Koh Poh Koon on retrenchment and re-employment of senior workers
Data shows that workers who are past the retirement age are not disproportionately affected by retrenchment compared with other age groups. From 2018 to 2022, the average incidence of retrenchment among residents aged 63 and over was 3.8 per 1,000 resident employees, lower than the overall figure of 6.1 for the entire resident workforce. Over the same period, the absolute number of retrenched residents aged 63 and over remained low, at an average of 450 per year. Senior Minister of State for Manpower Koh Poh Koon gave this update in reply to an MP's questions in Parliament on Thursday (Aug 3). He said the Retirement and Re-employment Act requires employers to offer re-employment to employees above the prevailing retirement age and below the prevailing re-employment age, or else employers will need to pay eligible employees the Employment Assistance Payment (EAP). He said the recommended EAP amount in the Tripartite Guidelines on Re-employment of Older Employees is carefully calibrated. He said the EAP should not be so low that it provides employers an easy alternative to offering re-employment. However, if the EAP is too high, it may deter employers from hiring or retaining senior workers nearing retirement age, he added. Dr Koh said the EAP quantum is tied to the legal obligation to offer re-employment and should not be compared with retrenchment benefits, which are not mandated by law. The quantum of retrenchment benefit varies across companies, though the vast majority of employers do follow the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment in paying retrenchment benefit, generally paying between two weeks and one month of salary per year of service to eligible employees. Dr Koh said any real or perceived “cliff effect” between retrenchment benefit and EAP is dependent on the quantum of retrenchment benefits specified in the individual worker’s employment contract or collective agreement. He said the Ministry of Manpower will continue to work closely with the tripartite partners to review its retirement and re-employment policies to ensure they remain relevant and foster progressive workplaces that enable senior workers to continue working if they wish to.
Data shows that workers who are past the retirement age are not disproportionately affected by retrenchment compared with other age groups. From 2018 to 2022, the average incidence of retrenchment among residents aged 63 and over was 3.8 per 1,000 resident employees, lower than the overall figure of 6.1 for the entire resident workforce. Over the same period, the absolute number of retrenched residents aged 63 and over remained low, at an average of 450 per year. Senior Minister of State for Manpower Koh Poh Koon gave this update in reply to an MP's questions in Parliament on Thursday (Aug 3). He said the Retirement and Re-employment Act requires employers to offer re-employment to employees above the prevailing retirement age and below the prevailing re-employment age, or else employers will need to pay eligible employees the Employment Assistance Payment (EAP). He said the recommended EAP amount in the Tripartite Guidelines on Re-employment of Older Employees is carefully calibrated. He said the EAP should not be so low that it provides employers an easy alternative to offering re-employment. However, if the EAP is too high, it may deter employers from hiring or retaining senior workers nearing retirement age, he added. Dr Koh said the EAP quantum is tied to the legal obligation to offer re-employment and should not be compared with retrenchment benefits, which are not mandated by law. The quantum of retrenchment benefit varies across companies, though the vast majority of employers do follow the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment in paying retrenchment benefit, generally paying between two weeks and one month of salary per year of service to eligible employees. Dr Koh said any real or perceived “cliff effect” between retrenchment benefit and EAP is dependent on the quantum of retrenchment benefits specified in the individual worker’s employment contract or collective agreement. He said the Ministry of Manpower will continue to work closely with the tripartite partners to review its retirement and re-employment policies to ensure they remain relevant and foster progressive workplaces that enable senior workers to continue working if they wish to.
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