RETIREMENT AGE BILL

Debate resumed.

Dr Lee Boon Yang: Mr Speaker, Sir, in my response to Dr Toh who suggested doing away with the employees' CPF contribution entirely when they reach the age of 55 years, I have explained why it would not help in the effort to get employers to retain older workers because cutting the employees' CPF contribution rate will not reduce the cost factor. While it will increase the employee's take-home pay, it will not reduce the employer's cost burden. Hence, when we were studying this issue of how to encourage more employers to retain their older workers, we felt that the 5% reduction on the part of the employers' CPF contribution rate will be worthwhile.

As to whether we could do it gradually or not, I have already explained earlier on that it will take a longer time and we have already waited for four years for companies to raise their retirement age voluntarily. If we wait for another four years, we will have missed the opportunity to employ so many more older Singaporeans or keep them economically active. And I think we should not dilly-dally over this matter. We have given four years of notice.

Why is it that we are now reducing the employers' CPF contribution while quite a number of unionised workers, in particular, are already enjoying a retirement age of 60 years without having to pay the price of a CPF reduction? We move to get all employers to raise their retirement age because it is a matter of national interest. While 10% of the companies have voluntarily raised their retirement age to 60 years, only a very small proportion of the total workforce is, in fact, enjoying this higher retirement age. Yes, they are all in the unionised sector. The intention here is to get all the rest outside the unionised sector, which forms the vast majority of our workforce, to also enjoy the benefits of working up to 60 years and to do so, a CPF reduction would expedite the move. That is why we are moving to cut the employers' CPF contribution rate by 5%.

Mr Chng Hee Kok: Mr Speaker, Sir, the Minister has not answered the concern which I raised and that is the right of individuals and companies to enter into contract, especially the highly-paid staff. By making all term contracts, or contracts of a fixed number of years or term, void it means you are taking away the right of contract and some of these highly-paid staff may be required for a specific purpose. Under the present Bill, it makes the law very rigid and there is no room for employees who are very capable of taking care of themselves to enter into such contracts.

Dr Lee Boon Yang: Sir, I think there is a misunderstanding here. It is not the intention of this Bill to make all fixed-term contracts void. On the contrary, it is my Ministry's intention to exempt all fixed-term contracts from the coverage of the Bill provided when there is a complaint about a wrongful dismissal, the employer can justify that the fixed-term contract is linked to a particular project and, therefore, it is a valid term contract.

Dr Toh Keng Kiat: Sir, when I proposed that we do away with the employees' CPF contribution after attaining the age of 55 years, it was not as a measure of cost-cutting but more to try and rationalise an action. Here we have, on the one hand, a worker who is allowed to withdraw all his CPF but, on the other hand, he has to make back monthly contribution. I do not see the rationale behind this action.

Dr Lee Boon Yang: Sir, the rationale is quite simple. As long as a person is able to work, he should set aside some of his income to cater for the day when he is unable to work. The fact that he has been given permission to withdraw his savings at the age of 55 years should not nullify this principle because an average Singaporean's life expectancy is now 76 years. Even if he retires at the age of 60 years, there is still a good 16 years for him to live on. So he should, between the ages of 55 years and 60 years, continue to save as much as he can and the saving rate should be compatible to his needs at the point of time. Hence, we are reducing it to a saving rate of 20% and not 40%, unlike workers who are below the age of 55 years. So it is entirely rational that workers who are continuing to work beyond the age of 55 years should make some contribution to their CPF.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Dr Lee Boon Yang].

Bill considered in Committee.

[Mr Speaker in the Chair]

Clause 1 ordered to stand part of the Bill.

Clause 2 -

Assoc. Prof. Walter Woon: Sir, I beg to move,

In page 2, line 35, at end, to add -

"(c) the employer declines to renew a contract of employment, where the contractis for a fixed term.".

The Minister has very usefully clarified that the Ministry will take a very flexible attitude towards the implementation of the Retirement Age Bill. But as long as you make it an offence under clause 4(3), you need to plug obvious loopholes. You have to look at the Bill in the way that a lawyer would look at it. One of the obvious loopholes is that if you want to get around this dismissal problem, you put people on fixed term contracts, six months or a year. Non-renewal of a contract is not dismissal, unless you define it as dismissal. This is why I am suggesting that the definitional section in clause 2 be amended in the manner that is stated, so that if an employer does have people on short-term contracts, non-renewal also would count as dismissal.

If, on the other hand, the Minister accepts my latest suggestion to take out that criminal provision and leave it entirely to conciliation, then this first proposal is not absolutely crucial. Because the Ministry and the officials will be able to look at the situation and come to a just conclusion.

Question proposed.

Dr Lee Boon Yang: Mr Speaker, Sir, the objective of the Bill is to raise the retirement age of employees who are on permanent employment to 60 and eventually to 67. This, however, should not prevent employers from employing workers on short-term basis for a particular project or where age is a genuine occupational requirement.

Let me give Members an example. When the Government formed the Mass Rapid Transit Corporation (MRTC) in 1983 to design and construct the mass rapid transit system, it was necessary for MRTC to engage sizable numbers of engineers, architects and technical officers to undertake the project. Once the MRT system was completed, the requirement for such a large number of professionals would obviously decrease and decrease quite drastically too. Hence, MRTC in 1983 and 1984 engaged many professionals on fixed term contracts. It was entirely reasonable and acceptable by the employees.

In fact, for the current phase of the MRT extension to Woodlands, the MRTC has also employed engineers and other professionals on fixed term contracts. Because once the current extension of the MRT to Woodlands is completed, again they would not need the number of engineers and architects.

Therefore, genuine fixed term contracts based on particular projects or where age is an occupational requirement, whether it is for health or safety reasons, should be exempted from the provisions of the Retirement Age Bill. This approach allows for flexibility and, at the same time, safeguards the interest of workers.

Sir, the proposed amendment by Assoc. Prof. Woon would make it practically impossible for employers to engage any worker, any employee, on a fixed term basis, as they would be compelled, under his amendment, to renew such contract even if there was no work for them. Taking the example of the MRTC, it would mean that the MRTC would have to retain all the hundreds of architects and engineers who were employed in 1984 to the age of 60. This is completely not feasible. And it is also clearly not the objective of the law to compel employers to retain such workers on a permanent basis.

Sir, hence clause 10 enables the Minister to grant exemption to certain categories of workers from the statutory requirement of minimum retirement age. And such exemption will be granted for employees who are on fixed term contracts. Under the circumstances, I do not believe that it is prudent to accept the amendment proposed by the Member. No matter how well intentioned it is, I think it will add to the rigidity of the labour market and make it more difficult for employers and employees to come to a certain agreement.

Assoc. Prof. Walter Woon: Mr Speaker, Sir, I think the Minister and I are at cross purposes. When you have a situation like the MRTC, when the work disappears, the employees are dismissed not on the ground of age, they are dismissed because you no longer have work. And that is permissible under the Act, I presume. What I am thinking about is a situation where an employer says, "All right, we are going to have a problem when you guys get old. So let us give you 1-year contracts. Everyone has 1-year contracts. When you reach 55, I don't renew you." That is not a dismissal. That is the problem. This is why I have suggested it. Is this a dismissal or not a dismissal? If you are going to court with a lawyer, the lawyer will argue that non-renewal does not amount to dismissal unless you define "non-renewal" as dismissal. And if there is no dismissal, there can be no question of whether it is on age or not on age, if you follow what I mean. This is why I have suggested the amendment.

The Minister says it is not necessary because his Ministry will look at these things in the circumstances and I accept that. If the Minister is going to leave it to conciliation, then we do not have to worry with all these niceties of the law. But if we are going to expect the courts to interpret these sections, then I think we must look at them in the way that lawyers would look at them and try to anticipate what kind of loopholes will be poked in the statute itself.

Dr Lee Boon Yang: Mr Speaker, Sir, accepting the Member's proposed amendment would, in fact, mean that fixed term contracts will no longer be used at all. Because I do not know what he meant by making a distinction between one where there is a clear-cut project with an ending and one where there is no ending and is renewed annually. I have already explained earlier on in response to the Member that should an employee complain that he has been dismissed and that his employer has used the fixed term contract as a mechanism to circumvent the law, then the investigating officer should be able to determine from the employer whether, in fact, the employee who has been retained on a fixed term contract was actually doing a different kind of work related to a specific project each time the contract was renewed. Or was he just carrying on doing the same work after each renewal of his contract and that there was no linkage of the term of the contract with a specific project? We are quite confident that that can be determined. If we ascertain that, in fact, the fixed term contract was not linked to a specific project, then we will conclude that the employer has tried to circumvent the law by using the fixed term contract, and we will rule in favour of the employee. So that will take care of the Member's concern that the employers may use the fixed term contract as a means to circumvent the law.

Amendment negatived.

Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Clause 4 -

Assoc. Prof. Walter Woon: Sir, I beg to move,

In page 3, lines 9 to 12, to leave out sub-clause (3).

The reason I have suggested this amend ment is that the Minister has rightly pointed out that conciliation is the better way to deal with these things rather than going to court with a prosecution. Once you go to court with a prosecution, firstly, there is a problem because the prosecution has to prove the case beyond a reasonable doubt. If the employer says nothing, it is for the prosecution to prove that the dismissal was on account of age. How does he do that in the absence of any evidence? That is the first thing.

The second thing is stigma. There is a stigma attached to being prosecuted and convicted in court. And I do not think, as a matter of principle, that we should criminalise behaviour of this sort. You cannot legislate good labour relations any more than you can legislate good husband and wife relations. So it is far better that the Ministry should play a conciliatory role than that this should be a matter for prosecution.

The third thing is that an offence of this sort has repercussions beyond the Retirement Age Act. The Companies Act, at present in section 154, disqualifies a person who is being convicted of an offence involving management of a company. If a person in the management of a company dismisses an employee and is convicted under this particular section, it is arguable that he is disqualified from directorship and management for five years. This particular provision of the Companies Act will probably the amended once the Select Committee has gone through, but one cannot say. So it does have repercussions beyond this particular law, which is why I am not very happy about criminalising it.

In most cases, an employee makes a complaint. The Ministry looks into the complaint. If the Minister finds the complaint to be justified, he makes an order, gives a direction. If the employer disobeys this direction, that is the time you impose a fine or jail sentence. But to prosecute someone without going through the conciliation process seems to be redundant if you want conciliation most of the time. This is why I am suggesting that clause 4(3) be taken out, because really it is going to be redundant. That is the first reason. The second is that it is too easy for lawyers to poke holes in it. As we have indicated - Mr Shanmugam has indicated - I think the legal Members of this House will know that lawyers being what they are, they will find a way around this if you have to go through a formal prosecution.

Question proposed.

Dr Lee Boon Yang: Sir, I am grateful to the Member for his strong support of our conciliation process. The Ministry is also of the view that conciliation should be carried out first before any prosecution is contemplated. Here I would like to reassure the Member that it is not the intention of the Ministry to prosecute under clause 4(3) of the Bill all violators of the law. We will, in fact, carry out a process of conciliation to resolve the dispute between employer and employee before we consider any further action.

While conciliation will help to settle disputes relating to unlawful dismissal on account of age, we should nevertheless retain the right to prosecute employers who blatantly and repeatedly resort to dismissing employees on account of age. The GPC Chairman for Labour has pointed out that, in fact, some employers may not all be averse to paying some compensation if they feel strongly enough and want to get rid of a particular employee. So compensation alone for the ex-employee may not be sufficient to deter employers from resorting to dismissing workers on account of age. So we should always have some criminal sanctions to act as a deterrent to the employers who, in dismissing their employees, would now have to take greater care to ensure that the dismissal is on valid grounds and not because of age.

Sir, similar offences are also provided in both the Employment Act and the Industrial Relations Act. The provision for criminal sanction in employer-employee relationship is not new. Both the Employment Act and the Industrial Relations Act have such a criminal sanction. Section 81 of the Employment Act (Cap. 91) states that no employer can dismiss a female employee who is absent from work because of confinement. If an employer contravenes section 81 of the Employment Act, he commits an offence under section 87 and he is liable to a fine not exceeding $1,000 or to imprisonment for a term not exceeding six months or to both. So an offence is created here.

Section 53 of the Employment Act states that any employer who employs any person contrary to Part IV of the Employment Act where certain terms and conditions of employment are provided for or fails to pay any salary in accordance with Part IV commits an offence and is liable to a fine not exceeding $1,000. If it is a second conviction, the fine is a sum not exceeding $2,000 or to imprisonment for a term not exceeding one year or to both.

Sir, in the Industrial Relations Act, section 82(1) states that an employer shall not dismiss or threaten to dismiss an employee by reason of, inter alia, his becoming an officer or member of a trade union, being a member of a trade union which is seeking to improve working condition. Any employer who contravenes section 82(1) of the Industrial Relations Act commits an offence and is liable to a fine not exceeding $2,000 or to an imprisonment for a term not exceeding 12 months or to both. Sir, such provisions or criminal sanction against violations committed by employers have not soured up employer-employee relationship in Singapore. On the contrary, the provision of criminal sanction has ensured that employers uphold their end of the bargain and that there are far fewer disputes as a result of the provision of sanction.

Sir, maybe at the risk of being considered diverting from the main discussion, I understand that Assoc. Prof. Woon has a desire to eliminate the penalty factor from this Bill. But, in reality, you need some penalty to deal with errant employers who will repeatedly flout the law. I understand that Assoc. Prof. Woon is drafting a Bill to legislate on filial piety. I understand that he is drafting a law which will force children to be responsible for the welfare of their parents. It is a very honourable objective. I do not wish to prejudge his draft Bill. But if the filial piety Bill does not have any sanction against offenders, he may well find that the law would have little effect on the hard-hearted children who persist in abandoning their aged and destitute parents. So even in a matter of father and son relationship, the law may well have to provide some sanction against the repeat offender or the violator. What more in the case of employer-employee relationship where we also need to safeguard the interest of the employee from an employer who may repeatedly violate the law.

Assoc. Prof. Walter Woon: I thank the Minister for his clarification, but I again think that he has misunderstood me. I do not want to take the penalty out of the Bill. I just think that the penalty is in the wrong place. There is already a penalty under clause 7. You go to conciliation, the Minister makes the order, you ignore the order, there is a penalty. There is no need to have a double penalty because, as I said, there are repercussions that go beyond the Bill. I think what we have is a basic difference of opinion about whether or not such a provision is going to be useful. I think that lawyers being what they are, they will find ways around it. But I respect the Minister's judgement. If he feels that it is not necessary, I hope the conciliation will be sufficient.

Amendment negatived.

Clause 4 ordered to stand part of the Bill.

Clauses 5 to 12 inclusive ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.