What is the Skills Development Levy (SDL)?
The Skills Development Levy (SDL) is a mandatory monthly contribution that employers in Singapore must pay for all their employees to fund national workforce skills and training initiatives. It ensures every business contributes to workforce development, creating a shared investment in employee growth that benefits individual workers, companies and Singapore's overall economic competitiveness. As industries rapidly evolve, SDL provides the foundation for continuous learning initiatives that keep Singapore's workforce relevant and productive.
Who needs to pay SDL?
, regardless of company size or industry. This includes all employees working in Singapore, including foreign employees (even if they don't contribute to CPF).
, such as domestic servants, gardeners and chauffeurs. Additionally, if employees do not render any services in Singapore in a specific month, employers are exempt from the SDL contribution for that month. However, employees on leave are still subject to SDL as long as the leave arises from their employment in Singapore.
How does a business calculate SDL?
, with a minimum payment of $2 for employees earning less than $800 per month and a maximum of $11.25 per employee. The levy applies only to the first $4,500 of each employee's monthly gross wages - any amount above this threshold is exempt.
Multiply each employee's monthly wages (up to $4,500) by 0.25%. If the result is less than $2, you pay the minimum $2. If it exceeds $11.25, you pay the maximum $11.25.
Most modern payroll systems handle these calculations automatically, ensuring accuracy and compliance.
What are the benefits behind the SDL scheme?
and provides grants for employees who attend training under the national Continuing Education and Training system. This systematic approach to skills development helps businesses stay competitive while supporting national priorities around innovation and digital transformation.
The scheme enhances employee skill sets through systematic investment in professional development, leading to improved productivity, innovation and adaptability within the workforce. Employees gain access to industry-relevant training that might otherwise be unaffordable, creating stronger career progression opportunities.
Are there any penalties for not paying SDL?
Late payment of SDL carries a penalty of 10% per annum on the outstanding amount. This penalty is calculated annually on unpaid SDL amounts and continues until full payment is made. SkillsFuture Singapore Agency may view late SDL payments as indicators of broader compliance issues, which can affect employers¡¯ access to government funding.
Timely submission and accurate reporting are essential for avoiding penalties. Employers should maintain detailed records of SDL calculations and payments while ensuring monthly deadlines are consistently met to prevent accumulating violations.
Explaining payments and refunds for SDL.
Employers can pay SDL and monthly CPF contributions through the same payment channels, including internet banking, direct debit and the CPF Board's online systems. This integration simplifies administrative processes and ensures consistent payment schedules.
If an employer has overpaid SDL, they can request a refund from SkillsFuture Singapore (SSG). The refund process typically involves submitting documentation proving the overpayment amount and circumstances.
Employers can view SDL payment history, retrieve notification letters and manage their accounts through the GoBusiness Dashboard. Modern SaaS payroll solutions also provide SDL tracking features, automated calculations and integrated payment processing to streamline compliance management.
Are there any exceptions for SDL?
SDL applies universally to all employers and employees in Singapore with very limited exceptions (like domestic servants, gardeners and chauffeurs). The flat-rate system ensures broad participation in workforce development funding across all sectors and business sizes.
Employers without employees during specific months must log into the SDL system and submit a declaration of non-liability to SSG. This administrative requirement ensures proper record-keeping even during periods without staff.
The universal nature of SDL reflects Singapore's commitment to shared responsibility for skills development. Rather than exemptions, the system uses minimum and maximum payment limits to balance the contribution burden across different salary levels while maintaining comprehensive coverage.
What is the future of SDL and employee development in Singapore?
SDL continues to evolve to support Singapore's transformation into a skills-based economy. The government regularly reviews contribution rates and funding mechanisms to ensure the system remains effective as workforce needs change. Current trends emphasise digital literacy, data analytics, artificial intelligence and other Industry 4.0 competencies that support economic transformation and competitiveness.
The evolving role of continuous learning positions SDL as increasingly crucial for business sustainability. As job roles transform rapidly due to technological advancement, systematic skill development becomes essential for maintaining workforce relevance and productivity.
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