Exemption from Retirement Age Act
Some categories of employees are exempted from the Act's coverage. These include persons employed to work on a specific project for a fixed term. The full list of employees exempted from the Act's coverage can be found under the Retirement Age (Exemption) Notification.
A workpass holder who obtains Singapore Permanent Resident (SPR) status is exempted from the RA Act if he/she continues to be employed under the same employment contract or further renewal under the same contract. However, if there is a break in the employment contract or variations in the terms and conditions of employment, the SPR will no longer be exempted from the RA Act.
An employee, who before 1 July 1993, is covered by any retirement benefit scheme approved by the Minister, which provides for retirement on or before the age of 60 years, from the Retirement Age Act is exempted from the RA Act.
The exemption does not apply to retirement benefit schemes which are established after 1 July 1993, or employee who are covered by any approved scheme after 1 July 1993.
Employees aged below 62 years who are employed to work on a specific project for a fixed term or are placed on a temporary contract which, including any extension of the contract, is not more than 2 years, are exempted under the Retirement Age Act.
A person who is employed on fixed term contract beyond a 2-year period or on a contract including its renewal exceeds 2 years, will be covered under the RA Act. This does not apply to employees aged above 62 years. They and their employers may wish to mutually agree on the type and the period of the contract of employment they wish to enter into.
With effect from 1 Jan 1999, the minimum retirement age is 62 years.
An employee can be retired the day before his/her 62nd birthday.
However, if the retirement age is not specified in the employment contract, the employer should give the employee advance notice as stipulated in the contract.
The Employment Act does not require an employer to pay retirement benefits to an employee, unless it is stated in the employment contract.
To help ease the cost burden of retaining employees beyond the age of 60, employers are given the discretion under the Retirement Age Act to reduce the wages of such employees by up to 10% when extending their employment beyond 60. The reduction may be a direct cut in salary or a combination of wage cost items such as fringe benefits, variable bonus, annual wage supplement (AWS) and basic salary.
If introduced, the wage reduction must be based on reasonable factors other than age, such as changes in an employee's productivity, performance, duties and responsibilities.
The Ministry of Manpower advises employers to be judicious in implementing the wage cut. In deciding on the need and extent of the cut, employers should consider whether the older employee's salary reflects his/her job worth.
The wage cut can be effected on or at any time after the employee turns 60. The wage cut be effected more than once so long as the total magnitude of the cut does not exceed 10%.
Employers should give reasonable notice, say one month, to the employee before the employee turns 60 or older. He must inform the employee in writing of the amount of wage reduction and the effective date of the cut. Employers should give the employee reasonable time, say at least a week, to consider and respond to the offer.
The employee may disagree with the wage cut proposed by his employer. He should voice his disagreement to his employer, explaining why he is unable to accept the proposal. The employer and employee should discuss the matter with a view to reaching an agreement. However, if an agreement cannot be reached after discussion, the employee may retire or his employer may retire him on or after he reaches the age of 60.
The Act stipulates that employees who are below the prescribed retirement age cannot be dismissed by their employers because of their age. An employee will be deemed to be dismissed by the employer if:
- The contract under which he/she is employed is terminated by the employer, regardless of whether or not notice is given;
- The employer retires the employee; or
- The employer requires or causes the employee to retire or resign because of his/her age.
Unlawful Dismissal
An employee who considers him/herself to have been unlawfully dismissed due to his/her age may write to the Minister for Manpower to be reinstated in his/her former employment. This must be done within one month of the dismissal.
Alternatively, the employee may consider pursuing the matter under common law.
An employer can continue employing a worker beyond age 62. The RA Act only prescribes the retirement age whereby employers can retire their employees without contravening the Act.
The Act does not legislate compulsory retirement; neither does it prohibit an employee from continuing employment beyond the statutory retirement age.
Employees above age 62 are not covered by the RA Act, regardless of whether they are employed on a contract or tenure basis. Thus, any extensions in an employee's employment beyond age 62 will be based on mutual agreement between the employer and employee
|
