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Changes to the re-employment legislation in Singapore take effect on 1 July 2017

Last updated: 2021-05-28 (originally published on 2017-05-16)   — by Alex

While employers have traditionally shunned hiring older workers as they are perceived to be less efficient and less capable, there are many benefits that an older worker can bring to a company. Keeping older workers in your company can benefit your younger employees as they serve as role models and can provide cross-generational mentoring and coaching. According to a Harvard Business Review study, there are several key areas in which the young can learn two key things from the old: how to exercise control over your work, and financial proficiency. In turn, the old can learn from the young how to build diverse networks and how to build a reputation. Key ways of facilitating the integration of older workers into the workforce is to prioritise older-worker skills in hiring and promotions, for instance by placing emphasis on employees’ loyalty, track records and competence, as well as adapting roles to better suit aging skill sets. It is timely then that Singapore has recently put in place changes to the Re-Employment legislation. From the second half of 2017, employers will be legally obliged to offer re-employment to eligible Singaporean workers up to the age of 67, under amendments to the Retirement and Re-employment Act. This is a two-year increase from the current age ceiling and will be applicable to those who turn 65 on or after 1 July 2017. Related reading: How to select the right freelancer for the job GIF - Employment Contract Singapore  

New changes

Should the employer be unable to offer re-employment to an eligible worker, he or she needs to offer an Employment Assistance Payment (EAP). Alternatively, the employer may transfer the re-employment obligation to another employer. The table below summarises the key changes that you should look out for as an employer.  

 

Change to re-employment legislation What are the new requirements?
Re-employoment age raised from 65 to 67 Employers will be required to offer re-employment to eligible employees from age 62 up to age 67.
Option to allow eligible employers to be re-employed by another employer An employer that is unable to offer a suitable position in its organisation may transfer its re-employment obligations, provided that:-

  • The transfer is done with the employee’s consent, and
  • The receiving employer agrees to take over all applicable re-employment obligations.

Should either condition not be met, and the original employer canot find a vacancy in its organisation for the employee, the employee must offer a one-off Employment Assistance Payment (EAP).

Removal of Option for Employers to Cut Employees’ Wages at Age 60 Employers are not allowed to reduce the salary of employees who turn 60 years of age.

 

FAQ

Who qualifies for re-employment under the new re-employment scheme?

The criteria for eligibility for re-employment are as follows:

  • The worker is a Singapore citizen or Singapore permanent resident.
  • The worker has served his/her current employer for at least 3 years before turning 62.
  • The worker has satisfactory work performance, as assessed by his/her employer.
  • The worker is medically fit to continue working.
  • The worker is born on or after 1 July 1952.

What is the Employment Assistance Payment (EAP)?

The EAP is a one-off payment equivalent to 3 months’ salary, subject to a minimum of $4,500 and maximum of $10,000. According to Section 7C(3) of the Retirement and Re-employment Act, this single lump-sum payment must be paid by the employer by the last day of employment of the eligible employee. This sum is meant to help the employee tide over the period of time that they spend looking for another job.

Can I simply offer my employee the EAP instead of offering him or her re-employment?

As an employer, you have a strong obligation to offer your employee re-employment or seek alternative re-employment. The EAP should be offered only after a thorough review as a last resort. In the case that you offer your employee the EAP, you are also encouraged to provide outplacement assistance and help your employee find alternative employment.

Where can I find guidelines on the re-employment of older employees?

The current Tripartite Guidelines on Re-employment of Older Employees, dated 11 January, will continue to apply until 1 July 2017. From 1 July 2017, refer to the new Tripartite Guidelines on Re-employment of Older Employees. These new re-employment legislation promise to facilitate the employment of older workers, with all its accompanying benefits, by companies in Singapore. As an employer, make sure you update the relevant HR policies in your company to stay aligned with these changes to the law! Not sure your Employment Contract for your workers is up to date with the new regulations? Join us as a Zegal subscriber to get access to our suite of business documents, including Employment Contracts, which you can customise according to your organisation’s needs!

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