Long Service Awards (LSAs) are a common practice in Singapore to recognize and reward employees for their loyalty and dedication. This guide provides a comprehensive overview of LSAs, addressing frequently asked questions and clarifying key aspects.
Eligibility and Benefits of Long Service Awards
Years of Service Required
The number of years required to qualify for an LSA varies significantly depending on the company's policies and industry standards. There's no single national standard. Common milestones include 5, 10, 15, 20, 25, and 30 years of continuous service. Eligibility typically applies to full-time employees, but some companies may extend this to part-time employees based on their individual policies. The specific requirements are outlined in each company's HR policies.
Types of Rewards
LSAs can be monetary or non-monetary. Monetary rewards can vary greatly. For example:
- Company A: $1,000 (5 years), $1,500 (10 years), $2,000 (15 years), $3,000 (20 years), $5,000 (25 years), $8,000 (30 years)
- Company B: $500 (5 years), $1,000 (10 years), $1,500 (15 years), $2,000 (20 years), $2,500 (25 years)
Non-monetary rewards may include:
- Gift vouchers
- Commemorative items (plaques, trophies)
- Additional paid leave
- Experience-based rewards (trips, dining experiences)
- Public recognition during company events
CPF Implications on Long Service Award (LSA)
CPF contributions are payable on cash awards given to your employee in recognition of his long service.
However, CPF contributions are not payable on Long Service Award (LSA) that is given to your employee with at least 5 years of service and subsequent LSA for each 5-year period of service with you, up to the amount of your employee’s Ordinary Wages (OW) for the month in which the LSA is paid. In the event that there are multiple types of LSA given to the same employee, only the first LSA granted to the employee in each 5-year period can qualify for this exemption.
If the LSA exceeds the OW for the month, CPF contributions are payable on the amount in excess of OW. If your employee has no OW payable in that month, CPF contributions are payable on the entire LSA.
| Long Service Award (LSA) Scenarios | Are CPF contributions payable? |
| LSA amount is OW and below | No |
| LSA amount is more than OW | Yes, on the amount of LSA exceeding OW |
| OW is $0 | Yes, on the entire LSA |
Tax Implications on Long Service Award (LSA)
The Inland Revenue Authority of Singapore (IRAS) classifies all gains and profits derived by an employee in respect of his/her employment as taxable, unless specifically exempt from income tax or covered by an existing administrative concession. In the case of Long Service Awards,
- Cash awards:
- Taxable
- Non-cash awards:
- Non-cash awards not exceeding $200 are not taxable due to an administrative concession.
- If the value of the award exceeds this exemption threshold, the entire value becomes taxable. Employers must declare the cost incurred for taxable awards.
Understanding Long Service Awards in Singapore
LSAs are a formal recognition program designed to reward employees for their long-term commitment and contributions to an organization. They are a valuable tool for boosting employee morale and retention. The specific details of an LSA program are entirely at the discretion of the employer.
Effect of Breaks in Service or Role Changes
Breaks in service can affect eligibility, depending on the company's policy. Some companies may reset the tenure count for significant breaks, while others may allow cumulative service periods. Role changes within the same company usually do not affect LSA eligibility, provided continuous employment within the organization.
Best Practices for LSA Programs
Effective LSA programs should be:
- Define Clear Criteria
- Establish transparent eligibility requirements based on tenure and performance.
- Apply criteria consistently across all departments to ensure fairness.
- Select Meaningful Awards
- Offer valuable and diverse options like monetary bonuses, extra leave, or personalised gifts.
- Cater to individual preferences to make the awards more meaningful.
- Personalise Recognition
- Include personal touches like the employee's name or a heartfelt message.
- Celebrate milestones through dedicated events to make recognition memorable.
- Communicate the Programme
- Clearly share details about the programme’s purpose, criteria, and awards.
- Use internal channels to provide regular updates and reminders.
- Gather Feedback and Improve
- Collect employee input through surveys or conversations to assess the programme’s impact.
- Continuously refine the LSA to ensure it stays relevant and valued.
Frequently Asked Questions
Is the Long Service Award Mandatory?
No, the Long Service Award is not mandatory for employers to provide in Singapore. It's a voluntary initiative that would benefit both employers and employees.
Are Part-Time Employees Eligible?
Eligibility for part-time employees depends entirely on the company's policy. While guidelines often mention full-time employees, some companies may include part-time workers.
How is the Long Service Award Presented?
Long Service Awards are typically presented during company anniversaries, annual dinners, special award ceremonies, or on the employee's service milestone date.
Can Previous Employment Years be Counted?
This depends entirely on the new employer's policy. Some companies may consider cumulative service, while others may reset the count upon new employment.
What Happens with Breaks in Service?
The impact of a break in service depends on the company’s policy. Some may reset the tenure count, while others may allow cumulative service periods. Short breaks (e.g., less than 30 days) may be disregarded in some instances.
Conclusion
Long Service Awards in Singapore are a powerful tool for showing appreciation for employee loyalty and dedication. While not legally mandated, they are a common and valuable practice. Understanding the specific policies of your employer is crucial for knowing your eligibility and the type of award you might receive.
