Rather than raise the age of retirement, as of 2012, a new law requires employers to offer reemployment to workers who have reached the statutory retirement age of 62. The legislation thus extends employment for older workers, initially to age 65 and later to age 67. Final guidelines were recently released to help employers become “reemployment ready”.
Based on feedback from members of the public, the Tripartite Guidelines on Reemployment of Older Employees were recently issued by a committee made up of government, employer and union representatives.
The guidelines require employers to reemploy the majority of their older workers, and to offer jobs to all employees who are medically fit and perform satisfactorily or better. Employers are required to start talking to the employees involved at least six months before they reach age 62, although they are not required to offer them the same job or the same pay. Employment benefits such as annual leave and sick leave must continue, however at the level appropriate for the reemployment job.
Reemployment will continue up to age 65, with contracts renewable annually, provided the employee remains fit and able to perform satisfactorily. If medical costs become an issue, caps on medical benefits, co-payments, or additional employer Medisave contributions can be considered.
If reemployment is not possible, employers must offer a one-off Employment Assistance Payment (EAP) to be used by the employee while looking for alternative employment. The guidelines suggest a minimum of USD 4,500 and a cap of USD 10,000.
Changes to the Central Provident Fund
The reemployment legislation complements changes to the Draw Down Age under the Central Provident Fund. The Draw Down Age, at which employees can access their savings, will rise from 62 to 63 in 2012, to 64 in 2015, to 65 in 2018, and later to age 67.
Employers with existing reemployment policies will need to check that these are compatible with the guidelines, while companies without such policies should start to put these in place as soon as possible, in time for the 2012 deadline. Adjustments to existing insurance and medical plans may be necessary to cover reemployed staff.
The guidelines require employers to reemploy the majority of their older workers, and to offer jobs to all employees who are medically fit and perform satisfactorily or better. Employers are required to start talking to the employees involved at least six months before they reach age 62, although they are not required to offer them the same job or the same pay. Employment benefits such as annual leave and sick leave must continue, however at the level appropriate for the reemployment job.
Reemployment will continue up to age 65, with contracts renewable annually, provided the employee remains fit and able to perform satisfactorily. If medical costs become an issue, caps on medical benefits, co-payments, or additional employer Medisave contributions can be considered.
If reemployment is not possible, employers must offer a one-off Employment Assistance Payment (EAP) to be used by the employee while looking for alternative employment. The guidelines suggest a minimum of USD 4,500 and a cap of USD 10,000.
Changes to the Central Provident Fund
The reemployment legislation complements changes to the Draw Down Age under the Central Provident Fund. The Draw Down Age, at which employees can access their savings, will rise from 62 to 63 in 2012, to 64 in 2015, to 65 in 2018, and later to age 67.
Employers with existing reemployment policies will need to check that these are compatible with the guidelines, while companies without such policies should start to put these in place as soon as possible, in time for the 2012 deadline. Adjustments to existing insurance and medical plans may be necessary to cover reemployed staff.