Retirement and Re-employment (Amendment) Bill – Speech by Leon Perera

(Delivered in Parliament on 9 January 2017)


Madam, the Retirement and Re-employment Amendment bill seeks to amend the existing law to raise the re-employment age to up to 67 years and to repeal the section which allowed employers to reduce the salaries of older workers once they reached 60, among other things.

My colleague Professor Goh will speak more broadly about the bill.

I would like to confine my comments to one aspect of the employment of older persons which this bill does not seem to sufficiently address and which is a gap in our current framework of law, regulations and norms in the labour market. And that is – how can we reduce instances of employers legally terminating older employees as a result of aegist prejudice?

I would like to ask – if an employee who does not have a mandatory retirement age specified in her employment contract has her employment terminated by the employer with notice for the reason that they have reached retirement age, do the provisions of the Act apply? The language of clause 4 (1) suggests that this is the case since it states that notwithstanding any law, contract of service or collective agreement the retirement age shall not be less than 62 years and up to 67 years as prescribed by the Minister. Section 4(2) of the existing Act also says that “No employer shall dismiss on the ground of age any employee who is below 62 years of age or the prescribed minimum retirement age”.

However this makes it all the more likely that an employer who is terminating an employee for reasons of aegism will not tell this to the employee or leave any paper trail as to the grounds for the termination.

There are two scenarios I would like to highlight here. The first is that of an employer who does not wish to offer re-employment on grounds of performance, which is allowed under the Act. The second is that of an employer who terminates an employee with notice on aegist grounds because they have become too old but does not state this reason or leave any evidence of this being the reason.

Let me discuss the first scenario. There would seem to be an escape clause for the employer who wants to invoke the retirement age against a reluctant employee and not offer her re-employment. Clause 4 states that where an employer does not intend to re-employ an employee past the retirement age because the employee either does not have satisfactory work performance or is not medically fit the employer must give the employee written notice “as far as it is reasonably practicable … within a reasonable period” before termination.

Section 8 of the current Act provides some remedies, which is actually for the employee to write in to MOM and let MOM decide if they have been unfairly dismissed or denied re-employment. But I would like to ask – what safeguards are in place to ensure that an employee in such a situation will get assistance in presenting her case, and that the burden of proof truly lies with the employer? To be realistic, if an employer does not offer re-employment at age 62 on grounds of performance, it may be hard for many employees to defend themselves to MOM, particularly if the company does not practise a system of regular performance reviews with documentary proof of the same, which is the case with many SMEs.

The second scenario is even more likely and hence more worrying. What if an employer decides to terminate an employee just before she hits the age of 62 or even earlier on the grounds of aegist prejudice without invoking the reason of retirement at all, because they decided that they can hire someone younger more cheaply? There may be safeguards against employers doing this in the case of companies that have collective bargaining employment contracts. But most employees do not fall into this category.

For most employees, there is no need for an employer to wait for the retirement age or re-employment age. Legally they can terminate an employee with notice at any time. In other words they can involuntarily “retire” their employees as and when they feel they have become “too old.”

For most employees, there is no protection against termination with notice for reasons of aegist prejudice. This is because the law does not require the employer to state a reason nor is it easily challenged at MOM if the termination is a legal employment contract termination with the notice period paid.

To be sure, I am not arguing that employers should have their ability to terminate with notice eliminated. Employers need to be able to eliminate unnecessary positions as a last resort, so as to protect the survival of the company and the jobs of the remaining workers. Employers also need this in cases of legitimate employee performance issues. My concern is with employers who exercise this right for the wrong reasons – for reasons of aegist prejudice.

No doubt, this is an issue that goes beyond the scope of this Act and touches on our framework for dealing with discriminatory employment practices in general. But it is worth noting that this law does not address this possibility.

It is a possibility that faces a huge number of workers, who may be forcibly “retired” and hence thrown onto a job market where finding good permanent employment for someone in their late 40s or 50s (let alone older) is extremely hard, especially in the current economic climate.

This points to a huge gap which this law does not address.

In 2015, there were 8,700 discouraged workers in Singapore who would like to work but have given up looking for a job because they feel that their chances are almost nil, according to the 2015 Labour Force Survey. 69% of those discouraged were aged 50 and over. I suspect that many of these workers would have undergone countless ordeals of sending in applications with no reply or going for interviews only to be met with rejections or a stone wall of silence, until they decided to give up the unequal struggle.

To meet this gap we should relook at the framework for tackling discriminatory employment practices in general, not only for aegist prejudice but for other forms of prejudice – gender, race, religion, disability status or ex-offender status, for example. A good starting point would be to get good data from a comprehensive survey of employees, not only of employers, and this is a subject we have discussed in this House last year.

We could then look at better carrots for employers who can demonstrate robust and auditable hiring and firing practices that give no quarter to prejudice of any kind.

Further down the road, depending on the effectiveness of these measures as surveys reveal, we could consider introducing sticks against proven and repeated discriminators, as my colleague Mr Faisal Manap argued during the 2016 COS.

Right now we have a system where employees can complain to TAFEP and TAFEP can then escalate complaints to MOM, which can wield the stick of employment and work pass access as well as moral suasion. However for companies that are not open to moral exhortations or which do not require EPs or WPs, these sticks may be ineffective. Moreover, going further upstream, there could be many employees who know or suspect that they have been on the receiving end of discriminatory practices but who would not want to complain to TAFEP for many reasons – not only timidity but also perhaps a lack of confidence that they could prove their case in a “my word against your’s” situation.

As a country, we have a long way to go to shift our labour market norms towards embracing the idea of people working till well into their 60s and perhaps older IF they choose to do so.

Such work opens up a crucial vista for self-fulfilment for older Singaporeans who might otherwise be at risk of social isolation. It also gives older people a fair chance to enhance their incomes by earning an honest income. As a country it allows us to raise our total labour force participation and thus staff our industries without adding to the population as much.

To move down this path, we need to go much further than this bill.