Singapore Secures its Ageing Workforce by Making Changes to the Retirement and Re-employment Act

January 12, 20171:57 pm1039 views

Singapore secures its rapidly ageing workforce by making three key changes to the Retirement and Re-Employment Act, which will come to effect from July 1, 2017. These changes are:

  • Singapore’s re-employment age will be raised by two years to 67.
  • Workers at 60 will be allowed to be re-employed by another company and
  • Employers will no longer be able to cut their workers’ salaries when they turn 60 and above.

According to the current law, the minimum retirement age is 62 years and employers are not allowed to dismiss anyone younger than this due to the person’s age. On the contrary, they will have to offer re-employment to workers who turn 62, up to age 65. This will further be raised to 67 years from July 1, 2017. The new re-employment age applies to those who were born on or after July 1, 1952.

Speaking at a lengthy debate in parliament on Monday, Manpower Minister Lim Swee Say noted that the tripartite partners – the government, employers and the unions have agreed to the changes after extensive consultations and negotiations.

He further added that all local workers with satisfactory performance and those who are deemed medically fit should be offered re-employment until 67years of age. Citing a 2015 survey that found over 98 percent of private sector local employees who wanted to continue working at 62, were offered re-employment with no cuts on their basic wages.

Employers unable to re-employ an eligible worker must offer an Employment Assistance Payment (EAP) to help the worker tide over, when searching for another job. The EAP is only meant to be given out as a last resort. This is a one-off payment equivalent to three months’ salary, subject to a minimum of S$4,500 and capped at S$10,000.

The government already provides for a 3 percent additional wage offset to encourage companies to voluntarily re-employ people beyond the current re-employment age of 65.

This scheme benefits around 120,000 Singaporean employees aged 65 and above every year, and is on top of the Special Employment Credit of up to 8 percent for hiring Singaporeans aged 55 or older and those who earn no more than S$4,000 a month.

This wage offset scheme is due to expire in July 1 this year. Mr Lim said that the government was studying the need and manner to extend it to encourage voluntary re-employment after the re-employment age goes up to 67.

The government is further aware of the fact that older employees and their employers need clarity on the future of the scheme, for which a final decision will be made way ahead of the expiry date, Lim assured.

The second change would allow employees to be re-employed by another company. This would increase the options for both companies and its ageing workforce. The current rule states that, the employers are not allowed to transfer re-employment obligations to another employer. However, this barricade to progress of senior employees will be removed by opening up more career progression opportunities and new pathways from July 1, 2017.

The re-employment change would benefit both parties into an agreement, as the employer will be deemed as having fulfilled the re-employment obligations, while the worker could have more chances to be re-employed and enjoy re-employment protection under the new company.

For this to happen, the employee has to first agree to the re-employment terms with the second employer, and the latter has to commit to take over all applicable re-employment obligations for this particular employee. If either of the condition is unmet, the original employer still has to fulfil his re-employment obligations, and offer EAP if it cannot find a job for the worker in the company.

The third clause removes the option for employers to slash a worker’s wages at 60 and above. In his remarks, Mr Lim said, “The amendments to the laws were the culmination of tripartite efforts over the last few years to strike the “delicate balance” between enhancing job opportunities for older workers while offering enough flexibility to employers.”

“We will continue to work closely with the tripartite partners and enhance employment opportunities for older workers to build age-friendly workplaces in Singapore,” Lim was quoted by The Business Times.

 

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