Singapore: Potential pitfalls in employment terminations

In all employment terminations, on the exiting employee’s last day of active employment, employers would benefit from:

• giving the exiting employee clear instructions
• ensuring appropriate supervision of the exiting employee

When summarily dismissing an employee for cause, employers should note that:

• The inquiry should neither be aggressive nor oppressive.
• Making audio/video recordings may be detrimental to the employer in the event of a wrongful dismissal dispute.
• The use of work email address for personal purposes is not sufficient cause for summary dismissal.

Background

The employer, Singapore Recreation Club, is one of Singapore’s oldest social clubs. The employer had resolved to terminate the employee’s employment during a management committee meeting on 11 August 2014. After the meeting, the employer informed the employee of the decision to terminate his employment, and allowed him to choose between resigning or receiving notice of termination from the employer.

The employee resigned. The employer instructed that he would be on garden leave until his termination notice period expired.

Dispute – exit procedures

One of the main areas of disagreement in this case is the employer’s next instructions to the employee on 11 August 2014. These instructions were significant because it would determine whether the employee had defied these instructions and the employer was entitled to summarily dismiss him.

• The employer alleged that the employee was instructed to visit the office the next morning to collect his personal belongings, because it had made arrangements for the employee to be supervised during the process. The employer contended that the employee removed his personal belongings as well as the employer’s property (including a laptop belonging to the employer) in defiance of the employer’s instructions that same night.
• The employee claimed that the employer instructed him to perform a “handover” the next morning and did not expressly prohibit the removal of his personal belongings that night. It was not disputed that his supervisor, who had gone to console the employee, was present while he was packing his belongings, and had also assisted to carry some bags to the employee’s car. The employee also asserted that he did not take away any of the employer’s property and had left the laptop on his office desk the next morning during the handover.

The court’s findings

The court found that the employer had not discharged its burden of demonstrating that it had a proper basis to summarily dismiss the employee.

• The court found that the employer’s instructions were unclear. The employer’s express instructions did not require the employee to leave the premises immediately without returning to his office first.
• The employer’s instructions did not preclude the employee from removing some of his personal belongings that night. The court noted that this might have been the implied subtext of the employer’s instructions. However, even if the court accepted the employer’s account of the instructions, the employee was not expressly forbidden from removing any of his personal belongings on 11 August 2014. The court took the lack of clarity in the employer’s instructions to determine whether the employee’s alleged disobedience was sufficiently serious and flagrant to constitute a repudiatory breach of the employment contract.
• Even if the employer’s express instructions had been clear, expecting literal compliance with the instructions would result in absurdity. If the employer’s expectation was that the employee would not collect any of his personal belongings until he was supervised the next day, the employee would also be unable to take home even essential belongings such as his car keys, briefcase, and other personal items which he would usually bring home daily. The court considered that this would have been entirely unreasonable, and it could not have been what the employer intended. The court found that a margin of interpretation must have been given to the employee to act reasonably in obeying the employer’s directions. From this perspective, the employee’s actions in removing some personal belongings on 11 August 2014 may have been a simple misunderstanding of the instructions, and was not necessarily an act of defiance against the employer. The court decided that the employee’s alleged wrong was not sufficiently serious to strike at the heart of his employment contract, such that it would destroy the confidence underlying the contract.
• The court considered that the presence of the employee’s supervisor while the employee was removing his belongings was significant. The court found that it had been justifiable for the employee to assume that his supervisor, who was the president of the management committee and had attended the 11 August 2014 management committee meeting, would be familiar with the required exit procedures. It was reasonable for the employee to assume that his supervisor was aware of what he could or could not do. Since his supervisor did not object to him removing some of this personal belongings, the employee was under the impression that his actions were permissible. Accordingly the court was unconvinced that the employee had acted in repudiatory breach of his employment contract by wilfully disobeying the employer’s instructions.

Dispute – inquiry

After the handover, the employer reported the missing laptop to the police. A few weeks later, the employee was instructed to attend a meeting at the employer’s premises. At the meeting, the employer questioned the employee about the missing laptop, but the employee failed to explain his actions on 11 August 2014. The court found that the meeting was carried out as an aggressive and oppressive inquiry. This meeting was recorded by the employer, without the employee’s knowledge.

• At court, the employee claimed that he did not defend himself during the inquiry because he was worried and frightened.
• The employer asserted that the employee’s failure to defend himself during the inquiry showed that the employee had impliedly accepted that he had knowingly disobeyed the employer’s instructions, and the employee’s explanation at court was a mere afterthought.

The court’s findings

The judge wrote that he initially doubted the employee’s justification, especially because it seemed to be a convenient explanation for failing to defend himself. However, after the court reviewed the transcript of the employer’s recording of the inquiry, the court found that the employee could indeed have failed to defend himself because he had been worried and frightened due to the aggressive and oppressive manner in which the inquiry was performed.

• The employer’s representatives at the inquiry made grave allegations against the employee and warned him that the matter had been reported to the police. They also repeatedly interrupted the employee’s explanations and talked him down.
• The court also held that the employee had been caught by surprise by the inquiry as he was not informed that he was attending an inquiry about the removal of his personal belongings on 11 August 2014 or the missing laptop prior to the meeting. The employer had asked him to attend the meeting to discuss other matters.

Accordingly, the court found that the way in which the inquiry was performed had the effect of throwing the employee’s thinking process off balance and prevented him from giving a full explanation for his actions on 11 August 2014.

Observation: Breach of employer’s email policy

The court took the opportunity to observe that the employee’s use of the employer’s email address for personal purposes does not affect the decision on repudiatory breach of the employment contract. Although such use of the employer’s email address was a breach of the employer’s email policy which the employee had signed, it was not sufficient to be deemed as a repudiatory breach.

Conclusion

The court found that the employee’s actions did not constitute a repudiatory breach of the employment contract. Therefore, the employer had no proper basis to summarily dismiss the employee, and the employee was entitled to unpaid salary which he would have earned during his notice period.

It would be prudent for companies to take note of the general potential pitfalls, which arose in this case, that could arise on the last day of active employment when an employee leaves the firm:

• omitting to provide the exiting employee with clear instructions, which could lead to misunderstandings and potential losses for the company
• omitting to ensure appropriate supervision of exiting employees, which could result in unaccounted company property

Under the Employment Act, which applies to almost all private-sector employees as of 1 April 2019, employers must conduct a due inquiry before summarily dismissing an employee for cause. Employers may wish to avoid the pitfalls encountered by the employer in this case by taking note that:

• The inquiry should not be carried out in an aggressive and oppressive manner. Otherwise, employers may find it difficult to argue that an employee failed to satisfactorily defend himself during the inquiry.
• Recordings of the inquiry may work against the employer. When presented to the adjudicator, such recordings may reveal information that is detrimental to the employer and sway the adjudicator’s decision against the employer.
• The use of work email address for personal purposes is not sufficient cause for summary dismissal, even if the employee had breached a signed written undertaking to only use the work email address for business purposes.

Given the increasing tendency for employees to bring wrongful dismissal claims against their former employers, employers may wish to be more careful when handling employment terminations and avoid the pitfalls highlighted by this case.