A trio of legislative amendments aim to improve economic productivity and labour market flexibility in Singapore.
As part of its efforts to help older employees remain economically productive, the Singapore government enacted re-employment legislation in 2012 to enable more people to continue working beyond the statutory retirement age of 62—raising the retirement age from 62 to 65 in the first instance.
Following extensive tripartite consultations between representatives from employer organisations, unions, and the Singapore government—as well as the recent passing of the Retirement and Re-employment (Amendment) Bill 2016—the following amendments to the Singapore Retirement and Re-employment Act (Act) will take effect on 1 July 2017:
- Raise re-employment age from 65 to 67
- Introduce option to allow eligible employees to be re-employed by another employer
- Remove option for employers to cut employees’ wages at age 60
Re-employment Age Raised from 65 to 67
Employers will be required to offer re-employment to eligible employees from age 62 up to age 67 (the present maximum age is 65). Under Section 7 of the Act, employees are deemed eligible for re-employment if they have satisfactory work performance and are medically fit to continue working.
This new re-employment age of 67 will apply to Singaporean citizens and permanent residents who turn 65 on or after 1 July 2017 (i.e., those born on or after 1 July 1952).
Option to Allow Eligible Employees to Be Re-employed by Another Employer
The law as it stands does not allow employers to transfer their re-employment obligations to another employer. With the amendment, however, an employer that is unable to offer a suitable position in its own organisation may transfer re-employment obligations to another employer, provided that
- the transfer is done with the employee’s consent, and
- the receiving employer agrees to take over all applicable re-employment obligations.
If either condition is not met, and the original employer cannot find a vacancy in its organisation for the employee, the employer must fulfil its re-employment obligations (i.e., offer a one-off Employment Assistance Payment (EAP)).
Under Section 7C(3) of the Act, the EAP shall be
- a single lump-sum payment paid by an employer by the last day of employment of the eligible employee, or
- determined by other mutually agreed upon arrangements.
Removal of Option for Employers to Cut Employees’ Wages at Age 60
Currently, the Act allows an employer to reduce the salary of employees who turn 60 years of age. The amendment will abolish the option for such a salary adjustment for all employees.
The amendments to the Act will benefit the increasing ranks of older employees who want to continue to work. Singapore’s Ministry of Manpower has published guidelines to help employers and employees prepare for the forthcoming changes.