What Is the Annual Wage Supplement (AWS) in Singapore?

Learn about Singapore's Annual Wage Supplement (AWS): Boosting employee rewards, fostering loyalty. Explore benefits and implementation insights

Annual Wage Supplement

What Is the Annual Wage Supplement (AWS) in Singapore?

The Annual Wage Supplement is a single payment to employees’ gross annual wage. It can also be referred to as the 13th-month payment.

AWS is offered with regard to your contract statement, ruling out the thought that it might be compulsory. However, organizations are encouraged to offer AWS to boost their workforce productivity.

The Annual Wage Supplement can be negotiated! Your employer might request to pay a lower amount if the company performed poorly that year.

Who’s Eligible for Annual Wage Supplement?

Singapore Permanent Residents (PRs) are eligible for AWS. Nonetheless, different companies have varying AWS policies, which might affect your eligibility.

Ensure you’re comfortable with the company’s AWS policy before you proceed with the employer.

How Is the Annual Wage Supplement Calculated?

There are basic guidelines that help with calculating AWS. These include;

  • Your Annual Wage Supplement cannot exceed one month’s salary.
  • There is NO specific method of calculating AWS. It all depends on the organization’s policies.
  • The date an employee joined a company will affect the AWS calculation. (If calculated using months)

Here are the most basic AWS calculation methods;

Calculating AWS Using Calendar WorkDays

Count all the days an employee actively showed up at the job throughout the year. Divide the total by 365 or 366 (depending on whether it’s a leap year.) Multiply the resulting value with the employee’s monthly salary.

(Total number of days worked ÷ 365/366) × Monthly Salary

Calculating AWS Using Months Worked

Here’s how to calculate Annual Wage Supplement using months worked:

(Number of complete months worked that year÷ 12) × Monthly Salary

However, this method heavily relies on the description of a full work month in the company’s policy.

If, for instance, you join a company on the 14th of a month, some companies might regard that as a full month when calculating AWS, unlike others. On the other hand, joining the 16th of a month might not qualify as a whole month during calculation and vice versa.

Carefully go through the company’s AWS policy before making any calculations.

Is the Annual Wage Supplement (AWS) a Mandatory Payment in Singapore?

No! Annual Wage Supplement is not a mandatory payment in Singapore. It is a form of motivation for employees to continue rendering excellent services to a company.

Even when it is a common practice in Singapore, AWS is not covered by any employment laws.

However, if your AWS is clearly stated in the contract terms, you deserve it when the year ends.

How Does the Annual Wage Supplement Impact Employee Motivation and Retention?

AWS plays a huge role in employee motivation and retention. It rewards the employee for the time they spent in a company. As a result, the company can retain employees better by introducing AWS rewards.

Can Foreigners who Work in Singapore Receive Annual Wage Supplement? (AWS)

Yes! AWS eligibility entirely depends on a company’s policy. Different employers have different ways of approaching the concept. Foreign workers need to check with their employers for clarity on AWS eligibility.

What Are the Penalties for Late Payment of the Skills Development Levy?

You’ll be faced with a 10%-per-year penalty on any outstanding SDL balances.

However, if you face challenges paying the total amount of SDL, you can negotiate an installment plan. Get in touch with SkillsFuture agents through their feedback portal.

You’ll need to give the total amount of SDL due, reasons for the outstanding SDL, and proposed instalment terms.

Is Annual Wage Supplement Taxed?

Yes! Annual Wage Supplement is a form of remuneration under the Central Provident Fund, CPF. That means it is a form of ‘bonus’ that automatically qualifies for CPF contributions.

AWS is also classified as a taxable income under the IRAS, Inland Revenue Authority of Singapore. Yes. Taxable income!

Can the Annual Wage Salary be Amortised?

Some employers offer AWS to employees gradually, together with their monthly pay. The other alternative would be to provide it as a lump sum when the year ends.

That is crucial in providing a stable income for the low-earning employees. Again, spreading the AWS bonus throughout the year allows employees to manage their cash flow more easily.

Amortizing AWS also addresses employee income gaps, creating a positive work environment.

Will I Get AWS After Working for a Company for Less than a Year?

AWS is not compulsory. It is a reward that depends on the company’s policies. As a result, the organization also dictates the terms of the Annual Wage Supplement.

In this case, check your contract terms for information concerning AWS. Some companies offer AWS after working for less than a year, while others won’t.

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