Retirement and Re-employment (Amendment) Bill 2016 to take effect from 1 July 2017

The Retirement and Re-employment (Amendment) Bill 2016 was passed by Parliament on Monday (9 January).

In April 2016, the Ministry of Manpower (MOM) announced that following extensive tripartite consultations, the tripartite partners had agreed for the following to take effect from 1 July 2017:

1. raise the re-employment age from 65 to 67.
2. introduce an option to allow eligible employees to be re-employed by another employer to increase labour market flexibility.
3. remove option of employers cutting employees’ wages at age 60.

MOM stated that the Retirement and Re-employment (Amendment) Bill 2016 amends the Retirement and Re-employment Act (RRA) to effect the above changes from 1 July 2017.

The key features of the Bill are as follows:

1. Raise the re-employment age to 67. The Bill specifies that the new re-employment age will be raised from 65 to 67 with effect from 1 July 2017. The new re-employment age of 67 will apply to locals who turn 65 on or after 1 July 2017, i.e. those born on or after 1 July 1952. This is what tripartite partners agreed to after extensive consultations.
2. Introduce an option to allow eligible employees to be re-employed by another employer to increase labour market flexibility. Today’s law does not allow employers to transfer their re-employment obligations to another employer. This amendment in the Bill allows an employer who is unable to offer a suitable position in his own organisation, to transfer his re-employment obligations to another employer, provided this is done with the older employee’s consent and that the second employer agrees to take over all applicable re-employment obligations. If either condition is not met, the original employer still has to fulfil its re-employment obligations i.e. offer an Employment Assistance Payment (EAP) if the employer cannot find a job in its organisation for the older employee.
3. Remove option of employers cutting employees’ wages at age 60. This option was originally intended to help employers with seniority-based wage systems manage costs. Over the years, tripartite efforts have been successful in moving employers away from seniority-based wage systems. Hence, the Bill removes this option, in line with tripartite partners’ agreement.

Said to prepare employers and employees, the Tripartite Committee on Employability of Older Workers (Tricom) has further revised the Tripartite Guidelines to provide guidance to employers and employees on the implementation of re-employment by another employer from 1 July 2017.

Mr Koh Juan Kiat, Executive Director of the Singapore National Employers Federation said, “SNEF urges employers to make early adjustments to their HR practices to further re-employ workers to age 67. Employers can tap on the age management, job redesign and work-life grants to adapt their workplaces and work arrangements to make jobs more suitable for their older employees.”

Mr Heng Chee How, Deputy Secretary-General of the National Trade Union Congress said, “The law will soon change to require companies to offer re-employment up to age 67, from the current 65. It will remove the possible cutting of wages at age 60 while enlarging the pool of companies that can re-employ a worker reaching the statutory age of 62 beyond his immediate employer, subject to the worker’s express agreement.”

“The Employment Assistance Payment (EAP) has also been updated. These are significant changes that benefit both employees and companies, and strengthen the re-employment of mature workers. The Tripartite Guidelines have thus been revised to incorporate these enhancements, so that firms, unions and workers can implement these smoothly and correctly,” he said.

Mr Sam Tan, Minister of State for Manpower said, “We thank the tripartite partners for supporting this Bill. Raising the re-employment age from 65 to 67 will help older workers who wish and are able to continue working stay employed. Allowing eligible employees to be re-employed by another employer will also help to provide more options for employers and employees.”

“MOM will continue to work closely with tripartite partners to support older workers who wish to stay employed and employers who wish to tap on this growing pool of workers,” he added.

MOM noted that the Tripartite Guidelines dated 11 January 2011 will continue to apply in cases of re-employment disputes, up until 30 June 2017. The revised Tripartite Guidelines dated 9 Jan 2017 will take effect from 1 July 2017 onwards.