The Government will enact re-employment legislation by 2012 to allow more people to continue working beyond the current statutory retirement age of 62, up to 65 in the first instance and, later up to 67. Re-employment will enable workers to remain in employment longer.
When will the re-employment legislation take effect?
The re-employment legislation will come into force on 1 January 2012. Employees who attain the age of 62 on or after 1 January 2012 will be covered by the legislation.
Why is this new legislation necessary, and how does it benefit retiring employees?
Life expectancy is increasing and our workforce is ageing rapidly. Enabling employees to work beyond the current retirement age of 62 will enhance their financial status and enable them to accumulate more savings. At the same time, the move will ease the older people dependency ratio.
How will re-employment legislation benefit companies?
The changing demographics will have an impact on companies in terms of availability of a skilled and quality workforce. As finding younger workers and foreign manpower will become more difficult, leveraging on the values and experience of the older employees will help companies to address these issues.
What are the four key components of the re-employment guidelines?
- Planning and preparing employees for re-employment
- Re-employment contract
- Recognising contributions of re-employed employees
- Assistance for eligible employees who cannot be re-employed
What is the re-employment consultation and planning for employees reaching retirement age?
The e-employment Guidelines recommend that employers engage employees in re-employment consultation and planning at least 6 months before the employee turns 62 years old.
How to identify eligible employees for re-employment?
Employers should aim to re-employ the majority of their older employees. Under the Re-employment Guidelines, employers are required to offer re-employment to employees who are medically fit to continue working, and those whose performances are assessed to be satisfactory.
In assessing an employee’s eligibility for re-employment, how should an employer assess whether he/she has given “satisfactory performance”?
Satisfactory performance refers to the minimum level of performance any employee is expected to maintain in discharging his duties. In assessing the eligibility of an employee for re-employment, employers may take into account the employees’ performance for the past 2-3 years.
What job arrangements can be made for re-employment?
There should be flexibility in the job arrangement for re-employed employees. It might not be the same job-same pay. In some instances, employers may vary the job functions, remuneration or offer a different job. These should be done reasonably,ensuring that it is equitable to the employees.
What should the re-employment contract observe?
The re-employment contract should observe flexibility for employers while maintaining reasonable terms of offer for re-employment.
What should an employee take note of in the re-employment contract?
They should take note of the notification period and details of the offer or non-offer of re-employment. The contract should be given at least three months before the employee reaches the age of 62. Employees should also look at the duration of the contract. This could be a three year contract, up to age 65, to be reviewed yearly or a yearly contract up to age of 65, renewable yearly.
What are the terms and conditions of re-employment?
The Tripartite Guidelines encourage employers to be flexible and reasonable in making adjustment to wages and benefits of re-employed employees.
What reasonable factors should be considered if employers decide to adjust the wages of the re-employed employees?
Employers should take into account reasonable factors such as value of the job, job duties and responsibilities, wage system and earlier reductions made at 60, if any.
Will re-employed employees continue to enjoy existing medical benefits upon re-employment?
Re-employed employees may be offered the same medical benefits (inpatient and outpatient) as new hires or they may consist of the following options:
No change to existing provision
Co-payment of medical benefits
Imposing a cap of $x per employee per calendar year on claimable items
What other arrangements on inpatient benefits can the employer consider implementing for the re-employed staff?
The employer could choose to keep existing provisions such as the Group Hospitalisation & Surgical Medical Benefits. The company may also allocate a quantum per employee per year for hospitalisation expenses or to purchase a medical insurance package. The company may make additional contributions to the employee’s Medisave Account.
What should be the leave entitlement and other benefits for the re-employed employees?
Re-employed employees do not need to serve the qualifying period to be eligible for annual leave and sick leave. Employers are encouraged to provide such benefits not less than what are provided to new employees. In addition, re-employed employees may also continue to enjoy other employment benefits.
What can employers do to recognise and value older employees?
Employers should continue to recognise and reward re-employed employees as this will motivate and encourage them to perform well. Examples of recognition include:
- Variable bonus
- Productivity bonus
- Incentive bonus
- Long service benefits
- Gain-sharing incentive
- One-off bonuses
What happens if the company is unable offer re-employment to eligible employees?
The employer should share with the employees the reason the company is unable to offer re-employment and they should be informed at least three months before the age of 62. The employer is also obliged to pay a one-off Employment Assistance Payment (EAP) to eligible employees who are not offered re-employment.
What is EAP for?
The EAP is meant to help employees tide over a period of unemployment while they look for another job. The employer pays the EAP as it unable to fulfil the obligation to offer re-employment to eligible employees at age 62 and/or while they are serving the re-employment contract.
What is the recommended amount for the EAP?
The EAP is not a retrenchment payment and should serve as a last resort when employers have exhausted all options of re-employment. The tripartite guidelines recommend an EAP ranging from $4,500 to $10,000.
When is a company not obliged to pay the EAP?
An employer is not obliged to pay the EAP when the employee chooses to reject a reasonable re-employment contract offered by the company.
What is considered reasonable re-employment offer?
Whether a re-employment is considered reasonable depends on many factors, including whether there has been adequate re-employment consultation and the extent of adjustments in wage and benefits to reflect the value of the job.
For unionised companies, must the employer consult unions before making the re-employment offer? What is the role of the unions in the process of re-employment consultation and planning?
It is good practice for both employers and unions to consult each other during the re-employment process. While the tripartite guidelines set out recommendations on the implementation of re-employment, the union plays an important role in ensuring that it is implemented fairly and reasonable.
Can re-employed employees on re-employment contract be represented by the unions?
What should employees do if they feel the re-employment offer is unreasonable?
The re-employment legislation provides avenues for employees to seek recourse for re-employment disputes. Employees may either appeal to the Minister for Manpower on grounds of unfair denial of re-employment, or lodge a claim for the EAP with the Commissioner for Labour.
What should employees do to be re-employment ready?
To be re-employment ready, employees need to consider the following:
- Discuss with the employer on the jobs that he/she can do
- Be prepared to do a lower level job, a same/different job with a variation to the wages
- Accept training, if necessary
- Remain open to a part-time or flexible arrangement
What are the five key focus areas in making re-employment sustainable?
To facilitate sustainable and scalable re-employment, companies are encouraged to implement the following 5 key focus areas:
- Structured HR policies on re-employment
- Job and workplace re-design
- Performance-based remuneration
- Employability training and retraining
- Workplace Health Programme
How can structured HR policies on re-employment help?
Clear HR policies on re-employment will enable employees to plan and prepare early to work beyond the retirement age. The re-employment policies should encompass the feature prescribed in the Tripartite Guidelines on Re-employment of Older Workers.
Model companies/organisations with structured HR policies
National University Hospital (NUH)
An exemplary Employer Award winner for year 2000, NUH has implemented a commendable re-employment policy aimed to address the needs of the employees. Having adopted the Tripartite Guidelines on Re-employment, NUH engaged their employees early to determine their interest in re-employment.
Singapore Polo Club (SPC)
Tapping on the ADVANTAGE! Scheme, SPC has built a mechanised horse walker that enables the stable assistant to perform his job efficiently with less mental and physical fatigue. The workplace has now become more age-friendly.
Seiko Instruments Singapore Pte Ltd
Collaborating with the union, Seiko has moved its wage structure from a seniority wage system to a performance-based wage system. This allows the company to implement a non-discriminatory wage system, which pays employees based on the job worth, regardless of age.
Qioptic Pte Ltd
Qioptic has a structured skills-matrix that identifies the relevant skills set for all employees, regardless of age. Not only does this increase the overall work competency of the workers, the skills-matrix also makes the workforce more nimble. Training and retraining has become an integral part of the company’s HR policies.
NatSteel Holding Pte Ltd
NatSteel’s vision to make a difference through its people can be seen in the inclusive way the company has implemented its Workplace Health Programme, resulting in healthier employees. The company saw employees absenteeism rate drop from 3.21 days in 2006 to 1.92 days in 2008.
Will it be necessary for companies to adopt and implement the Tripartite Guidelines on Re-employment of Older Workers before the re-employment legislation comes into force in 2012?
Yes. Employers are highly encouraged to implement the guidelines as early as possible, even before the legislation comes into effect. This will enable companies to be better prepared to be re-employment ready by 2012.
For more information & resources on re-employment, please visit the Re-employment of Older Employees Portal
For more information on our benefits & programs for Active Agers, please visit the ULive Portal
Our Re-employment Guide: An Insight on the Practices & Implementation (April 2010) can be viewed by clicking the Download below