Resident Workers Offered Re-employment Contracts upon Reaching Retirement Age

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 and it will be raised to 67 by 1 July 2017, as announced at the Ministry of Manpower's (MOM's) Committee of Supply debate in April.

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 10 actually received higher wages upon re-employment.

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 MOM, 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 MOM for early assistance.