If you run payroll in Singapore, CPF contributions probably get most of your attention. Sitting quietly next to them on the same payment is a smaller charge that many new employers overlook: the skills development levy, usually shortened to SDL. It is small per employee, but it applies far more widely than CPF, and getting it wrong is one of the most common payroll slips for first-time employers.
This guide explains what the levy is, who it covers, how it is usually worked out and paid, and the mistakes to avoid. It is general information, not financial or legal advice. The levy is administered by the Skills and Workforce Development Agency (SWDA, formed in 2026 from Workforce Singapore and SkillsFuture Singapore) and collected through the Central Provident Fund (CPF) Board, so always check the current rules with them.
What the Skills Development Levy Is For
SDL is a levy that employers pay for their employees. It is not deducted from the employee’s salary. The money goes into the Skills Development Fund, which supports workforce training and upgrading in Singapore. In practice, it helps fund the course subsidies and training grants that employers and workers can tap into through SWDA’s SkillsFuture programmes.
That is worth remembering when budgeting. SDL is a cost of employing people, but it is also linked to support your company may be able to use. If you send staff on approved training, check whether course fee subsidies or absentee payroll funding are available for your situation.
Who You Must Pay It For
The key difference between SDL and CPF is scope. CPF contributions generally apply only to Singapore citizens and permanent residents. SDL is broader. It is generally payable for all employees working in Singapore, which includes:
- Singapore citizens and permanent residents
- Foreign employees on work passes, such as Employment Pass, S Pass and Work Permit holders
- Full-time, part-time, temporary and casual employees
Because of this, an employer with only foreign staff, who therefore pays no CPF, can still owe SDL. This catches out many small firms set up by newcomers.
There are some situations with special treatment, such as employees working overseas or particular categories of workers. Do not assume an exemption applies. Check SWDA’s guidance or ask the CPF Board about your specific case.
How the Levy Is Calculated
SDL is calculated on each employee’s total monthly gross remuneration, which generally includes salary, overtime, bonuses and allowances paid in that month. At the time of writing, SWDA publishes the levy as 0.25% of the first $4,500 of monthly gross remuneration, with a minimum amount for lower earners and a cap for higher earners. Rates and bands can be revised, so confirm the current figures on the SWDA or CPF Board website before running payroll.
A few practical points follow from this:
- Each employee is calculated separately, then added together for your total.
- Bonus months matter. Because the levy follows gross pay for the month, a month with a bonus can change the amount for employees under the ceiling.
- The minimum applies even for small payments, so part-timers and casual staff are usually still liable for something.
Many payroll software packages calculate SDL automatically. If you use one, spot check the first few months by hand so you understand the figures.
SDL, CPF and Foreign Worker Levy Compared
New employers sometimes confuse SDL with other payroll charges. They are separate obligations with different rules, and you may have to deal with all three.
| Charge | Who it applies to | Who bears the cost | How it is paid |
|---|---|---|---|
| Skills Development Levy | Generally all employees working in Singapore, local and foreign | Employer only | With the monthly CPF submission to the CPF Board |
| CPF contributions | Generally Singapore citizens and PRs | Shared: employer share plus employee share deducted from salary | Monthly to the CPF Board |
| Foreign worker levy | Certain work pass holders, such as S Pass and Work Permit holders | Employer only | Billed by the Ministry of Manpower (MOM) |
If you employ S Pass or Work Permit holders, you may pay both SDL and the foreign worker levy for the same person. Our guide to the S Pass framework and levy explains how that separate levy works, and CPF for employers covers the contribution side.
How to Pay It Each Month
SDL is collected together with CPF contributions, through the CPF Board’s employer e-services. The usual monthly routine looks like this:
- Run payroll and confirm each employee’s gross remuneration for the month.
- Calculate SDL per employee, applying the current rate, minimum and cap.
- Submit the CPF and SDL amounts together through the CPF Board’s online portal, using your company’s CPF submission number.
- Pay by the due date, typically through GIRO or another approved method.
- Keep records of the calculations and payment confirmations.
If your company employs only foreigners, you still need to set up CPF employer access so that you can submit SDL. Register early, ideally before your first payroll run.
Late payment can attract interest or penalties, and persistent non-payment can lead to enforcement action. If you discover past months were missed, contact the CPF Board, pay the arrears and correct your process rather than waiting to be caught.
Common Mistakes First-Time Employers Make
- Skipping SDL for foreign staff because no CPF is due. This is the most frequent error.
- Deducting SDL from salaries. It is an employer cost. Taking it from pay may breach employment rules; see our guide to the Employment Act for employers for wider obligations on salary deductions.
- Forgetting part-timers and casual staff. Short or small engagements usually still count.
- Using outdated rates in a spreadsheet built years ago.
- Missing it in the first month. New companies often set up payroll in a rush; add SDL to your onboarding checklist from day one.
Building SDL Into Your Payroll Process
The simplest way to stay compliant is to treat SDL as a fixed line in every payroll run, not an afterthought. Note it in your payroll checklist, make sure whoever handles payroll, in-house or outsourced, knows it applies to every employee, and review the rates once a year against SWDA’s published figures.
When you are planning new hires, include SDL in your cost estimate alongside salary, CPF and any foreign worker levy. If you are just starting to build a team, our guide to hiring employees in Singapore walks through the wider setup. And once the levy is running smoothly, look at the training support it helps fund. Used well, it can bring real value back to your business.
Official sources: CPF Board · SkillsFuture (SWDA)