An ex gratia payment is an amount of money that an employee would receive by the employer as a termination payment when he/she has left the company.

It usually represents a “good will” sum without any obligation by the employer to pay this.

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Are CPF contributions payable on gratuity and ex-gratia payments?

CPF contributions are payable on ex-gratia payments that are given in respect of your employee’s employment. For example:

  • reward your employee's good performance

  • reward your employee for the completion of a contract/project

  • entice your employee to remain in employment OR

  • recognize your employee's service

NOTE: CPF contributions are not payable on the ex-gratia payments if they are compensations given for termination or loss of employment.

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