Progress Software Corp (S) Pte Ltd v Central Provident Board

CourtHigh Court (Singapore)
JudgeChoo Han Teck JC
Defendant CounselEdmond Pereira and LR Penna (Edmond Pereira & Partners)
Date08 August 2002
Subject MatterApplication by defendants to strike out on basis of incorrect mode of commencement,Dismissal of defendants' application,No appeal against dismissal,Originating processes,Sch 1 paras 5(d) & 5(e) Central Provident Fund Act (Cap 36, 2001 Ed),reg 2(1) Central Provident Fund Regulations (Cap 36, Rg 15, 1998 Ed),O 53 Rules of Court,'Additional wages',Plaintiffs not having statutory right of appeal to courts,Appeals,Words and Phrases,Plaintiffs' application by way of originating summons,Whether variable component in plaintiffs' salary package constitutes 'additional wages' or 'ordinary wages',Civil Procedure,Whether plaintiffs ought to commence application under O 53 of Rules of Court,'Ordinary wages',Provident Fund,'Back door' appeal,Whether plaintiffs' application a 'back door' appeal,Whether issue res judicata,Contributions,Mode of commencement of proceedings
Plaintiff CounselSarjit Singh Gill SC, Dylan Lee and Chua Beng Chye (Shook Lin & Bok)
Published date19 September 2003
Docket NumberOriginating Summons No 601579 of



1. The plaintiff is a private company incorporated in Singapore and is a subsidiary of Progress Software Corporation, a NASDAQ listed company in the United States Of America. This is an application brought by the plaintiff in respect of the Central Provident Fund ("CPF") payments of four of its employees. Under their employment contracts, the remuneration of these employees is structured as having two component parts described in the affidavit of Christopher Yeo, the plaintiff's managing director, as a fixed component (comprising about 60% of the total remuneration) and a variable component (comprising the balance 40%). The fixed component was expressed as an annual package and contributions to the CPF were paid on a monthly basis. The variable component was determined monthly but paid at various intervals. At this point it will be useful to mention that remuneration for the purposes of calculating contributions under the Central Provident Fund Act, Ch 36 fall into two broad categories. First, there is the "ordinary wages", and secondly, there is "additional wages". These are defined in 5 (d) and (e) of the First Schedule to the Act as follows:

"(d) "additional wages" means any wages other than ordinary wages;

(e) "ordinary wages for the month" means the amount of remuneration due or granted wholly or exclusively in respect of employment during that month and payable before the due date for the payment of contribution for that month."

All CPF contributions must be paid "not later than 14 days after the end of the month in respect of which the contributions are payable" as required under reg 2 of the CPF Regulations (1987).

2. The employees concerned in this case were paid a fixed monthly salary in respect of which no dispute arises. They were also paid commissions depending on whether they met the sales target set for them by the company. The plaintiff says that the commissions do not depend on collections but on invoices generated by the employee. Therefore, it takes the view that any commission due is easily computable at the end of each month and should therefore form part of the ordinary wages of the employee. If that is right, then the total contributions to the CPF, including the variable component (the commissions), is subject to the maximum of 36% from the employee (up to a maximum of $2,160) and 20% (up to a maximum of $1,200) from the employer - these amounts are those payable at the material time. The figures and percentages may vary from time to time. On the other hand, if the variable component is regarded as "additional wages", which, in the opinion of the Board, it is, then additional contributions are required to be made from the "additional wages". The additional contributions are not subject to the maximum prescribed for contributions from the "ordinary wages".

3. According to Christopher Yeo, as at 1 July 1996 the Board accepted that the variable component is part of "ordinary wages". On 4 August 2000 the plaintiff's records from 1997 to 2000 were called for as part of the Board's "periodic checks". The plaintiff's then Finance Manager was summoned to produce various documents and answer queries by the Board. Eventually, the Board wrote by letter dated 15 November 2000 to the plaintiff stating that the "commission payments should be treated as "Ordinary Wages". However, on 22 January 2001, the Board wrote to the plaintiff stating that the plaintiff had not made correct contributions to the CPF for their employees for the period between October 1998 and July 2000 and re-assessed the commission payments to be "additional wages". A sum of $13,728 was demanded by the Board as additional payment. This amount was subsequently revised to $12,048 after an exchange of correspondence between...

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