Reimbursements and Claims: Ultimate Guide for Singapore Companies

employee reimbursement

When you run a business, you’ll likely have to reimburse your employees for various expenses and costs. The most common type of reimbursement is for business-related expenses. For instance, your salespeople may entertain clients, and will likely need to be compensated for meals and other gifts they provide to customers. You will also have to reimburse employees for medical expenses, particularly if these expenses stem from work-related injuries/diseases. You may also need to file reimbursement claims as a business owner, such as when claiming compensation for maternity leave benefits from the government. This guide will go over the key aspects of employee reimbursements.

Here’s a summary of the key points:

  1. What is an employee reimbursement?
  2. Reimbursements vs disbursements
  3. Legally mandatory vs optional reimbursements for employees
  4. Do you need to make CPF contributions for reimbursements?
  5. Are you allowed to refuse employee reimbursements?
  6. Can you claim reimbursements for employee benefits?

What are reimbursements?

A reimbursement is money the company pays to employees, to compensate them for expenses incurred.

Example: John works as a sales manager for a company. As part of his job, John has to entertain clients over meals. He also has to travel to meet clients in Singapore and in various parts of Asia. John can file reimbursement claims with his employer for his work-related meals, and transportation expenses.

On the other hand, a disbursement is a sum of money paid by a company to someone when he or she incurred an expense as an agent – in other words, when that person contracts with a supplier in the name of the company or another person.

Reimbursements vs Disbursements

Reimbursement Disbursement
Paid to own employees for expenses incurred Paid to external parties for expenses incurred in your company’s name

Sometimes, people get confused about the difference between reimbursements and disbursements. A disbursement is a sum of money paid to external parties, for expenses ultimately incurred by your company. For instance, let’s say you contract a party planner (company B), to organise a year-end Dinner-and-Dance to reward your staff. The party planner orders a variety of hampers and gifts to present to your staff at the event. The party planner can make an advance payment to the hamper and gifts supplier first. The party planner will then lodge a disbursement claim with your business, to claim compensation for the expenses incurred in planning the event.

Legally mandatory vs optional reimbursements

Employers are legally obligated to reimburse employees for medical expenses, up to a certain amount. All other reimbursements are optional, unless otherwise stated in your employment agreement.

Legally required reimbursements Optional reimbursements
Medical expenses

  • Medical consultation fees only, for paid sick leave
  • Medical expenses up to $45,000, for work-related injuries/sickness
  • Compensation of $225,000, for death of employee in work-related incident
  • Compensation of $289,000, for permanent disability of employee in work-related incident
All other expenses, except medical expenses.

 

Examples include, but are not limited to:

Travel expenses

Meal expenses

Client entertainment expenses

Childcare expenses

Phone bill expenses

Laptop expenses

Clothing/uniform allowances

Leisure allowances (e.g. company benefits like free movie tickets, Zoo passes, etc.)

Medical expense reimbursement:

MOM requires employers to reimburse employees for paid sick leave. This is part of Singapore law.

If your employee takes paid sick leave, you must pay the following expenses:

  1. Medical consultation fee
  2. Employee salary while on paid sick leave

You must reimburse your employee for their medical consultation fee, if the following conditions are met:

  • Your employee has worked for you for at least 3 months
  • Your employee’s medical consultation results in at least 1 day of paid sick leave
  • The medical certificate is issued from a public institution, or a healthcare provider appointed by your company

Common questions about medical expense reimbursements

Q1: Do I also have to pay for my employee’s medication?

Answer: No. You only have to pay for the medical consultation fee. You don’t have to pay for the medication.

Q2: Do I have to pay for my employees’ medical consultation if they visit see a private clinic?

Answer: No. You only have to pay if they visit a public institution, or a healthcare provider appointed by you. See here for the list of approved institutions.

Q3: Do I have to pay for medical consultations for cosmetic procedures/plastic surgery?

Answer: No. Employers do not have to compensate workers for cosmetic procedures. If a member of staff wants a botox shot, or a nip-and-tuck, that’s great. They’ll just have to do it on their own dime!

Take note that the above reimbursements only apply for non-work-related injuries/sickness. If your employee gets suffers a work-related injury/sickness, the types of medical expenses that you have to compensate them for immediately becomes much broader. If the injury/sickness if work-related, you must compensate your employee for all medical costs related to the injury/sickness, up to a maximum of $45,000. This includes medication, and other medical expenses – not just medical consultation costs.

Optional reimbursements:

You are not legally obligated to compensate employees for all other kinds of expenses. Of course, just because it’s not legally obligatory, doesn’t mean it makes good business sense to not pay your employees for certain important expenses. For instance, if you don’t compensate your sales staff for the money they spend on clients, then your salespeople are not likely to go the extra mile to keep your clients happy. You can say goodbye to niceties like hampers, gifts, good meals, and other attractive incentives that your salespeople use to keep your clients close to you. Even though these reimbursements are optional in the eyes of the law, you should think about the ultimate impact on your sales and profits when considering whether or not to reimburse employees for certain expenses.

Here’s a list of common expenses that business owners will typically compensate employees for:

  1. Client entertainment expenses: keeps clients happy and sales coming in
  2. Travel expenses: allows your sales staff to meet clients at their convenience
  3. Meal expenses: nice staff benefit to help employees defray costs while eating out
  4. Clothing/uniform allowances: usually provided if staff have to wear uniforms, e.g. in F&B or service business environments.

Do businesses need to make CPF contributions for reimbursements?

It depends on whether these reimbursements are ad-hoc, or whether they are allowances that form part of your employee’s monthly salary.

Ad-hoc reimbursements: You don’t have to pay CPF contributions for ad-hoc reimbursements to employees.

Example: One of your employees submits a travel and meal reimbursement claim to you. The employee had to take a taxi to meet a client, and had to buy dinner for the client. You don’t have to make contributions to the employees’s CPF for the reimbursements to pay to this employee.

Tip: As part of industry-standard compliance practices, make sure that your employees submit official documents like receipts to substantiate these claims.

Allowances that are part of employees’ salaries: You must make CPF contributions if you provide allowances that form part of your employees’ salary.

Example: Your employee is paid $4,000/month. This is the breakdown of her monthly wage:

  1. Basic salary: $3,000
  2. Allowance for transport, entertainment, and meals: $1,000

You must make CPF contributions on both the basic salary and the allowance component. This is because the allowance is part of an employee’s salary, which means it’s subject to CPF contributions.

Can I refuse to reimburse employees?

Yes, as long as the reimbursement is not related to medical consultations, or work-related injuries/sicknesses. Let’s revisit the table that highlights mandatory vs optional reimbursements.

Legally required reimbursements Optional reimbursements
Medical expenses

  • Medical consultation fees only, for paid sick leave
  • Medical expenses up to $45,000, for work-related injuries/sickness
  • Compensation of $225,000, for death of employee in work-related incident
  • Compensation of $289,000, for permanent disability of employee in work-related incident
All other expenses, except medical expenses.

 

Examples include, but are not limited to:

Travel expenses

Meal expenses

Client entertainment expenses

Childcare expenses

Phone bill expenses

Laptop expenses

Clothing/uniform allowances

Leisure allowances (e.g. company benefits like free movie tickets, Zoo passes, etc.)

Not allowed to refuse reimbursement Allowed to refuse reimbursement

You can refuse reimbursements for the expenses in the right column. Unless you’ve specifically agreed to compensate workers for such expenses in your employment contract, you don’t have to pay your workers for such reimbursement claims.

You cannot refuse reimbursements for claims in the left column. For instance, you cannot refuse reimbursement claims for medical consultations, when workers take paid sick leave. This is a legal entitlement under Singapore law. This is designed to protect workers’ rights to access medical care, and to adequate rest when ill. It is a criminal offence to not reimburse workers for qualifying medical consultation fees. Under the Employment Act, you can be jailed up to 12 months, and/or fined up to $10,000.

If you fail to compensate employees for certain expenses that were agreed upon in your employment contract, your employees can file a legal claim against you. They may do so in the Employment Claims Tribunals (ECT) (for claims under $20,000), or file a civil lawsuit against you. Employees can sue company directors personally in such cases. It’s best to consider getting Directors and Officers (D&O) Liability Insurance, which will cover employee vs director lawsuits.

For lawsuits filed in the ECT, the courts will review several aspects of the claim:

  1. Why the claim was filed, and the facts of the case
  2. How much is being claimed against you
  3. Any efforts made by you or the employee to settle the dispute out of court

The ECT will then decide whether you have to compensate the employee for their claim. If you have an expense that you’ve agreed to compensate employees for in their employment contract, it’s best to honour that agreement. It’s never good to allow cases to go to court, unless the employee in question is truly being unreasonable and making demands that are not within their employment contract. Court proceedings are a big extra expense, suck up lots of time, and are poor for publicity and staff morale.

Can businesses get reimbursed for employee benefits?

Business owners can claim compensation for certain employee benefits that they provide. The most common examples are maternity leave, paternity leave, and childcare leave. The government will compensate you for providing such benefits to your workers. This is designed to encourage employers to provide these benefits to workers. This allows workers a better work-life balance, and also helps the policy goal of increasing the country’s overall births.

As an employer, you must continue paying your employees’ salary while they are on family leave (i.e. childcare leave, maternity leave, and paternity leave). However, you can claim reimbursements for employee benefits for family leave from the government.

Reimbursement for childcare leave

There are two schemes that provides compensation for businesses to grant their workers paid childcare leave. These schemes are differentiated according to how old the employee’s children are.

The first scheme applies to childcare leave taken for children under 7 years of age. It’s called the Government-Paid Childcare Leave (GPCL) scheme. As an employer, you can claim reimbursement from the government. The government will pay for 3 days of childcare leave, for each qualifying employee.

The second scheme applies to childcare leave taken for children between 7-12 years of age. It’s called the Extended Childcare Leave (ECL) scheme. As an employer, you can claim reimbursement from the government. The government will pay for 2 days of childcare leave, for each qualifying employee.

Reimbursable amount:

For the GPCL scheme, the maximum reimbursement that employers can claim is $500/day.

For the ECL scheme, the maximum reimbursement that employers can claim is $500/day.

Qualification criteria for childcare leave:

  1. Childcare leave taken must be for child(ren) must be in the age groups stated above (basically 12 years old or younger)
  2. Child(ren) must be Singapore citizens
  3. Employee must have worked for the employer for at least 3 months

Reimbursement for Maternity leave

Businesses can claim compensation from the government for employees who take maternity leave. You can claim 8 weeks of maternity leave salary for your employee’s first and second child. You can then claim 16 weeks of maternity salary for the third child, and beyond.

Your employee must meet the criteria under the Government-Paid Maternity Leave (GPML) scheme. Read more about maternity leave in Singapore.

Reimbursable amount:

The maximum amount employers can claim is $10,000 for every 4 weeks of maternity leave. This figure includes CPF contributions.

Qualification criteria for maternity leave:

  1. Maternity leave can be taken up to 4 weeks before the child’s birth. All maternity leave must be used within 12 months of the child’s birth.
  2. Child must be a Singapore citizen
  3. Employee must have worked for the employer for at least 3 months

Reimbursement for Paternity leave

Businesses can claim compensation from the government for employees who take paternity leave. You can claim 2 weeks of paternity leave salary. Unlike with mothers, the amount of leave claimable does not increase with additional children. It is capped at 2 weeks, per child.

Your employee must meet the criteria under the Government-Paid Paternity Leave (GPPL) scheme. Read more about paternity leave in Singapore.

Qualification criteria for maternity leave:

  1. Paternity leave can only be taken after the child’s birth. All paternity leave must be used within 12 months of the child’s birth.
  2. Child must be a Singapore citizen
  3. Employee must have worked for the employer for at least 3 months

Reimbursable amount:

The maximum amount employers can claim is $2,500 for every 4 weeks of paternity leave. This figure includes CPF contributions.

Childcare, maternal, and paternal leave reimbursement procedure

You will need to submit your reimbursement claim to the government within 3 months of your employee’s return from childcare, maternal, or paternal leave. You may submit your claim online via the Government Paid Leave (GPL) portal.

Here are quick links to the official application forms that your employees can use to apply for paid family leave.

  1. Childcare leave form
  2. Maternity leave form
  3. Paternity leave form

You will need either the official forms, or your own form (which captures similar information to the official one) as part of your reimbursement submissions. You’ll also need some additional information, which you can find here.

Reimbursement for work-related injuries/sickness

Under Singapore law, all employers must compensate their employees for work-related injuries and sicknesses. This includes work-related Covid-19 infections. This is legislated by the Work Injury Compensation Act.

Work Injury Compensation Insurance is widely purchased in order to alleviate these potentially large costs from employers.

To submit a Work Injury insurance claim, employers must first notify MOM about their employee’s work-related injury or sickness. Employers must provide an incident report, the employee’s personal details, medical documents like doctor’s reports, and other reports like police statements (if applicable).

MOM will then carry out an investigation. After investigations, MOM will issue a Notice of Assessment (NOA), which stipulates the amount of compensation the employer owes to injured/sick employee. After the NOA has been issued, employers can then file a claim with their insurance company to compensate them for these expenses.

Get Work Injury Compensation from $5/month, per worker

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