How to Calculate SDL in Singapore: A Step-by-Step Guide (2026)

Quick answer: SDL is 0.25% of an employee's monthly remuneration, subject to a minimum of S$2 and maximum of S$11.25 per employee per month. It is payable by the employer for all employees.

If you run payroll in Singapore, the Skills Development Levy (SDL) is one of those statutory deductions that is easy to overlook but expensive to get wrong. The good news is that the SDL calculation itself is one of the simplest in the Singapore payroll landscape, a flat percentage with a floor and a ceiling. The complications come from knowing which payments count as "remuneration," which employees are covered, and how the levy is actually collected.

This guide walks through the SDL rate, the exact formula, five worked examples, the payment process, and the penalties for late payment. By the end, you will be able to compute SDL for any employee in your head, or confirm your payroll software is doing it correctly.

What is SDL?

SDL stands for Skills Development Levy. It is a statutory levy that employers must pay to fund national workforce training and upgrading programmes in Singapore. The revenue funds the training grants and subsidies administered under the SkillsFuture movement.

SDL is administered by SkillsFuture Singapore (SSG), the government agency responsible for the national skills and training ecosystem. However, SSG does not collect the levy directly from most employers. Instead, the Central Provident Fund (CPF) Board collects SDL on behalf of SSG, alongside the employer's monthly CPF contributions (Source: CPF Board).

SDL is governed by the SkillsFuture Singapore Agency Act and the SDL Act, which set out the rate, the definition of remuneration, and the employer's obligation to pay. The levy is a cost of employment borne by the employer, not a deduction from the employee's wages.

In short: SDL is a small monthly levy that every Singapore employer pays on every employee to fund the country's workforce training system.

Who pays SDL?

The employer pays SDL. This is the single most important rule to remember, because it is not a deduction you take from an employee's pay, it is an additional cost the employer bears on top of wages and CPF.

The obligation to pay SDL applies to every employee working in Singapore, regardless of nationality or immigration status (Source: SSG). This includes:

• Singapore Citizens
• Singapore Permanent Residents (SPRs)
• Foreign employees holding an Employment Pass (EP), S Pass, or Work Permit

It also covers every employment arrangement:

• Full-time employees
• Part-time employees
• Casual and temporary employees
• Employees on probation or notice periods

There is no exemption for small headcounts, part-time roles, or foreign workers. If you have one employee in Singapore, you have an SDL obligation for that employee.

A common point of confusion: SDL is separate from and in addition to CPF contributions. CPF is the retirement, housing, and healthcare fund that applies to Singapore Citizens and SPRs. SDL is a training levy that applies to everyone, including foreign workers who are not CPF-liable. Paying CPF does not discharge your SDL obligation, and paying SDL does not discharge your CPF obligation. For a deeper look at CPF rates and obligations, see our guide on Singapore CPF contribution rates.

SDL rate and formula

The SDL formula is straightforward, which is why most payroll setups get it right once the inputs are clear (Source: CPF Board).

The formula:

SDL = 0.25% of an employee's monthly remuneration

Subject to two bounds:

• Minimum: S$2 per employee per month (applies when the employee earns less than S$800 per month)
• Maximum: S$11.25 per employee per month (applies when the employee earns more than S$4,500 per month)

In practice, this means:

What counts as "monthly remuneration"?

The term "monthly remuneration" is used interchangeably with "total wages" in the official guidance, and it is deliberately broad. It includes essentially all remuneration payable to the employee for the month (Source: CPF Board). Specifically, it includes:

• Basic salary
• Bonuses and incentive payments
• Allowances (transport, food, housing, etc.)
• Commissions
• Overtime pay
• Any other payment for work done in the month

This is the same "total wages" concept used for CPF purposes, which combines Ordinary Wages (OW) and Additional Wages (AW). If a payment is treated as wages for CPF, it is treated as remuneration for SDL. This alignment is what lets a single payroll engine handle both calculations from the same earnings base.

The one figure to keep in mind: SDL is computed per employee, then summed across all employees, and the total SDL payable for the month is rounded down to the nearest dollar. The rounding happens at the total, not per employee.

Step-by-step calculation with worked examples

Let us walk through the calculation with five common scenarios you will encounter in Singapore payroll.

Example (a): S$700/month — minimum applies

An employee earns S$700 per month in basic salary.

1. Compute 0.25% of S$700: 0.0025 × S$700 = S$1.75
2. Compare to the minimum: S$1.75 is below the S$2 minimum.
3. SDL = S$2.00

Any employee earning below S$800/month will always trigger the S$2 minimum.

Example (b): S$3,000/month — within range

An employee earns S$3,000 per month.

1. Compute 0.25% of S$3,000: 0.0025 × S$3,000 = S$7.50
2. Check the bounds: S$7.50 is between S$2 and S$11.25.
3. SDL = S$7.50

This is the most common scenario for rank-and-file office and operations staff in Singapore.

Example (c): S$5,000/month — maximum applies

An employee earns S$5,000 per month.

1. Compute 0.25% of S$5,000: 0.0025 × S$5,000 = S$12.50
2. Compare to the maximum: S$12.50 is above the S$11.25 cap.
3. SDL = S$11.25 (capped)

Any employee earning above S$4,500/month will always pay the S$11.25 maximum. This is worth noting for management and executive payroll, the SDL cost is effectively flat above that threshold.

Example (d): S$2,500/month salary + S$500 bonus — remuneration includes bonus

An employee earns S$2,500 in basic salary and receives a S$500 performance bonus in the same month.

1. Compute total remuneration: S$2,500 + S$500 = S$3,000
2. Compute 0.25% of S$3,000: 0.0025 × S$3,000 = S$7.50
3. Check the bounds: S$7.50 is within range.
4. SDL = S$7.50

This is where many manual calculations go wrong. Because SDL is based on total remuneration, a bonus, commission, or allowance paid in the same month increases the SDL for that month. If the bonus had pushed total remuneration above S$4,500, the S$11.25 cap would apply.

Example (e): Foreign worker on S$1,500/month

A Work Permit holder earns S$1,500 per month.

1. Compute 0.25% of S$1,500: 0.0025 × S$1,500 = S$3.75
2. Check the bounds: S$3.75 is within range.
3. SDL = S$3.75

Foreign workers are fully covered by SDL. The only operational difference is the payment channel: if the employer has no CPF-liable employees at all, SDL is paid directly to SSG rather than through the CPF Board (see the next section). For the broader obligations that come with hiring foreign workers, including the Foreign Worker Levy, see our guide on the foreign worker levy in Singapore.

How to pay SDL

The payment process for SDL depends on whether you have CPF-liable employees (Source: CPF Board).

If you have CPF-liable employees (most employers)

For the majority of Singapore employers, SDL is collected by the CPF Board alongside monthly CPF contributions. You do not need to make a separate payment to SSG. When you submit your monthly CPF contribution via CPF e-submission and make the GIRO or electronic payment, the SDL for your CPF-liable employees and any foreign employees is included in that single payment. The CPF Board then remits the SDL portion to SSG on your behalf.

If you have only foreign employees (no CPF payable)

If your entire workforce is foreign and you have no CPF-liable employees, there is no CPF submission to attach SDL to. In this case, you pay SDL directly to SSG. SSG provides the channels for direct SDL payment, and the levy remains due monthly on the same cadence as if it were collected through CPF.

Monthly deadline and cadence

SDL is payable monthly, on the same schedule as CPF contributions. The standard CPF contribution deadline is the 14th of the following month (for example, SDL for January wages is due by 14 February). SDL follows the same cut-off. If the 14th falls on a weekend or public holiday, the deadline is extended to the next working day.

Because SDL rides on the same monthly cycle as CPF, the simplest way to stay compliant is to treat it as part of your monthly payroll run rather than as a separate task. For a full walkthrough of the monthly payroll cycle, including statutory deadlines, see our guide on how to run Singapore payroll.

Late payment consequences

SDL is a statutory levy, and non-payment carries real penalties.

Late payment penalty: A late payment penalty of 10% per year is imposed on the outstanding SDL amount (Source: CPF Board). This means an unpaid SDL liability continues to accrue penalty interest annually until it is settled.

SkillsFuture grant impact: Late payment of SDL affects the employer's eligibility for SkillsFuture grant funding (Source: SSG). Because SDL revenue funds the very training subsidies employers apply for, outstanding SDL can block or delay grant approvals. For a company that relies on training subsidies to offset course fees, an SDL shortfall can quietly become a larger funding problem.

In short, SDL is small in absolute dollars, S$11.25 per employee per month at most, but the downstream consequences of non-payment are disproportionate. Treat it as a non-negotiable monthly obligation.

SDL vs CPF vs SHG: what's the difference?

SDL, CPF, and SHG (Self-Help Group) contributions are three distinct statutory deductions that Singapore employers deal with, and they are often confused because the CPF Board collects all three. The table below sets out the key differences.

The practical takeaway:

• SDL is the only one paid entirely by the employer for every employee, including foreign workers.
• CPF is the largest by dollar value and applies only to Singapore Citizens and SPRs.
• SHG contributions are deducted from the employee's wages based on their ethnicity and remitted by the employer, with no employer portion.

For details on the SHG funds (CDAC, MBMF, SINDA, ECF) and their rates, see our guide on Singapore SHG funds.

How AIMM Payroll auto-calculates SDL

The SDL calculation is simple in principle but tedious to run manually across a full headcount every month, especially when bonuses, allowances, and overtime shift the remuneration base. AIMM Payroll handles this automatically.

On every pay run, AIMM Payroll:

1. Computes SDL per employee by applying the 0.25% rate to each employee's total monthly remuneration, enforcing the S$2 minimum and S$11.25 maximum.
2. Auto-applies SDL to all employees, including Singapore Citizens, SPRs, and foreign workers, so no employee category is missed.
3. Includes SDL in the GIRO bank file generated for the pay run, so the levy is bundled into the same electronic payment stream as CPF and salaries.

Because SDL is built into every pay run, you do not need to maintain a separate spreadsheet or set a separate calendar reminder. The levy is calculated, summed, rounded, and prepared for payment as part of the normal payroll cycle. This is the kind of statutory compliance that payroll software exists to remove from your plate.

AIMM Payroll currently auto-calculates SDL every pay run for all employees, applies the rate and bounds correctly, and includes the amount in the GIRO file for submission alongside CPF. (AIMM Payroll is not yet IRAS AIS Category A certified and is not yet PSG-approved; this article describes current payroll features, not certification status.)

Try AIMM Payroll free and let the SDL calculation run itself on your next pay run.

Run compliant Singapore payroll automatically with AIMM Payroll — free for 3 employees. Sign up free.