The Skills Development Levy (SDL) and SkillsFuture initiatives form the backbone of Singapore’s national training framework, ensuring that employees remain competitive and companies maintain access to a skilled workforce. For employers, understanding and complying with these requirements is an investment in organisational sustainability and growth.

This article provides a detailed overview of SDL and SkillsFuture compliance requirements, practical strategies for maintaining adherence, and best practices for leveraging these frameworks to maximize business value.

What is SDL?

The Skills Development Levy is a mandatory contribution that all employers in Singapore must pay for each employee. Introduced under the Skills Development Levy Act, SDL funds are channeled into SkillsFuture Singapore (SSG) to support workforce training and skills upgrading programs across industries.

SDL Payment Requirements

Employers must pay SDL at a rate of 0.25% of the total monthly remuneration for each employee, subject to a minimum of $2 (for employee earning <S$800/month) and a maximum of $11.25 (for employee earning >S$4,500/month) per month. This levy applies to all employees, including:

• Full-time employees
• Part-time employees
• Contract workers
• Temporary staff 

*Only domestic servants, gardeners or chauffeurs are exempted from the SDL.

To check the total sum for all your employees, you can refer to the SSG’s online SDL calculator here.

Common SDL Compliance Issues

Many employers face difficulties with compliance in a number of areas. Employee compensation underreporting is a common problem, especially when variable elements such as overtime pay, bonuses, and allowances are not accurately factored into SDL calculations. Inaccurate employee classification, particularly with regard to contract workers and part-time employees, can result in underpayment, and late payments can incur penalties and interest charges.

Since the CPF Board may audit payroll records to confirm SDL compliance, maintaining accurate payroll records is crucial. Employers should keep records for a minimum of five years and make sure their payroll systems automatically compute SDL based on actual monthly compensation.

The SkillsFuture Framework

SkillsFuture is Singapore’s national movement to provide citizens with opportunities for skills mastery and lifelong learning. For employers, SkillsFuture offers various funding schemes and training programs designed to upskill employees and enhance organizational capabilities. While SDL is mandatory, participation in SkillsFuture training programs is voluntary but highly encouraged.

Several programs are available to support employer-led training initiatives. 

• SkillsFuture Enterprise Credit (SFEC) 

Provides eligible employers with a one-time S$10,000 credit to support enterprise transformation and skills development. This credit can be used for qualifying training programs, consultancy services, and transformation projects that drive business innovation.

• Absentee Payroll (AP) scheme

Helps employers defray the cost of course fees and salary costs incurred when sending employees for training in approved programs. Employers can claim up to 95% of hourly basic salary for each training hour (subject to a cap of $7.50/hr). It is particularly valuable for SMEs that face resource constraints.

• SkillsFuture Career Transition Programme (SCTP) 

Supports mid-career individuals transitioning to new occupations or sectors by providing training subsidies and salary support during on-the-job training. Employers benefit from access to job-ready candidates who have undergone industry-relevant reskilling programs.

Establish Robust HR and Payroll Systems

Investing in integrated HR and payroll systems is fundamental to maintaining compliance. Modern payroll software can automatically calculate SDL based on employee remuneration, generate monthly reports, and flag potential compliance issues before they escalate. These systems should be regularly updated to reflect changes in legislation and contribution rates.

Maximizing Value from SDL and SkillsFuture

Compliance with SDL and active participation in SkillsFuture should be viewed as foundational elements of a broader learning culture. Organizations that prioritize continuous learning are better positioned to adapt to market disruptions, attract top talent, and retain high performers. Recognize and reward employees who actively pursue skills upgrading, and integrate learning outcomes into performance evaluations.

Create internal knowledge-sharing platforms where employees who complete training programs can disseminate learnings to colleagues, amplifying the impact of training investments. This peer-to-peer learning approach enhances organizational knowledge while fostering collaboration and engagement.

The Bottom Line

It doesn’t have to be difficult to navigate SkillsFuture and SDL compliance. At Verti, our full-service HR offerings manage SDL administration from start to finish, carry out compliance checks, and create training plans that are strategically aligned with your company’s objectives. Reach out to us at contactus@verti.sg or +65 6909 5691.

All information accurate as of 12 December 2025