By DollarsAndSense Business
April 22, 2020
This article was first published on 20 April 2020 and has been updated to include enhanced measures from the extended “Circuit Breaker”.
The COVID-19 outbreak has affected businesses and livelihood. To provide relief to businesses during the circuit breaker month, the Government has enhanced the Jobs Support Scheme to pay a portion of local workers’ salaries till the end of 2020.
It was first introduced at Budget 2020 and was further enhanced at the Resilience and Solidarity Budgets. Apart from providing cash flow support, the scheme hopes to help businesses retain workers during this period.
Under the Jobs Support Scheme, businesses will receive wage support for the first $4,600 of gross monthly wages paid to their local employees. This includes all your Singapore Citizens and Permanent Resident employees. The wage support begins in April and lasts for 9 months (until December 2020).
For the months of April and May 2020, all businesses will receive 75% in wage support (capped at the first $4,600 of wages) to tide through the circuit breaker period. This was the latest enhancement from the Solidarity Budget.
For the remaining 7 months, businesses will receive co-funding based on the tier that they belong to, for the first $4,600 of gross monthly wages.
Tier 1: Businesses in the aviation and tourism sector will receive 75% in wage support.
Tier 2: Food services businesses will receive 50% in wage support.
Tier 3: All other employers will receive 25% in wage support.
Businesses are tiered according to the impact that COVID-19 has caused, for instance, the aviation and tourism sectors have been severely hit by travel restrictions. If you would like to know if you are eligible for a higher tier, you may fill by this form or call 1800 352 4728 (8 am to 5 pm from Mon to Fri).
Read Also: How I Am Trying To Be Productive And Efficient During The #WorkFromHome Circuit Breaker
Employers who have made CPF contributions for their local employees are eligible for the payout.
Shareholders and/or directors of a company are eligible if they are also salaried employees of the company with Assessable Income of $100,000 or less for the Year of Assessment 2019.
Business owners do not qualify for this payout, including sole proprietors and partners of general partnership, limited liability partnerships and limited partnerships.
Employers trading in their own personal capacity, such as hawkers who do not have UEN, or those hiring local personal drivers or domestic helpers, will not be able to claim wage payout.
Read Also: The Ultimate Business Owners’ Guide To The HDB Home Office Scheme
You do not need to apply for the Jobs Support Scheme. If you are eligible, IRAS will notify you by post the tier that your business belongs to, and the amount of payout you will get. To view your Jobs Support Scheme letters, you may visit this IRAS website.
You will receive a total of three payouts in April, July and October this year. For most employers, the April payout should already be credited.
How will the payout be made? It will be credited to the GIRO bank account that employers used for income tax or GST. For those without GIRO accounts, you will receive the payout via the bank account registered with PayNow Corporate. If you do not have both of the options above, the payout will be made by cheque. To receive your payouts faster, you can sign up for PayNow Corporate.
Read Also: What Is PayNow For Business And 3 Reasons Why Businesses Should Adopt It Soon
Regardless of which tier you belong to, the wage payout will only be paid for the first $4,600 of your employee’s gross monthly wages. Assuming that Employee A earns $5,000 a month, and belongs under Tier 3, you will receive 25% of the first $4,600. The remaining $400 will not receive any wage support.
Payouts are computed based on past wages. For the first payout in April 2020, IRAS computes the amount based on wages paid from October 2019.
The table below shows how IRAS computes the payout for subsequent months. Those who belong to Tier 1 will continue to receive 75% wage support for all applicable months.
Computation of Payouts (Source: IRAS)
With this in mind, companies should understand that any pay cuts made during this period will affect their total payout from the scheme.
As seen from the blue text in Payout 2’s row, your payout is computed based on how much you paid your employee in April 2020, compared to its original salary (in October 2019). It includes a deduction in the equation such that employers who choose to retrench or do pay cuts will receive significantly less.
For a local worker with a gross monthly wage of $3,000 in the retail sector, assume that you choose to pay this worker $1,500 for February and March. In April, you decide that let this worker go.
This table reveals a few things.
Firstly, a pay cut will lead to a smaller payout from the Jobs Support Scheme.
Secondly, whatever decision you made in April will have a significant impact on the overall payout. If you lay off the worker, it may even result in a negative amount because the worker’s original salary of $3,000 was taken into consideration.
Lastly, if you choose to lay off the employee, you will not receive any payout. This further highlights the purpose of the Jobs Support Scheme to retain employees.
If there are any negative quantum from Payout 2, it will be adjusted accordingly in Payout 3. Otherwise, it will be offset from your overall payout from the Jobs Support Scheme. That means it is likely to be deducted from the payouts of your other workers.
According to this advisory released by MOM, employers are advised not to retrench workers, or to use prolonged no-pay leave during this circuit breaker.
If your employees are still working full-time, the advisory recommends paying them their prevailing salaries, including the employer’s CPF contributions. If your employees are not working or are working from home, MOM suggests using the Jobs Support Scheme payout to provide a baseline pay to employers, including employer’s CPF contribution.
Lastly, if you are implementing a pay cut of more than 25% during the circuit breaker period, and have at least 10 employees, you must notify MOM here.
Articles, Stay Relevant on May 20, 2020