Case Update: Long Kim Wing v LTX-Credence Singapore Pte Ltd [2017] SGHC 151 – employer liable for failing to conduct due inquiry before termination for cause / dismissal

Significance: The Singapore High Court held an employer liable for failing to conduct due inquiry before terminating or dismissing an employee for misconduct.

Although the employee was found to have indeed committed misconduct which justified his dismissal, the Court also found that the employer had breached its employment contract in failing to conduct due inquiry. Under the relevant clause in the contract, it was provided that:-

“The Company may after due inquiry dismiss without notice an employee on the grounds of misconduct inconsistent with the fulfilment of the express or implied conditions of his/her service.”

The Court then had to consider what constituted “due inquiry”. Although the clause was similar to s 14(1) of the Employment Act (Cap 91, 2009 Rev Ed), the employee did not rely on this section as the Act was not applicable to him. The Court then considered case law as well as the website of Singapore’s Ministry of Manpower (“MOM”) (http://www.mom.gov.sg/employment-practices/termination-of-employment (accessed 17 April 2017)). The Court noted that under the subject of “Termination due to employee misconduct” and “Holding an inquiry”, the website states that the employee being investigated for misconduct should have the opportunity to present his case even though there is no prescribed procedure for conducting an inquiry.

At [161]-[162], the Court then opined that the phrase “due inquiry” means something more than just the making of inquiries and the conduct of an investigation. Otherwise the word “inquiry” alone would suffice. The phrase suggests some sort of process in which the employee concerned is informed about the allegation(s) and the evidence against him so that he has an opportunity to defend himself by presenting his position, with or without other evidence. While the website of the MOM does not have the force of law, its guide that the employee concerned should have the opportunity to present his case is a useful one. That accords with notions of justice and fairness especially since serious consequences may follow.  In order for an employee to be given an opportunity to present his case effectively, he must first be informed clearly what the case against him is. This includes the allegation(s) and the evidence against him. While “due inquiry” does not mandate any formal procedure to be undertaken, the more the informality the greater the danger that “due inquiry” was not undertaken. Accordingly, where no formal process was undertaken, the court should be more careful to ensure that the employee’s right is protected.

The Court thus found the employer liable for breaching its obligation to conduct due inquiry. The Court then applied Gunton v Richmond-Upon-Thames London Borough Council  [1980] 3 WLR 714, which entitled the employee his salary for the reasonable time it would have taken the employer to conduct “due inquiry”.

Unfortunately, the evidence adduced by the parties before the Court was scant on this point of how long the reasonable time would have been to conduct due inquiry.

Further,  the Court had some reservation as to whether the Defendant would also be obliged to give the Plaintiff an opportunity to address it on the consequences of his misconduct if it concluded that the misconduct was established. There was no evidence as to what human resource departments do or on the advantages and disadvantages of embarking on such a course of conduct. There was also no evidence or submission as to whether both liability and consequences could be addressed together in the same opportunity given to the Plaintiff or should be done separately: at [182].

The Court then found that the employer would not have required more than seven days, based on the chronology of events which transpired in this case.

Case Update: Liu Huaixi v Haniffa Pte Ltd [2017] SGHC 270 – IPA letter may be evidence of foreign worker’s salary amount

Significance: Singapore High Court rules that monthly salary amount stated in Ministry of Manpower’s (MOM’s) in-principle approval (IPA) letter to a foreign worker is indicative of worker’s salary where written employment contract is absent.

The Court in this case ordered department store company Haniffa to pay $6,500 for salary and payment in-lieu of termination notice to PRC worker Liu Huaixi who had worked as a warehouse assistant and supermarket storekeeper.

The IPA letter issued by MOM had stated that Liu would receive a basic monthly salary of $1,100. Generally, such IPA letters are issued on the basis of the employer’s declaration to MOM as to the expected monthly salary amount.

However, Liu was given in this case a salary of $680. The employer claimed that there was an oral contract, but the evidence was scant and the Court rejected finding such an oral contract.

Justice Lee Sieu Kin noted former Labour Minister Tan Chuan-Jin’s parliamentary speech on IPA letters and stated at [25]-[31] that the IPA letter is intended to keep foreign workers informed of their salary components in clear terms. When applying to the MOM for a work permit, the employer is required to declare the foreign worker’s basic monthly salary, allowances, and deductions. This is one of the bases upon which the MOM approves (or rejects) the application. The second policy objective is to shift more responsibilities of employing foreign workers onto the employers. The reason why IPA duties are added to employers is to broaden their scope of their responsibilities, and in the process, to allow employees to rely less on middlemen. An employer is required to declare the actual basic monthly salary of the foreign worker in applying for a work permit and to maintain the payment of such sum for the duration of that employment unless modified in accordance with the Employment Regulations. Given the statutory intent of the IPA, the court would take as factual an employer’s declaration of the basic monthly salary in the IPA because he must be presumed to be truthful when he made the declaration.

The Court also stated at [33]: “Indeed, I would go so far as to state that even if there was a written contract of employment which provides for a monthly basic salary of less than the sum stated in the IPA, the burden would lie on the employer to show why the IPA figure does not reflect the true salary. For example, the employer may adduce evidence to prove that the sum stated in the IPA is different from the amount declared by him in the application for the work permit and somehow an error had been made in the IPA by MOM. Or the employer can admit that he had made a false declaration in the work permit application, thereby attracting other consequences for himself”.

Comment: It is needless to say that employers should be truthful in making declarations in their applications for work permits to MOM. For a long time prior to this case, it was unclear what the status of IPA letters is in salary disputes. From my volunteering work with migrant worker NGOs, I have heard anecdotally that in many cases in the (former) labour courts, the IPA letter was sometimes treated as neither here nor there.

Now it is made clear that the IPA letters have evidential effect and arguably almost quasi-contractual effect. Of course, this is where there is no written employment contract, or good evidence of a binding oral employment contract. In any case, MOM regulations now require that key employment terms are in writing. This is helpful for foreign workers. At the end of the day, the starting point for justice and fairness has to be in clear expectations on all parties, and the clarity of these expectations (assuming there is no intentional exploitation, misrepresentation or otherwise) is best brought out where there are clear written documents which every party understood and signed on.

It is hoped that this decision will go some way to promoting clarity and certainty for employers and foreign workers. I hope also that black sheep employers will not now try to force foreign workers to sign on documents (e.g. to agree to lower the salary only after arriving in Singapore) the workers would likely disagree on but have no bargaining power to say no to.  I think it is important that workers should in such cases collate evidence of such instances if they are ever forced into them. For example, record the conversation with the employer where they voice our their objection and the employer pressures them to sign the documents anywhere and threatens to repatriate them if they do not.

Legislative Update: new Tripartite Standard on Employment of Term Contract Employees

On 31 July 2017, the Ministry of Manpower, the National Trades Union Congress, and the Singapore National Employers Federation jointly released the new Tripartite Standard on Employment of Term Contract Employees (the “Standard“). The new Standard is not mandatory, but employers who adopt the Standards can distinguish themselves terms of human resource and employment practices, enhancing their attractiveness as employers and staff retention.

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Legislative Update: Paternity Leave, Child Developments Co-Savings, Unwed Mothers

Paternity Leave

Under the Child Development Co-savings (Amendment) Bill 2016, employers and self-employed individuals, who voluntarily exercise the option to grant to employees or take a second week of paternity leave respectively, will be reimbursed by the Government for this additional week of leave granted or taken.

The second week of paternity leave may be taken on or after 24 Aug 2015, and applies to:

i. children born on or after 1 Jan 2015;
ii. children born before 1 Jan 2015, but whose estimated delivery date (EDD) was on or after 1 Jan 2015;
iii. adopted children where the application to adopt is on or after 1 Jan 2015 (for child who is a Singapore citizen); or,
iv. adopted children whose dependant’s pass is issued on or after 1 Jan 2015 (for a child who is not a Singapore citizen).

It allows employers and self-employed to seek reimbursement from 1 Jul 2016.

It will also be mandatory for employers to provide two weeks of paternity leave to fathers of citizen children born from 1 January 2017 onwards. Amendments to the relevant statutes will follow.

CDA for Unwed Parents

Children of unwed parents would be eligible for Child Development Account (CDA) benefits, including the $3,000 CDA First Step grant. This applies to eligible children born from September 2016 onwards.

MOM calls for public feedback on Employment Claims Tribunal

MOM calls for public feedback on Employment Claims Tribunal

The current Labour Court under the Employment Act only covers workers who earn less than $4,500 per month regarding their salary disputes. The Ministry of Manpower (MOM) is considering establishing the ECT to expand this scope to include all employees (except public servants, domestic workers and seafarers for the time being). The detailed proposal can be found here. The public has until 23 March 2016 to give feedback.

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Article: Employment contracts penalty clauses

At BCS legal clinic yesterday, 2 separate foreign applicants came distressed, seeking legal advice on how they can quit their job. They were overworked and exploited. They had thought that if they quit their job, they’d have to pay a hefty sum of money for terminating their employment contract or agreement before a purported “bond” period. When they left the legal clinic, they were uplifted and relieved because they found out from us that they could leave their unhealthy jobs without penal consequences.

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Case Update: Daniel John Brader and others v Commerzbank AG [2013] SGHC 284 – collateral contract, discretionary bonus, employment

Daniel John Brader and others v Commerzbank AG [2013] SGHC 284

Significance: an announcement made to employees at a Townhall meeting regarding bonus payments was held to be a sufficiently certain binding unilateral contract collateral to their employment contracts.

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

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Work Injury Compensation Act compensation limits increase Jan 2016

Work Injury Compensation Act (WICA) compensation limits 

The Ministry of Manpower (MOM) recently announced on 5 October 2015[1] that from 1 January 2016, the maximum and minimum WICA compensation limits for death, permanent incapacity and medical expenses will be increased as follows:

Existing Limit New Limit
Death Minimum $57,000 $69,000
  Maximum $170,000 $204,000
Permanent incapacity Minimum $73,000 $88,000
  Maximum $218,000 $262,000
Medical expenses Up to $30,000 or 1 year from date of injury, whichever reached earlier Up to $36,000 or 1 year from date of injury, whichever reached earlier

Additionally, treatments that facilitate early return to work will be claimable as part of WICA medical expenses. This would cover charges for physiotherapy and occupational and speech therapy, case management, psychotherapy, functional capacity evaluation and worksite assessment for purposes of rehabilitating an injured employee back to work, and the cost of medicines and artificial limbs and surgical appliances.

[1] See Work Injury Compensation Act (Amendment of Third Schedule) Order 2015; Third Schedule of the Work Injury Compensation Act.