Legal and Ethical Risk Management

Legal Risks of Mishandling Allegations

Failing to address workplace allegations properly can lead to a variety of legal consequences for employers in Singapore.

Wrongful Dismissal Claims
As discussed, if an employee is fired or forced out in relation to an allegation without just cause or due process, they can file a wrongful dismissal claim under the Employment Act. The Tripartite Guidelines on Wrongful Dismissal give concrete examples. Firing someone to punish them for raising a complaint is wrongful, as is alleging poor performance as a pretext when the real reason was the employee’s whistleblowing or harassment complaint. The remedies can include compensation or reinstatement. Even if the employee is not dismissed but perhaps demoted or marginalized unfairly, they might claim constructive dismissal or breach of contract. Legal fees and potential settlements add up, not to mention the time spent handling disputes at TADM or the Employment Claims Tribunals.

Employment Act and WSH Act Offences
Under the WSH Act, if an employer is found to have failed in their duty to ensure a safe workplace, for example ignoring known harassment or violence risks, they could face regulatory prosecution. The WSH Act imposes strict liability on employers to take reasonably practicable measures for safety, and penalties for breaches include hefty fines up to S$500,000 for corporations and even imprisonment for individuals who consent or connive in the offence. Consider a case where an employee was repeatedly bullied and threatened by a supervisor, and the company did nothing despite complaints. If that escalated to a serious injury or psychological harm, MOM could potentially prosecute under WSH regulations for failure to provide a safe workplace.

Likewise, under the Protection from Harassment Act, while it mainly provides remedies for victims, employers who allow a harassing environment could indirectly find themselves entangled. For example, POHA was amended to empower courts to issue Protection Orders that could require employers to ensure the order is complied with in the workplace.

Additionally, Singapore is moving towards stronger anti-discrimination laws. The Workplace Fairness Act, passed in 2025, will, once in force, make it unlawful to discriminate in various HR decisions and will prohibit retaliation against those who report discrimination or harassment. Employers may face claims in a tribunal for breaches of these provisions, with remedies likely including monetary compensation or penalties.

Civil Lawsuits
In some cases, employees or even third parties might sue the company in civil court. Possible causes of action include negligence for not protecting an employee from a hazard or a known harasser, breach of the implied term of trust and confidence, or even defamation if the company made a public accusation that turned out false and harmed the employee’s reputation.
While such lawsuits are not very common in Singapore’s employment landscape due to the preference for the statutory framework, they are not impossible, especially for high-level employees not covered by Employment Act protections.

Regulatory and Enforcement Actions
Aside from MOM, bodies like TAFEP can impose sanctions. TAFEP currently can recommend that MOM suspend a company’s ability to hire foreign employees if the company is found to have engaged in discriminatory practices or failed to curb workplace harassment. This is a significant business impact in Singapore, where many companies rely on work pass holders.

Furthermore, if an allegation involves personal data mishandling, for instance if during an investigation the company carelessly exposed personal info of employees, the Personal Data Protection Commission could investigate and issue fines for PDPA breaches. One could imagine a scenario where an HR team shares the complainant’s identity and details to a wide internal audience inappropriately. The complainant might lodge a PDPC complaint for misuse of their personal data.
The legal risk portfolio is therefore multifaceted. Employment law claims, statutory fines, loss of privileges, and civil damages.

The experiences of other jurisdictions highlight similar risks. In the UK, mishandling an allegation can lead to Employment Tribunal claims for constructive dismissal or discrimination with uncapped damages. Discrimination cases have no cap on compensation and can include injury to feelings awards. Large payouts have made headlines. For example, an employee who was subjected to egregious harassment and whose employer did little to help won over £300,000 in combined damages, including for psychiatric injury and lost earnings. In one notable UK case, the tribunal explicitly increased the award by 25 percent because the employer failed to follow the ACAS Code. Procedural missteps directly translate to financial penalties.

Australian courts have likewise not shied away from high damages in sexual harassment cases. A landmark 2014 case, Richardson v Oracle, saw the Federal Court increase general damages for sexual harassment to A$100,000, signaling that inadequate employer response will cost dearly. Under Australia’s new 2022 laws, employers who do not actively prevent harassment may face enforcement by the Human Rights Commission, with orders to comply and even public naming and shaming for serious breaches.

Hong Kong, while traditionally having lower damages, still imposes liability on employers for harassment. If an employee wins a case at the EOC tribunal, the employer is on the hook unless it proves the reasonably practicable steps defence. This essentially means the employer’s only escape is showing it did everything right, such as training, policies, swift action, to prevent the harassment.

Thus, from London to Sydney to Hong Kong, the writing is on the wall. Failing to manage workplace allegations properly can lead to legal and financial pain.

Ethical and Reputational Considerations
Beyond formal legal liability, employers must consider the ethical dimension and reputation. In today’s age of social media and tight labor markets, the way a company handles internal issues can quickly become public or at least known within the industry.

An unethical handling, such as protecting a star performer who is a known bully, may keep a lawsuit away in the short term, but it can create a toxic culture that leaks out. If employees see that complaints are ignored or complainers are victimized, they lose trust and morale plummets. Good staff may leave or quit quietly by disengaging, and the company can develop a public reputation as an unsafe or unfair workplace.

Singapore has had its share of high-profile cases that, while not always ending in court, led to public outrage and official censure. We saw earlier the examples highlighted by AWARE. A company where the owner shrugged off a manager punching a subordinate, or another where HR brushed off sexual harassment as normal. When these stories come out, as they did in the press, they generate public condemnation and surely make any decent professional think twice about working for or with such companies.

In a small business community like Singapore’s, word gets around. From an ethical standpoint, employers have a duty of care to their employees. Acting ethically means treating allegations seriously even if they are inconvenient, and placing employee safety and dignity above short-term expediencies.

Organizations that genuinely uphold values of fairness and respect tend to see positive outcomes. Higher employee engagement, better talent attraction, and less likelihood of internal issues escalating.
There is also the broader ESG movement. Investors and partners are paying attention to companies’ social and governance practices, which include labor practices. A firm that earns a name for being a fair employer could enjoy benefits in branding and investor confidence, whereas a firm that is constantly in the news for the wrong reasons may find itself losing business or facing consumer boycotts.

A regional example. In 2020, a major finance company in Australia faced a public inquiry that revealed a culture of sexism and harassment. The ensuing scandal led to top executives resigning and the stock price taking a hit. In response, the company undertook an ethical overhaul. Not due to a court forcing it, but due to reputational necessity. The cost of inaction and the unethical status quo became greater than the cost of reform.

This scenario is increasingly common. Stakeholders expect companies to do the right thing internally, not just meet the bare legal minimum. In Singapore, while we historically had a more subdued public reporting culture, this is changing. With the rise of platforms like Glassdoor and with younger employees more willing to speak out, ethical lapses in HR can quickly surface online. Agencies like TAFEP encourage workers to report discrimination or harassment, meaning unethical practices are more likely than before to come to light.

Thus, ethical risk management is not just about avoiding being sued. It is about upholding the company’s values and public image.

Proactive Risk Management – Policies, Training, and Culture

The best way to manage risk is to prevent issues and be prepared for them, rather than reacting after the fact. Key proactive measures include:

Clear Policies and Codes of Conduct
Every employer should have up-to-date written policies on key areas. Anti-harassment, anti-discrimination, grievance handling, disciplinary procedures, and whistleblowing. In Singapore, TAFEP provides templates and Tripartite Standards that outline what a good policy should contain. For example, an anti-harassment policy should define what constitutes harassment with examples, state that it will not be tolerated, describe how to report it, and assure that all reports will be investigated promptly and confidentially.

A whistleblowing policy can encourage employees to report wrongdoing such as fraud or safety issues internally by guaranteeing protection and possibly allowing anonymous reporting. Having these policies is not just paper compliance. It sets expectations and can be a first line of defence.

Under Hong Kong’s law, for instance, an employer’s best defence to a vicarious liability claim for an employee’s harassment is that it took reasonably practicable steps to prevent it. This basically means having good policies, training, and enforcement.

Training and Awareness
Policies alone do not work if employees are unaware or management does not champion them. Regular training is essential. This includes training all staff on workplace harassment prevention, non-discrimination, and how to report misconduct.

In light of Singapore’s upcoming requirements, training managers on grievance handling will be crucial. Managers should know how to recognize an allegation and what to do. Training should also cover subtler topics like unconscious bias, respect in the workplace, to build a positive culture.

Overseas, some jurisdictions mandate training. Certain U.S. states require annual sexual harassment training. While not mandated yet in Singapore for private sector, it is strongly encouraged.

The UK’s new legal duty on harassment basically nudges employers to do frequent training and refreshers. The idea is to create a workforce that not only knows the rules but buys into the ethos of a respectful workplace.

Leadership and Culture
Perhaps most important is cultivating the right tone from the top. Leaders and business owners should model ethical behavior and make it clear that integrity trumps results. If a high-performing salesperson is found to be bullying colleagues, the company’s reaction will send a message. Do they overlook it because he brings in money, or do they address it firmly? The latter will earn trust and long-term stability. The former may yield short-term gain but sow seeds of disaster.

Building a speak-up culture involves leadership encouraging openness. For example, having townhalls where concerns can be raised, or anonymous surveys about workplace conditions. Employees who feel their voices matter are less likely to resort to external channels or let resentment fester.

Procedural Safeguards
Employers should implement procedural safeguards such as dual controls and checks and balances where appropriate. For example, in investigations of senior management, have oversight by a board committee or external counsel to ensure fairness.

In disciplinary decisions, consider an appeal mechanism. An employee who feels wronged by an investigation can appeal to a higher management or independent party. This can sometimes catch and correct mistakes internally before they become lawsuits.

Under the new Workplace Fairness Act, large employers might even have to report certain metrics or comply with dispute resolution processes for discrimination complaints. Setting up internal committees now could help.

Monitoring and Continuous Improvement
Risk management is ongoing. Companies should periodically audit their HR practices. Are complaints being handled in a timely way? Do certain departments have more complaints, indicating a local culture issue?

Use anonymous employee feedback or exit interviews to gather intelligence. One practical tool is to track all allegations in a register without names for confidentiality and note how they were resolved. This allows review for patterns. For example, if multiple complaints arise about the same person, that is a red flag that perhaps earlier ones were not properly addressed.

Continuous improvement also means staying updated on legal developments. For instance, with the new Workplace Fairness Act in Singapore, companies should start adapting their practices before the law fully kicks in. Similarly, learning from others’ high-profile cases. When you read about a company facing a scandal, ask “Could that happen here? How would we respond? Should we tighten our controls?” This reflective approach keeps the organization agile in risk management.

Engaging External Expertise

As part of risk mitigation, know when to seek external help. Employment lawyers can review your policies for compliance. They can also advise on tricky situations. For example, balancing an employee’s mental health issue with misconduct allegations is a sensitive intersection of law.

External HR consultants can provide training or even act as independent mediators in conflicts. In some instances, involving authorities early is prudent. For example, if a serious criminal element is found such as an employee embezzling funds, involving the police and cooperating fully can demonstrate the company’s good faith and possibly mitigate penalties. Covering it up could lead to worse consequences.

Case Study

Positive Outcome

A medium-sized tech company in Singapore faced an allegation that a team leader was favoring male employees over female ones and had made disparaging remarks about women’s abilities. This was essentially a gender discrimination or harassment complaint.

The company’s response exemplified good practice. Top management immediately acknowledged the gravity of the issue. An impartial investigator from an external firm was appointed. All employees in the team were confidentially interviewed, and it was found that the team leader had created a boys’ club atmosphere that alienated female staff.
The findings were taken to the company’s leadership. They decided on a course of action that included removing the team leader from his supervisory position, issuing him a final warning, and mandating he attend diversity and inclusion training with a clear message that any recurrence means termination.

They also rolled out an internal workshop for the whole company on inclusive behavior, using this incident anonymously as a learning point. The complainant was given a private apology and the assurance that she can escalate straight to HR if any retaliation occurs.

No lawsuits were filed. In fact, the complainant stayed with the company, eventually advancing in her career, and she often spoke positively of how the company walks the talk on fair treatment.
This outcome, while involving some pain and embarrassment for the company, ultimately strengthened its culture and reputation. By facing the problem head-on and adhering to its professed values, the company turned a potential legal risk into an opportunity to improve.

Conclusion and the Path Forward

Managing workplace allegations is undeniably challenging. It involves navigating human emotions, conflicting accounts, and legal complexities. However, with a solid framework based on Singapore’s legal requirements and international best practices, employers can turn these challenges into catalysts for building a better workplace.

To recap key recommendations. Have clear policies, train everyone, respond promptly and fairly to every allegation, investigate thoroughly with an open mind, and take appropriate action without fear or favor.

Importantly, do not retaliate against those who raise issues. Instead, see them as partners in improving the organization. By doing so, companies protect themselves from legal repercussions and cultivate an ethical culture that can be a true competitive advantage.

As laws evolve, such as the Workplace Fairness Act, and societal expectations rise, the organizations that thrive will be those that treat workplace allegations not as annoyances to be swept under the carpet, but as essential issues to be managed with integrity and care.

In sum, the best risk management strategy is to foster a workplace where allegations are less likely to arise, and if they do, they are handled with the transparency, justice, and respect that our laws and our people deserve.

Take the Next Step with I.R.B Law LLP
Workplace issues left unaddressed can quickly escalate into costly legal and reputational risks. Whether you’re an employer seeking clarity or an employee navigating a difficult situation, we’re here to help. Contact us today for a confidential consultation and take proactive steps to build a safer, more respectful, and legally secure workplace.