Case Update: Piattchanine, Iouri v Phosagro Asia Pte Ltd [2015] SGHC 259 – new grounds for terminating employment contract post-termination; breaches of implied contractual duties of employee

Piattchanine, Iouri v Phosagro Asia Pte Ltd [2015] SGHC 259

Significance: High Court determines issue of when it is permissible to raise new grounds for terminating employment contract post-termination; breaches of implied contractual duties of employee.

The right to terminate is exercised by giving notice to the other party. The language used in the notice read against the context and circumstances in which the notice was given will usually make clear what is the ground relied on for the termination. No particular formula of words is required. Indeed, in some cases, the ground or basis on which the party is terminating (or purporting to terminate) the contract may be unclear. It goes without saying that determining whether there is a proper basis to terminate the contract is especially important where the other side disputes the right to terminate. Where a party purports to exercise a “right” of termination (whether a contractual right or a right under common law) it does not have, the consequences are very serious since that party may now be in repudiatory breach himself: [143].

The determination of whether a party had exercised a right to terminate under the employment contract was to be determined from the point of view of the reasonable reader in the position of the recipient of the termination notice, and ask how he would construe the said notice: [148].

The court must consider the legal grounds upon which the contract was purportedly terminated. This will be determined by looking at the facts and circumstances at the time of the termination, and by consideration of how a reasonable reader would interpret the termination. The broad issue is whether the contract was terminated by reliance on a contractual right (such as termination on contractual notice etc) or on the basis that the other party was in repudiatory breach. Only in the latter situation is the employer entitled to raise new facts as a defence to the suit for wrongful dismissal: [191].

While a party may not depart from the legal ground upon which it elected to terminate the contract (namely termination on the basis of a contractual right to terminate so as to negate any accrued or crystallised rights that flowed from the exercise of the contractual right), the party can justify the course of contractual termination that the party elected to proceed with: [223].

While an employee may have breached his express or implied contractual duties, e.g. duties of good faith and fidelity, duty to act with care and diligence, duty not to cause loss to the employer or misuse the employer’s assets, the court must still consider the nature of the breaches to determine whether the breaches constituted wilful breach or serious misconduct: [228].

There is an implied term in the employer’s favour that the employee will serve the employer with good faith and fidelity, and use reasonable care and skill in the performance of his or her duties pursuant to the employment contract”: [239].

The scope of the duty of care and of good faith and fidelity thus may differ depending on the nature of the work. A higher standard of care and fidelity may be expected from senior employees, especially those who also hold fiduciary positions: [240].

The duties of good faith and fidelity encompass, inter alia, a duty not to make use of the employer’s property for one’s own purposes (at para 5.17) and a duty to give due consideration to the interests of the employer: [242].

In each case, it is a matter of degree whether the act complained of is of the requisite gravity as to constitute serious misconduct. It must be so serious that it strikes at the root of the contract of employment, that it destroys the confidence underlying such a contract. Careful attention must be paid to the effect the breaches of duty has on the employer-employee relationship. Naturally, this would be affected in part by the employer’s attitude to the breaches in question: [253]-[254]. A wilful breach is one that requires some form of intentionality or deliberateness in the commission of the breach: [263].

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