Termination of employment for employees in Singapore is governed by their employment contract as well as the Employment Act (“EA”).
It is a requirement by law that an employee’s employment contract does not contain terms that are less favorable to the employees as compared to their rights under the EA.
Section 9 – 11 of the EA contains provisions in relation to the termination of employment. Essentially employment can be terminated in three manners:
- If it is a contract work – at the expiry of the contract or when the work specified in the contract is completed;
- By written notice – the length is determined by your contract or in the absence of such provisions, in accordance to Section 10(3)
- Without notice – also called summary dismissal.
The right to terminate without notice / summary dismissal is strictly regulated and can be exercised by:
- Either party paying to the other party a sum equal to the amount of salary under the notice period; or
- If there is a wilful breach by the other party of a condition of the contract of service. Usually, the employment contracts would provide a further description of which matters may be presumed to be a condition of the contract and when its breaches will amount to misconduct to allow the company to terminate summarily. These situations should be limited and the Courts and the Ministry of Manpower (MOM) applies a high standard to determine if a company can rely on misconduct to exercise their right for summary dismissal.
Singapore laws accord protection to employees against unfair, unlawful, and wrongful dismissal. Although unlawful and wrongful dismissal is commonly relied on in situations where an employee is terminated without notice / summarily, the definition of unlawful and wrongful dismissal is wider than those situations as it includes all situations wherein an employee’s employment was terminated without just or sufficient cause. This includes a situation where notice was given.
What constitutes wrongful or unfair dismissal in Singapore?
In December 2018 and recently in March 2020, MOM published guidelines as to what may constitute wrongful dismissal.
If any employee is able to prove that he/she has been wrongfully dismissed, other than bringing a case to the Courts, they are also able to file a complaint with MOM through the Tripartite Alliance Dispute Management (“TADM”).
Section 14(2) of the Employment Act gives the employee cause to lodge a claim for wrongful dismissal if the employee feels that he/she was dismissed without just cause or excuse. If he/she is successful, he/she may obtain reinstatement of employment or compensation.
The following are examples of wrongful dismissal:
- Dismissal on discriminatory grounds;
- Dismissal to deprive an employee of benefits or entitlements;
- Dismissal to punish an employee for exercising an employment right;
- Dismissal based on grounds which are unsubstantiated;
- Involuntary resignation
The examples above can be evidenced by the notice given (if a reason was provided) or by recent conduct / events in the company (if a reason was not provided in the notice or where the employee was summarily dismissed).
A dismissal is considered to be on discriminatory grounds if it is based on age, gender, disability, family responsibilities, nationality, pregnancy, race or religion
For example, a common situation where employees suspect they have been dismissed on discriminatory grounds is when they are dismissed after recent conversations on their inability to converse in a preferred language although the language is not a working requirement.
Another example includes situations wherein the employee can prove that the employer made discriminatory remarks about their religion, or the employer stated that they preferred to hire someone of a different religion.
Depriving an employee of benefits or entitlements
This usually involves a dismissal based on ill-health as the company may choose to deprive or is intending to deprive the employee of their medical entitlements under the statute and/or employment contract.
Another common situation includes employees who are dismissed shortly after informing that they are pregnant.
This also includes situations where employees are dismissed with or without notice in a disguised retrenchment situation in order for the company to avoid paying retrenchment / redundancy benefits which may be accrued contractually or are in contravention of MOM’s advisories and guidelines.
Punishing an employee for exercising an employment right
This ground involves scenarios where the employer dismisses the employee to punish the employee for exercising their employment rights.
It involves situations where an employee is terminated shortly after a failed negotiation to reduce an employee’s salary. It may also extend to situations wherein an employee was terminated after making a legitimate police report or commencing a claim against the company for failure to act upon knowing a situation of workplace harassment and/or bullying.
Other possible situations include the dismissal of an employee who declines to work overtime because they have have to take care of their baby. They have a statutory right to refuse overtime. Similarly, an employee cannot be dismissed if they request mediation with the employer for non-payment of salaries. They have the right to request mediation.
Grounds which are unsubstantiated
The most common ground cited in terminations with or without notice tends to be bad / poor / unsatisfactory performance or misconduct.
It is prudent to note that where misconduct or poor performance is cited as the reason for the dismissal, the employer bears the burden of proving that ground for dismissal. The dismissal is considered wrongful if the employer is unable to do so.
It is also important in cases where misconduct is alleged that the employer shows that there has been some form of due inquiry before a termination is exercised. A proper inquiry includes providing an opportunity for the employee to be heard.
If an employer gives any other reason for dismissal with notice but the reason given is proven to be false, the dismissal would also be wrongful.
This is generally the situation wherein an employee had no choice but to resign. It is also commonly an example used in constructive dismissal cases.
Most employees who are able to rely on this state that they were placed under duress by the company and had involuntarily resigned or were forced to resign, and as a consequence, they were deprived of certain employment benefits, such as retrenchment or the full notice per their employment contracts.
What is then the safest way to terminate an employment relationship?
It is always safest to terminate an employment relationship with proper notice, as contractual terminations are presumed not to be wrongful since both employer and employee have a contractual right to terminate the employment in accordance with the contract.
In such situations, the employer does not inform the employee of any reason for termination other than it is relying on the contractual right to termination.
Employers would still need to be wary of two situations even in this scenario:
- That there are no facts, incidents, or situations which could suggest the employer’s intention was to terminate due to discrimination, to deprive the employee of benefits and entitlements, and/ or to punish an employee for exercising an employment right.
- That it is not a disguised retrenchment.
What happens in cases where there is an unlawful/wrongful dismissal?
This depends on where the matter is heard. For example, an employee may take their employers to Court if they have damages to claim as a result of the unlawful/wrongful dismissal.
Alternatively, an employee may make a complaint with TADM and escalate matters to the Employment Claims Tribunal (ECT) if it is not successfully settled at TADM. TADM and ECT have a maximum claim of S$20,000.00.
In considering monetary compensation, TADM/ECT assesses and determine by taking the following into account as per the Second Schedule of the Employment Claims Regulations 2017:
- loss of income – capped at 3 months of employee’s gross rate of pay
- the -harm caused to the claimant – capped at 2 months of the employee’s gross rate of pay
Aggravating and mitigating factors are also considered to adjust the award upwards or downwards (by 50%) in ECT.
Aggravating circumstances include humiliating or degrading conduct towards the employee, physical harm, false accusations against the employee by the employer, or any deliberate act by the employer to negatively influence the employees’ changes of subsequent employment.
Mitigating factors include any misconduct or poor performance of the claimant and any insubordination by the claimant.
Is there a time limit to file my claim?
If you would like to bring a claim to the Courts, the claim would be time-barred if it is more than 6 years after your dismissal.
If you would like to bring a claim to MOM/TADM, you will need to do so within 1 month after your last day of employment. For women who are wrongfully dismissed during pregnancy, the timeline is extended to within 2 months of the birth of your child.
What should an employer/employee do when there are claims that the dismissal is unfair, unlawful, or wrongful?
Most companies have internal mechanisms to try and resolve complaints of unfair treatment. It is always good to try and resolve the issues internally.
If, however, your matter cannot be resolved internally, you can proceed with a claim in Court or with a mediation claim with TADM. If this is unresolved in TADM, it will be heard in ECT.
Although no lawyers are allowed to attend the TADM or the ECT proceedings, you are entitled to obtain advice from a lawyer on the proper steps and procedures to follow. It may also be important to obtain advice before commencing the process to know whether or not you will have a valid case or where to commence your claim.
It may also be prudent to engage a lawyer if you are pursuing your case in Court as there are various documents to draft and file to commence the action.
 Except seafarers, domestic workers and any persons whom the Minister has excluded via Gazette
 True misconduct is the only legitimate reason for dismissal without notice. Misconduct includes theft, dishonesty, disorderly behaviour at work, or bringing the company into disrepute.
 For managers and executive (includes foreign employees), you may only avail to this route if you have served your employers for at least 6 months
 MOM presumes retrenchment in situations where more than 5 employees are terminated within a 6 months period. During the COVID-19 period, MOM also presumes retrenchment if the role is not being filled up soon.
 Loss suffered by the employees. The general position in the Singapore Court is that the loss must be foreseeable and not remote which means that it is unlikely to include periods of “loss of income” but will include any shortfall of the notice period and any cost immediately incurred as a result of untimely termination.