The following are 3 frequently asked questions that we often encounter:
How do I handle an employee who received a large annual bonus before resigning
Why is CPF being deducted differently for employees who joined mid-year?
How can I check if CPF contributions on variable wages are calculated correctly?
CPF calculations on bonuses (AW) can differ depending on an employee’s work history in the year especially if they joined late, resigned mid-year, or had variable monthly pay.
Here’s how Talenox handles it, following CPF Board’s official logic.
Quick Reminder: What is AW Ceiling?
The CPF Board caps CPF contributions on Additional Wages (bonuses, commissions, etc.) using this formula:
AW Ceiling = $102,000 – Ordinary Wages (OW) subject to CPF for the year
(OW is capped monthly: $6,800 in 2024, $7,400 in 2025)
Once the ceiling is reached, CPF is no longer applied to bonuses for that year.
If an Employee Joins Mid-Year
How CPF is calculated:
OW is projected from join month to December (not the full 12 months).
Example: Joined in July → OW projection = July to Dec (6 months).
AW Ceiling = $102,000 – total OW for 6 months (capped monthly).
Talenox handles this automatically when the start date is in the employee profile.
See Page 3 of CPF Board PDF for examples of mid-year joiners.
If an Employee Resigns Mid-Year
How CPF is calculated:
AW Ceiling is recalculated at the final month of employment.
Only actual OW paid from Jan up to resignation month is used.
AW Ceiling = $102,000 – actual OW paid to date
Talenox automatically adjusts this when a resignation date is set before processing the final payroll.
See Page 5–6 in CPF Board PDF for resignation cases.
If the Employee Has Variable OW (e.g. monthly commissions)
How CPF is calculated:
Talenox may initially project OW based on the first few months of salary.
At year end or resignation, the system re-evaluates actual OW and adjusts the AW Ceiling accordingly.
This helps match real earnings and ensures CPF is only applied to AW within the correct ceiling.
See Page 7+ of CPF Board PDF for variable wage examples.
What You Can Do in Talenox
Ensure accurate start/resign dates are entered in the employee profile.
For variable pay, process all past months accurately and consistently.
If on a SUITE plan, download the AW Ceiling Report to verify monthly CPF calculations.
Reference Material
Joiner scenarios – see Page 3
Resignation scenarios – see Page 5
Variable OW scenarios – see Page 7 onward
Notes
Talenox automatically applies CPF’s logic for special cases like joiners, leavers, and variable salaries.
You don’t need to calculate manually just make sure employee profiles and payroll data are correct.