Committee of Supply debate: Ministry of Manpower

Workers can be re-employed till age 67; law letting firms cut pay of 60-year-olds to be scrapped

Workers can stay in job till age 67; law letting firms cut pay of 60-year-olds to be scrapped

Participants at a computer literacy class in 2011.
Participants at a computer literacy class in 2011.PHOTO: ST FILE

From July 1 next year, workers will get to be re-employed up to the age of 67 years.

The announcement of the date for raising the re-employment age ceiling has been a long-awaited one, and comes 23 years after the Government first made clear that it wanted Singaporeans to be able to work until 67.

From the date, employers will be obliged to offer re-employment to eligible workers up to the age of 67. This is two years older than what is legally required today.

And those who want to be re-employed can also work with a different company if they agree to it.

Separately, a legal provision allowing companies to cut the wage of employees who turn 60 will be removed.

Minister of State for Manpower Sam Tan announced these changes yesterday during the debate on the Manpower Ministry's budget.

He said that until the law is changed, the Government will continue to support companies which voluntarily re-employ workers older than 65. These companies get a subsidy equivalent to 3 per cent of the employee's wages.

Since 2012, employers have been required to offer re-employment to eligible workers when they retire at 62, or give them one-off payments if they cannot be re-hired.

Mr Tan said that in future, older workers can be re-employed by a different company, provided the worker agrees to the transfer and the new employer fully embraces the re-employment obligations.

"We have received feedback that, sometimes, employers are unable to find suitable jobs in their own companies, but can help the worker secure re-employment in a related or subsidiary company," he added.

On the removal of the legal provision to cut employees' wages by up to 10 per cent when they turn 60, Mr Tan said it was "no longer relevant" as more than 98 per cent of companies here do not make such cuts.

The provision was needed in the early days when wages were more closely tied to seniority, to make older workers more attractive to companies, he added.

In recent years, more than 98 per cent of local employees who wanted to keep working beyond the age of 62 got their wish.

Said Mr Tan: "Going forward, pay should be reflective of workers' job scope and value, regardless of age."

During the debate, Ms Jessica Tan (East Coast GRC) noting how "MOM is committed to letting workers work longer and as long as they can and they're willing to", suggested raising or removing the retirement age.

But Manpower Minister Lim Swee Say said that doing so could result in less protection for workers as companies are then free to terminate their employment even earlier.

Labour MP Heng Chee How (Jalan Besar GRC) pointed out that some companies, such as ComfortDelGro, have set retirement ages that are higher than what is legally required.

Mr Heng, who is also Senior Minister of State in the Prime Minister's Office, asked if MOM could work with the labour movement to encourage more firms to follow suit.

Mr Lim praised the "progressive" behaviour of such companies and suggested that the Tripartite Alliance for Fair and Progressive Employment Practices (Tafep) should spearhead these efforts.

A version of this article appeared in the print edition of The Straits Times on April 09, 2016, with the headline 'Re-employment age cap up from July 2017'. Print Edition | Subscribe