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Written answer by Mr Lim Swee Say, Minister for Manpower, to Parliamentary Question on resident workers offered re-employment contracts upon reaching retirement age

Employment practices

Notice paper no. 183 of 2016 for the sitting on or after 12 May 2016 question no. 308 for oral answer

MP: Mr Dennis Tan Lip Fong

To ask the Minister for Manpower (a) since 2011, how many resident workers have been offered re-employment contracts upon reaching retirement age; (b) of these, how many have received a reduction in wages and other remuneration despite having no change in job scope or responsibilities; (c) what has been the average reduction in wages and other remuneration; and (d) how does the Ministry ensure that employers do not unfairly reduce wages of workers reaching retirement age even though there is no change in their productivity and performance.

Answer

  1. The re-employment model was introduced in 2012, after extensive tripartite consultations. Under the Retirement and Re-employment Act (RRA), employers are required to offer re-employment to eligible employees who turn 62 years old or the contractual retirement age if it is higher, up to the prevailing re-employment age. Employers may re-employ employees on a new contract with re-negotiated terms, or allow them to continue on their existing contracts. The law requires any adjustments to contract terms to be based on reasonable factors, such as the employees’ productivity, performance, duties and responsibilities and the wage system applicable to the employee, including any seniority element. Currently, the re-employment age is 65 years old and it will be raised to 67 years old by 1 July 2017 as announced at the Ministry of Manpower’s Committee of Supply debate last month.
  2. In recent years, over 98% of resident employees who wished to continue working were offered employment beyond 62. Specifically in 2015, 98% of those who accepted re-employment in the same job, be it on a new or existing contract did not experience a cut in their basic wages. Of the small minority of 2% who did experience wage cuts upon re-employment, the median wage cut was 10%. It is worth noting that among those on new contracts, almost one in ten actually received higher wages upon re-employment. 
  3. To create higher awareness of employers’ obligations on the employment of older employees, the tripartite partners have issued a set of Tripartite Guidelines on the Re-employment of Older Employees. The guidelines are gazetted, and are used by the Ministry of Manpower, the Industrial Arbitration Court and the High Court in settling re-employment claims and appeals. Employees who feel that their wages have been unfairly adjusted upon re-employment should approach their unions or the Ministry of Manpower for early assistance.