Singapore - New Hope for Middle-Aged Professionals, Termination Notices And Springboard Injunctions.
4 February, 2016
Source - http://www.123rf.com/profile_siraphol
There have been some optimistic updates in Singapore in the area of labour and employment law over the past six months that potentially signal new hope for middle-aged professionals. In addition, there has also been some development in the Courts with regards to those being terminated from their jobs for alleged misconduct and those seeking to work for a competitor We had an opportunity to speak with Pradeep Pillai and Stephanie Wee, Partners at Shook Lin & Bok about these new developments as well as a look back at some of the highlights from 2015.
Conventus Law - Middle-aged professionals in Singapore are increasingly finding it difficult to secure new employment as they find themselves competing with eager, single young employees. To aid those aged 40 and older to secure meaningful employment, the Ministry of Manpower (“MOM”) announced on 8 July 2015 new measures to support Singaporean professionals, managers and executives (“PMEs”).
How will the new measures help those aged 40 and older find employment?
Shook Lin & Bok - These measures are expected to enhance employment and career opportunities for Singaporean PMEs aged 40 and older (“Mature PMEs”) and help Singaporeans to pursue PME jobs by covering three areas: (a) strengthening the Singaporean core of PMEs; (b) enhancing the quality assessment of foreign PME applicants; and
(c) expanding coverage of dispute resolution for Singaporean PMEs.
In particular, the following specific measures are being implemented to strengthen the Singaporean core of PMEs and help those aged 40 and older find employment:
(a) At the sectoral level, tripartite partners will work to re-skill Singaporean PMEs, whose skills are at a higher risk of becoming outdated, so that they can remain relevant in their current industry, or embark on alternative career pathways in other industries. The Workforce Development Agency (“WDA”) will strengthen its outreach to PMEs through workshops, dedicated career fairs for mid-career PMEs, and career counselling.
(b) To further assist Mature PMEs, the WDA has implemented a new Career Support Programme (“CSP”). The CSP was launched on 1 October 2015, and will run for 2 years, with the aim of encouraging employers to tap on the wealth of experience of Mature PMEs, in the form of wage support for employers. Under the CSP, employers must commit to offering structured/approved training to such PMEs recruited.
(c) For Mature PMEs who experience greater difficulties in finding jobs, the WDA will collaborate with, and provide incentives to, private search and placement firms to help these PMEs access more job opportunities. Such individuals may also seek the help of these firms directly without going through the WDA.
CL - The measures are specific to Singaporean nationals. Is this because the MOM wants to encourage businesses to employ Singaporeans over non-locals?
Shook Lin & Bok - Yes. These MOM initiatives are targeted at Singaporean PMEs to progressively encourage and facilitate the transfer of expertise to Singaporean PMEs over time.
As for foreign PMEs, MOM had indicated that it will enhance the quality assessment of foreign PME applicants by refining work pass controls in order to ensure that foreign PMEs are of suitable quality and experience to complement Singaporean PMEs.
MOM currently assesses foreign PMEs based on a combination of qualifications, experience and salary. In addition to banning applicants with forged qualifications from working in Singapore for life, MOM has further indicated that it will:
(a) reject work pass applications which contain dubious qualifications (such as those from degree mills); and
(b) pay more attention to the relevant experience of such foreign PMEs.
With regards to strengthening the Singaporean core of PMEs, MOM will increase the scrutiny of Employment Pass (“EP”) applications for selected firms which have a weaker Singaporean core of PMEs relative to others in the industry.
CL - One of the initiatives the Workforce Development Agency has undertaken is the New Career Support Programme (“CSP”) which incentivizes employers to hire Mature PMEs by offering 12 months of wage support, provided all qualifying requirements are met. Will the incentives provided to the employer in the CSP be enough to achieve its goals, and is there anything preventing employers from laying off the PME once 12 months have elapsed?
Shook Lin & Bok - The CSP provides wage support to employers to hire Mature PMEs who have been unemployed and are actively seeking a job for a considerable period of time. To help individuals settle in their new jobs, employers will be required to provide structured on-the-job training or send them for external training. These initiatives are aimed at ensuring that Mature PMEs remain employable and that employers consider hiring unemployed Mature PMEs.
Notably, these initiatives work only to incentivise companies to hire Mature PMEs through grants which defray wage bills. The employers may still have other commercial and financial considerations which may deter them from hiring such Mature PMEs. While these initiatives are seemingly limited, they are still a positive step towards encouraging companies to tap on the wealth of Mature PMEs and to be more open to hiring them. Whether such initiatives are sufficient remains to be seen.
There are also presently no restrictions which prevent the companies from terminating these Mature PMEs after the 12-month period.
CL - Piattchanine, Louri v Phosagro Asia Pte Ltd  SGHC 259 is a recent case that highlights the need for employers to properly craft all termination notices. In the aftermath of this case, what should businesses be aware of and consider when crafting employee termination notices?
Shook Lin & Bok - This case highlights the importance of employers stating clearly and unambiguously in a termination notice the ground(s) which they are relying on in the termination of an employee, and where applicable, to expressly state the relevant clause(s) in the employment contract relied upon. Once an employer elects to rely on its contractual rights at the time of the termination, the employer is bound and cannot later depart from its election after termination and to retrospectively argue that the employment contract was terminated by the employee’s repudiatory breach of contract.
Summary of Case
By way of background, in this case, the material terms of the employment contract relating to termination were:
(a) Clauses 2 and 14 which provided that either party could give three months’ notice of termination in writing. If the contract was terminated before the expiry of the three-year term, the employee (the “Plaintiff”) would be entitled to 100% of his annual salary as a one-off payment;
(b) Clause 20 which provided that the company (the “Defendant”) could terminate the contract without notice or payment in lieu of notice in the case of serious misconduct or wilful breach or non-observance of any terms of the contract (“Summary Termination Clause”).
It is also stated that a right to terminate exists under common law when one party (i) renounces the contract; or (ii) breaches a condition of the contract; or (iii) breaches a term of the contract and as a consequence of such a breach, the innocent party will be deprived of substantially the whole benefit of the contract.
The Brief Facts
The Defendant terminated the Plaintiff’s employment by a letter dated 28 February 2014 (“28 February 2014 Letter”).
The 28 February 2014 letter provided, inter alia, that the Defendant reserved the right to “withhold any payment which may otherwise be due to [the Plaintiff] on account of any breach of contract and/or any misconduct or non-observance of the Employment Contract and/or breach of any of [the Plaintiff’s] fiduciary duties…” It also provided that “the termination takes place immediately” and that the Defendant would pay to the Plaintiff such moneys due to him under the contract subject to any deductions to be determined by the authorities.
Subsequently, on 18 March 2014, the Plaintiff received a second letter (the “18 March 2014 Letter”) from the Defendant alleging that the Plaintiff was guilty of serious misconduct and of breaching his duties to the Defendant because he made unauthorised expense claims. Neither summary termination nor the allegation of unauthorised claims were mentioned in the 28 February 2014 Letter.
The High Court had to determine whether the Defendant was allowed to adduce new grounds (i.e. the allegations as set out in the 18 March 2014 Letter) that were not relied upon at the time of termination to justify the employee’s termination. In this regard, in determining the legal grounds for the termination, the Court had stated that the approach is to take 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.
The court, thus, decided that the 28 February 2014 Letter had stated that the Defendant was terminating the employment contract pursuant to its contractual rights under the contract. Accordingly, this meant that it could not rely on the common law right of termination by asserting a repudiatory breach due to the Plaintiff’s purported misconduct.
As the termination of employment had already taken effect on 28 February 2014, the Defendant could not have summarily terminated the employment contract. Further, the 18 March 2014 Letter could not, in law, change the complexion of the contractual termination.
Notably, the court took cognisance that whilst the Defendant could not depart from its election to terminate the employment contract pursuant to the contractual terms, given that it did not specify which contractual clause it was relying on, it was open to the Defendant to raise new facts to justify its reliance on the Summary Termination Clause.
However, on the facts, it was found that the Plaintiff’s breaches did not amount to serious misconduct nor did it amount to a wilful breach of the employment contract which the Defendant could rely on based on the Summary Termination Clause.
CL - In the event an employer seeks to terminate on account of misconduct, are there any special considerations or actions that should be undertaken before drafting the termination notice?
Shook Lin & Bok - Although it is not strictly necessary to conduct an internal inquiry or investigation (unless otherwise stated in the employment contract and/or company policies), it would be in the employer’s interests to conduct a full internal inquiry prior to issuing a termination letter on account of misconduct. This would aid the employer in obtaining the complete facts before termination. Any information uncovered through an investigation could also help to support or defend against any future litigation in connection with the termination.
In any event, this aforementioned case has highlighted the importance of clear communication in a termination letter.
An investigation would eliminate the risk of raising additional grounds not known at the time of the termination.
On another note, having a mechanism to inquire into the misconduct complained of would also accord with the best practices as set out in the guidelines published by Singapore’s Tripartite Alliance for Fair and Progressive Employment Practices.
CL - In the case Jardine Lloyd Thompson Pte Ltd (“JLT”) v Howden Insurance Brokers (S) Pte Ltd and others  SGHC 202, the Singapore High Court found for the defendant in deciding not to grant a springboard injunction to the plaintiff employer who sought to prevent a number of its employees from working for a competitor.
What is a springboard injunction, and why would an employer seek one?
Shook Lin & Bok - The “Springboard” injunction was first granted in a dispute outside the employer-employee relationship. Such an injunction can be used in a case where a person who had obtained information in confidence and was not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, even if the confidential information had already become available publicly. “Springboard” relief was subsequently granted in employment cases, and the UK courts had extended the scope of such relief beyond the realm of confidential information.
In this case, JLT initiated proceedings against four of its former employees, Howden Insurance Broker (S) Pte Ltd (“First Defendant”) and an employment agency that purportedly assisted the First Defendant in employing its former employees. JLT sought injunctive relief and damages arising from the tort of conspiracy to injure, breach of contract and breach of fiduciary duty. Before trial, JLT sought, inter alia, two interim “Springboard” injunctions to restrain the
First Defendant from employing its former employees and to restrain the former employees from joining the same.
In this regard, JLT had argued that the wrongful acts of the defendants had enabled the First Defendant and the defendant employees to gain an “unfair competitive advantage” against it. Hence, unless the defendants were enjoined, they would “be allowed to use such unfair competitive advantage to ‘springboard’ ahead causing further irreparable loss to the plaintiff”. JLT, thus, sought the interim injunctions to “neutralise the unfair advantage and restore the competitive positions of the parties”.
CL - Moving forward, what lesson(s) should employers heed from the JLT case?
Shook Lin & Bok - This case sets a new precedent in Singapore for the use of “Springboard” injunctions. The implication is that the scope of such injunctions is limited (whether or not in employee poaching cases) to the extent that in a case where an employer is seeking to prohibit a former employee from using confidential information belonging to the employer as a springboard for activities detrimental to it, the courts are unlikely to grant relief beyond instances where there is a real risk of a misuse of confidential information obtained by the former employee from the employer.
CL - What were some of the notable highlights in Employment Law from 2015?
Shook Lin & Bok - Apart from the measures aimed at enhancing support for Singaporean PMEs and the above notable cases, the Government has also announced several key changes which will impact employment law in Singapore as set out below.
Increased Central Provident Fund (“CPF”) Contributions
In order to keep pace with income growth over the years, the Government had announced that the CPF salary ceiling will be raised from $5,000 to $6,000 with effect from 1 January 2016.
For workers aged above 50 years to 65 years, there will be an increase in CPF contribution rates to help them save more for retirement needs with effect from 1 January 2016.
To help employers adjust to the cost increases associated with the CPF changes, including the raising of the salary ceiling and the increase in employer CPF contribution rates for older workers, the Temporary Employment Credit scheme will be enhanced and extended to 2017.
Pay Slips & Key Employment Terms
From 1 April 2016, all employers will be required to issue itemised pay slips and key employment terms to employees covered under the Employment Act. The amendments aim to help employees to better understand how one’s salary is calculated and their employment terms and benefits. This should also go some way in helping employers prevent misunderstandings and minimise workplace disputes.
In addition, from 1 April 2016, the MOM will set up a framework to treat less severe breaches of the Employment Act as “civil breaches” which will attract administrative penalties. Such breaches will include the following:
- Failure to issue itemise pay slips
- Failure to issue key employment terms in writing
- Failure to maintain detailed employment records
- Provision of inaccurate information to the Commissioner for Labour or inspecting officers without the intent to defraud and mislead
Increased Work Compensation Limits
From 1 January 2016, the government will increase work compensation limits for injury and death under the Work Injury Compensation Act (“WICA”) by about 20%. The cap on medical expenses will also be raised from $30,000 to $36,000.
In addition, treatments that facilitate early return to work will be claimable as part of medical expenses under WICA with effect from 1 January 2016.
For further information, please contact:
Pradeep Pillai, Partner, Shook Lin & Bok
Stephanie Wee, Partner, Shook Lin & Bok