: Employer should hold an inquiry and give a
chance for the employee to explain before any
salary deduction. If the inquiry concludes that
employee is at fault, the deduction should be a
one-time basis and shall not exceed more than
25% of employee’s monthly salary.