Is the 13th Month Bonus Compulsory in Singapore? AWS, Pro-Rating, CPF and Tax

Short answer: No. The 13th month bonus Singapore employees often expect, formally the Annual Wage Supplement (AWS), is not compulsory by law. Your employment contract, staff handbook or union collective agreement decides whether it is payable, how it is pro-rated and what happens if you leave. If it is promised, CPF and tax apply.

This article is general information only and is not legal, tax or immigration advice. For matters needing legal advice, we work with a panel of experienced Singapore law firms.

Is the 13th month bonus compulsory in Singapore?

No. MOM states that the Annual Wage Supplement (AWS), or “13th month payment”, is not compulsory under the Employment Act, and that payment depends on what is in your employment contract or collective agreement. Employers are encouraged to give it as a reward for contributing to company performance.

So the question to ask is “what did my employer promise in writing?”. MOM lists three places where the terms sit:

• the employment contract;
• the company’s employment handbook; and
• the collective agreement, if the company is unionised.

If the contract is silent and the company has simply paid one every year, ask HR in writing what the policy is, because eligibility, pro-rating and leaver terms are rarely obvious from habit alone.

What is the AWS and how is it different from a bonus?

The AWS is a single annual payment on top of the total annual wage, usually equal to one month’s salary. A bonus is a one-time reward, usually at year-end, and a variable payment is an incentive designed to lift productivity. MOM treats all three as variable wage components that are not compulsory unless the contract or collective agreement says so.

Payment	What it is (per MOM)	Compulsory?
Annual Wage Supplement (13th month)	A single annual payment on top of the total annual wage	No, unless in the contract or collective agreement
Bonus	A one-time reward, usually at the end of the year	No, unless specified in the contract or collective agreement
Variable payment	An incentive payment to increase productivity or reward contributions	No, unless specified in the contract or collective agreement

Source: MOM, “Variable wage components: AWS, bonus, variable pay”, as at 8 November 2026. Employers who want their payslips and contracts to be clear on these components can read our guide to key employment terms and itemised payslips.

Do new joiners and leavers get a pro-rated 13th month bonus?

Only if the contract or policy says so. MOM states that entitlement to AWS and how it is calculated, including pro-ration, depends on the terms of your contract. It also says the AWS position is the same for someone who has worked less than 12 months, and for someone who left right before or around the time the AWS is paid.

There is no statutory formula, so employers choose one and should write it down. Common wording that employers use includes:

• pro-rated by completed months of service in the calendar year;
• payable only if the employee is still employed on the payment date; or
• subject to a minimum service period.

We have not found an official MOM or CPF rule that favours one of these options, so treat them as drafting choices, not legal requirements. Whatever the policy is, apply it consistently, because unclear terms are a common source of disputes. If an AWS is already due and unpaid when someone leaves, it may fall into the final pay discussion, and our article on final salary and unreturned property explains why employers should keep separate claims separate.

Can an employer reduce or cancel the 13th month bonus?

MOM says an employer can negotiate a lower amount of AWS with its employees or the trade union if business results have been exceptionally poor for the year. If the AWS is written into the contract, the employer is bound by those terms, so the negotiation route matters.

MOM also sets a cap: an employer that paid no AWS before 26 August 1988 cannot pay more than 1 month’s salary as AWS.

If you plan to change the terms, consult staff and record the agreement in writing. Unilateral cuts to pay raise their own issues, covered in our article on whether an employer can deduct salary in Singapore.

Does CPF apply to the 13th month bonus?

Yes, for Singapore Citizens and Singapore PRs. Under the CPF Act, wages include any bonus due or granted in respect of employment. A 13th month payment is normally Additional Wages (AW), and CPF contributions apply up to the Additional Wage ceiling.

The CPF Board explains the building blocks as follows:

• Ordinary Wages (OW) are wages for the employee’s work in that month and payable by the 14th of the following month, such as monthly salary.
• Additional Wages are wages that are not Ordinary Wages, for example an annual performance bonus.
• The OW ceiling is S$8,000 a month from 1 January 2026.
• The AW ceiling is S$102,000 less the total Ordinary Wages subject to CPF for the year, applied per employee, per employer, per calendar year.

The contribution rates for a Singapore Citizen or an SPR from the third year, with monthly wages above S$750, are 17% (employer) and 20% (employee) for age 55 and below, 16% and 18% above 55 to 60, 12.5% and 12.5% above 60 to 65, 9% and 7.5% above 65 to 70, and 7.5% and 5% above 70 (CPF Board, rates from 1 January 2026). The CPF Board also announced increases for senior employees from 1 January 2027. We summarise them in our guide to CPF contribution rates for 2027, and you should confirm the final rates on cpf.gov.sg before running December 2027 payroll.

The CPF Board says contributions are payable for employees who are Singapore Citizens or SPRs. Your foreign staff on work passes fall outside that statement, so check cpf.gov.sg or ask CPF if your case is unusual. A newly converted PR is a special case, because the first and second years of SPR status have their own rate tables on cpf.gov.sg.

How do you calculate CPF on a 13th month bonus? Worked examples

Add the bonus to the year’s Ordinary Wages, work out the Additional Wage ceiling, and apply the contribution rate to whichever is lower: the bonus or the ceiling. The examples below are illustrations only, built on the rates and ceilings above, and use a Singapore Citizen aged 40 whose salary is paid by the 14th of the following month.

1. Work out the Ordinary Wages subject to CPF for the calendar year (each month capped at S$8,000).
2. Subtract that total from S$102,000 to get the Additional Wage ceiling.
3. Compare the AWS with the ceiling and take the lower figure.
4. Apply 37% in total (17% employer, 20% employee) to that figure and round to the nearest dollar, dropping the cents on the employee’s share.

Case (assumptions)	OW subject to CPF in year	AW ceiling	AWS paid	AWS attracting CPF	CPF on AWS (employer / employee)
A: S$4,000 a month, full year, AWS of one month	S$48,000	S$54,000	S$4,000	S$4,000	S$680 / S$800
B: S$4,000 a month, joined 1 July 2026, contract pro-rates by completed months (6/12)	S$24,000	S$78,000	S$2,000	S$2,000	S$340 / S$400
C: S$9,000 a month, full year, AWS of one month	S$96,000 (S$8,000 x 12)	S$6,000	S$9,000	S$6,000	S$1,020 / S$1,200

In case C, S$3,000 of the bonus attracts no CPF because the Additional Wage ceiling has been reached. The ceiling is easy to miss in a December payroll run, which is one reason some businesses outsource payroll before reaching 20 staff. The CPF Board provides an Additional Wage ceiling calculator on cpf.gov.sg for checking your own figures.

Is the 13th month bonus taxable in Singapore?

Yes. IRAS states that all gains and profits an employee derives in respect of employment are taxable unless specifically exempted. A bonus is assessed in the year the employee becomes entitled to it, and the employer reports it on Form IR8A.

IRAS distinguishes between two kinds of bonus when deciding the year of entitlement:

• Contractual bonuses are payable under a contract of service or a bonus plan adopted by the employer, and cannot be rescinded by the employer without legal consequences.
• Non-contractual bonuses can be rescinded by the employer at any time before actual payment without legal consequences.

For employers, the practical steps are these:

1. Decide whether each payment is contractual or non-contractual, and keep the document that proves it.
2. Report the bonus in the correct year on Form IR8A (item b, Bonus), or through the Auto-Inclusion Scheme if your organisation participates.
3. Give the IR8A to employees, or submit electronically if under the scheme, by 1 March. IRAS’s notes for the year ended 31 December 2025 set the date as 1 March 2026, so confirm the date for the next filing on iras.gov.sg.
4. Use an amendment or revised submission if an error is found later, as IRAS’s notes describe.

Lump-sum payments on leaving a job follow different rules, which we cover in are retrenchment benefits taxable in Singapore. If your business also needs help with payroll and accounts, our sister site Raffles Corporate Services handles accounting and tax compliance.

What should employers put in the contract about the 13th month bonus?

Put the payment, the eligibility rules and the pro-rating method in writing. MOM’s guidance makes clear that these terms govern, so vague wording is the main source of disputes. A clear clause answers each of the questions below.

Question to settle	Why it matters
Is the AWS guaranteed (contractual) or at the employer’s discretion?	Decides whether the employer can withhold it, and when IRAS treats the employee as entitled
What is the amount (for example, one month of basic salary)?	Avoids disagreement about whether allowances are included
When is it paid?	Sets the CPF month and the year of entitlement for tax
How is it pro-rated for joiners?	MOM says pro-ration depends on the contract
What happens if the employee resigns or is dismissed before payment?	MOM says the position depends on the contract, including for leavers near the payment date

Frequently asked questions

Is the 13th month bonus mandatory under the Employment Act?

No. MOM states that the AWS is not compulsory under the Employment Act. Whether you are entitled depends on your employment contract or collective agreement.

I joined in the middle of the year. Do I get a full 13th month payment?

That depends on your contract. MOM says entitlement and calculation, including pro-ration, depend on the terms agreed with your employer. Ask HR for the written policy.

Do I lose my 13th month bonus if I resign in November?

MOM says the AWS position depends on your contract or collective agreement, and that this also applies if you left your job right before or around the time the AWS is paid. Check the clause on service on the payment date.

Is CPF payable on the 13th month bonus?

For Singapore Citizens and PRs, yes, up to the Additional Wage ceiling of S$102,000 less the year’s Ordinary Wages subject to CPF. The CPF Board says contributions are payable for employees who are Singapore Citizens or SPRs.

When is the 13th month bonus taxed?

IRAS assesses a bonus in the year the employee becomes entitled to it, which depends on whether it is contractual or non-contractual. The employer reports it on Form IR8A.

Can my employer pay less than one month’s salary as AWS?

If the contract promises one month, a lower amount needs agreement. MOM says an employer can negotiate a lower AWS with employees or the union if business results are exceptionally poor.

Need help with pass, PR and citizenship applications for your team or yourself? Contact Little Big Employment Agency. Email [email protected] or Call/SMS/WhatsApp +65 8501 7133.

Sources used: MOM, Variable wage components; CPF Board, What constitutes wages for CPF contributions; IRAS, Explanatory notes on Form IR8A and Appendix 8A.

Last reviewed: 8 November 2026. The Editorial Team, Little Big Employment Agency.