Mastering Skills Development Levy: Expert Guide

Did you know that all employers in Singapore must pay the skills development levy (SDL) for their employees—and that this contribution unlocks funding for training grants?

For many entrepreneurs and business owners, the SDL feels like just another compliance box to tick. But in reality, it’s a gateway to affordable workforce training through SkillsFuture Singapore grants. This guide explains what the SDL is, who needs to pay, how to calculate it, and how to maximise its benefits—so you can stay compliant and grow your business at the same time.

TL;DR 🚀

The Skills Development Levy (SDL) is a small but mandatory employer contribution in Singapore that fuels employee upskilling and access to SkillsFuture training grants.

• Who pays? All employers, except those exempted (e.g., domestic helpers, seafarers, certain interns).
• How much? 0.25% of monthly wages, min $2, max $11.25 per employee.
• How to pay? Via CPF EZPay or GoBusiness portal.
• Why it matters? Non-payment risks fines, but timely payment unlocks funding support to grow your team’s skills.

👉 Let Grof handle compliance and payroll seamlessly, so you can focus on scaling your business.

What is the Skills Development Levy (SDL)? 

The Skills Development Levy is a compulsory contribution imposed on all employers in Singapore. Collected by the Central Provident Fund (CPF) Board on behalf of SkillsFuture Singapore (SSG), the levy funds the Skills Development Fund (SDF).

Money from the SDF supports training subsidies and grants, helping businesses defray the cost of employee upskilling. Simply put, the SDL ensures you comply with the law while giving you access to government-backed funding for workforce development.

👉 GoBusiness explains SDL here

Who Needs to Pay SDL—and Who’s Exempted?

All employers must pay SDL for:

• Full-time employees
• Part-time employees
• Temporary or casual staff
• Foreign employees (including work pass holders)

Exemptions apply to:

• Domestic workers
• Chauffeurs
• Certain students (e.g., those on internships under approved schemes)
• Employees who perform no work in Singapore for that month

It’s important to note that the SDL Singapore is payable for all eligible employees, even if they are part-time or on a temporary contract. Employers must carefully track and account for all their employees to ensure compliance with the SDL requirements. 

Calculating the Skills Development Levy in Singapore 

SDL is based on monthly gross wages, including allowances and bonuses, with a set minimum and maximum.

Formula: SDL = Gross monthly wages × 0.25%

Monthly Gross Salary	SDL Contribution
$600	$2 (minimum)
$1,500	$3.75
$3,000	$7.50
$5,200	$11.25 (maximum cap)

Example 1: A part-time employee earns $650 → $650 × 0.25% = $1.63 → rounded up to $2 minimum.
Example 2: A manager earns $5,200 → $5,200 × 0.25% = $13 → capped at $11.25 maximum.

How to Pay SDL: A Step by Step Guide

SDL must be paid together with CPF contributions. Employers can use two main platforms:

1. CPF EZPay
   • Log in to CPF EZPay.
   • Submit employee wages.
   • SDL auto-calculates alongside CPF.
   • Make payment via eNETS, GIRO, or PayNow.

👉 Pay via CPF EZPay

1. GoBusiness Licensing Portal
   • Access SDL e-services on GoBusiness.
   • Submit salary details.
   • Complete SDL payment directly.

👉 GoBusiness SDL info

To ensure compliance with the Skills Development Levy (SDL) requirements, employers can calculate the exact levy payable for each employee using the SDL calculator provided by CPF. The calculator helps you determine the appropriate levy based on your employees’ total wages. You can access the SDL calculator here. 

Pro tip: Payment deadlines follow CPF due dates, usually the 14th of the following month.

Penalties and Risks of Non-Compliance

SDL is a legal obligation. Failure to pay correctly can lead to:

• Late payment penalties of up to 10% annually
• Fines or legal action for wilful non-payment
• Suspension of licences for serious breaches

Accurate wage reporting is crucial. Always include allowances and bonuses to avoid underpayment.

Refunds 

In some cases, you may have overpaid your SDL contributions. If this happens, you can request a refund from the SkillsFuture Singapore Agency (SSG). To do so, you’ll need to provide the necessary documentation and proof of the overpayment. 

It’s important to keep track of your SDL payments and regularly review your records to ensure that you’re not paying more than required. Proactively addressing any overpayment issues can help you optimise your cash flow and ensure compliance with the SDL regulations. 

Maximise SDL with Training Grants

Instead of seeing the SDL as an expense, use it to subsidise employee training. Employers can tap into SkillsFuture funding for:

• Digital and technology courses
• Vocational and technical skills
• Leadership and management training
• Soft skills workshops (e.g., communication, problem-solving)

These subsidies reduce training costs and build a future-ready workforce.

👉 Explore SkillsFuture training grants

Conclusion: Turn SDL into an Opportunity

The Skills Development Levy is more than a compliance cost—it’s a strategic tool. By paying SDL correctly and tapping into SkillsFuture grants, you can reduce training expenses, build a skilled workforce, and position your business for long-term growth.

Don’t let payroll and compliance slow you down. Partner with Grof’s payroll service to handle SDL and beyond—so you can focus on growing your business.

FAQs

1. Who doesn’t need to pay SDL?
   Employers don’t pay SDL for domestic workers, chauffeurs, certain students, or employees who don’t work in Singapore that month.
2. How is SDL calculated?
   SDL = 0.25% of monthly wages (min $2, max $11.25).
3. Is SDL payable for interns?
   Yes, unless they are exempt under specific student schemes.
4. Is SDL payable for bonuses?
   Yes, bonuses form part of total wages subject to SDL.