Case: Court’s comments on contractual discretion and implied term of mutual trust and confidence

Significant comments by the Appellate Division of the Singapore High Court.

In Dong Wei v Shell Eastern Trading (Pte) Ltd [2022] SGHC(A) 8, the Court in obiter dicta considered and said that:

a. although it has been held that an employer’s exercise of a contractual discretion is subject to requirements of rationality, good faith and consistency with the contractual purpose (Leiman, Ricardo and another v Noble Resources Ltd and another [2018] SGHC 166 at [112]-[114]; Braganza v BP Shipping Ltd and another [2015] 1 WLR 1661);

b. such a fetter on contractual discretion should not extend to the contractual right to terminate with notice (at [88]);

c. further, this fetter would cut both ways and also limit an employee’s right to terminate with notice (at [92]);

d. the existence of an implied term of mutual trust and confidence in employment contracts under Singapore law is not yet settled (The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd [2015] 3 SLR 695 (CA) at [44]);

e. the High Court of Australia in Commonwealth Bank of Australia v Barker (2014) 312 ALR 356 had firmly rejected this in Australian law. The Court’s reasoning there would be cogent in the Singapore law context too.

#singaporelaw #law #employmentlaw #litigation #contractlaw

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