Unfair, Unlawful & Wrongful Dismissal in Singapore, Complying with Responsible Retrenchment in Singapore. Article: What if an expatriate dies in Singapore? If your employee’s role … (2) The Dunlop formulation does not apply to a true deposit because:- Potential changes could include a new rate of pay, new working hours or new duties. She went to the Ministry of Manpower (“MOM”), who purportedly told her that since there was a contract between her and her employer, she had to deal with it herself and MOM couldn’t help her. The past few years have seen subtle but important shifts in how the concept of a penalty is defined. She worked till 4 am on several days and was verbally abused for failing to meet ridiculous deadlines. In the highly anticipated S… Receiving compensation is not as straightforward as it may seem and it may be very complex and difficult in certain situations. Typically, when drafting an employment contract, employers include terms relating to commencement of work, salary and remuneration, job scope and requirements, working hours, leave (including medical leave, benefits, grounds for dismissal and notice periods for termination. Clauses 3 and 4 in the examples above are drafted to minimize the risk of those clauses being deemed to be "penalty clauses". I’m a Singapore lawyer with commercial litigation & arbitration and corporate practices. When she took MC, her employer will make her “pay back” by working on a Sunday. A recent decision from the Singapore Court of Appeal gives insight into the approach taken in that country. Scope of the legislation Clause in Employment Contract. These clauses are likely penalties, which are unenforceable as a matter of contract law. However, if the stated sum is disproportionately large compared to the primary obligation, the clause may be deemed under the law to be a penalty and therefore not valid and enforceable. In the other, it was 6 months. I’m a Singapore lawyer with commercial litigation, international arbitration and corporate business advice practices. When drafting a non-disclosure agreement, it is important to bear in mind exactly what kind of information you wish to protect or exclude, as well as how long the agreement is intended to last, and whether the receiving party should destroy the information once the assignment or other purpose is complete. The penalty clause of the Contract is twenty percent (20%) of the total value of the Contract, and shall apply as indicated in the General Conditions. The contract provision you’ve described is a liquidated damages provision. In one case, it said that she had to pay 2 years’ salary for terminating the contract before the 2 years are up. It may be determined that an employee who breaches the confidentiality obligation has to pay a certain amount in penalties for each violation. I’m Ronald JJ Wong / Ronald Wong Jian Jie / 黄健杰. The Supreme Court recently examined the common law rule on penalty clauses in consumer and commercial agreements. 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. While this was a clause … Receiving compensation is not as straightforward as it may seem and it may be very complex and difficult in certain situations. There are no restrictions on the kinds of information that can be covered by a non-disclosure agreement – typical examples include sales plans, design specifications, software and client databases. They allow businesses to obtain financing, outsource work to experts and to pursue selling their business with the security that important business secrets will remain confidential and will not be used by competitors with their interests. The terms of Mr Leiman’s employment contract 10 Mr Leiman’s contract with NRL is set out in a letter dated 6 December 2005 on NRL’s letterhead and signed by Mr Elman as adirector of NRL.10 11 The letter states that the agreement “contains the whole agreement” between Mr Leiman and NRL, and that Mr Leiman agreed to comply with Courts will also consider how experienced the former employee is, how much confidential information he or she had access to, and which industry the employee works in. A recent decision from the Singapore Court of Appeal gives insight into the approach taken in that country. Under Singapore law at present, the touchstone for penalty clauses is still the Dunlop Pneumatic Tyre Company v New Garage and Motor Company [1915] AC 79 (HL) principle that the sum is “not a genuine pre-estimate of loss” (CLAAS Medical Centre v Ng Boon Ching [2010] 2 SLR 38; Max Media FZ LLC v Nimbus Media Pte Ltd [2010] 2 SLR 677). The employee works in the back office and has no direct contact with clients. Around 50 of such cases, with some involving a high financial penalty, had been lodged with the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) since September 2018. Many employers try to include so-called non-compete clauses into their employment contracts to prevent former employees from working for competitors or opening a competing business by including a non-compete clause in the employee’s contract. However, this clause may not be found to be enforceable in court. In Singapore, however, this is a critical difference: a penalty clause is unenforceable while a liquidated damages provision is enforceable if it meets the conditions set forth in Dunlop. I try to promote access to justice by volunteering pro bono. I also write on the law; some of my articles are published in academic journals. Once a contracting party signs a written contract, the court will conclude that he or she has agreed to all of the terms contained within the contract. Noble countered by contending that clause 3(c) could not be a penalty, because a penalty only arises where there is a breach of contract (i.e. Some employers include these clauses to discourage breach by … If an employee chooses not to complete the bond, they might have to pay the amount of liquidated damages provided in the contract. If the employment in question is covered by the Act, AND the employer enters into an employment contract which does not follow the requirements of the Employment Act, then the employer will be found guilty of a criminal offence which is punishable with a fine of up to $5000, up to six months in prison, or both. If the penalty rule applies, we have to then consider whether the consequence of a breach is out of all proportion or “unconscionable” or “extravagant” having regard to the legitimate interests of the innocent party. The rule does not apply to primary obligations. (1) The High Court remained bound by the Singapore Court of Appeal's endorsements of the Dunlop formulation in the previous case of Xia Zhengyan v Geng Changqing. Such clauses belong to a group of contractual clauses known as ‘restraint of trade’ clauses. Non-workmen covered under the Employment Act earning below $2,500 in basic monthly salary. I also write on the law; some of my articles are published in academic journals. Any contravention of such minimum conditions amount to an offence under the Act. In other words, if the stated sum in the clause is not a genuine pre-estimate of the employer’s loss should the employee terminate his employment, then it’s a penalty clause and not valid and enforceable. A contract can be entirely written, entirely oral or partly written and partly oral. An employment agreement is a contract between your company and the employee that discusses both the employee's and your company's responsibilities and rights. Typically, a non-compete clause prevents employees from plying their trade or skill or engaging in businesses in certain markets and geographies for a certain period of time. Noble countered by contending that clause 3(c) could not be a penalty, because a penalty only arises where there is a breach of contract (i.e. Failure to comply with a MOM order will constitute a criminal offence punishable by fines up to $5000, imprisonment of up to 6 months, or both. More importantly, this applicant’s case highlights the importance of keeping a copy of documents one signs. It is therefore advisable that European companies from civil … The employer may negotiate a contract provision that says, for example, the employee must reimburse the full amount of the tuition if the employee quits within one year of earning the degree… All she needed to do is give (written or oral) notice of termination of her employment. These are some of the following areas covered: The Employment Act covers all persons (including foreigners) working under a contract of service in Singapore except: Additionally, Part IV of the Employment Act, which contains provisions for working hours, days of rest and other conditions of service, only applies only to: If the employment in question is covered by the Act, AND the employer enters into an employment contract which does not follow the requirements of the Employment Act, then the employer will be found guilty of a criminal offence which is punishable with a fine of up to $5000, up to six months in prison, or both. Some important factors include how long the restrict lasts, how large an area the restriction covers, and which specific activities are restricted. This was an example given by the Ministry of Manpower (MOM) on Wednesday (Oct 30) in a statement addressing the issue of unfair clauses found in employment contracts in Singapore. The employer then refused to cancel her S-Pass even though it was obliged to under the law. Because restraint of trade clauses restrict a former employee’s ability to practice his or her profession, they are unenforceable unless they can be justified as protecting the legitimate interests of the parties and the public in general. the loss of fees which would otherwise have been paid by the employer. Applying Cavendish Square, the court held that clause 1 was a primary obligation and clause 4, which stipulated the consequence of breach of clause 1, was in a substance a secondary obligation. If that party later discloses this information, this will be considered a breach of contract which would allow the innocent party to claim damages or even seek an injunction to prevent future breaches of contract. The Employment Act of Singapore is the principal statute governing termination of employment. The penalty rule applies only to secondary obligations, i.e. The United Kingdom Supreme Court (“UKSC”) has since created a new leading authority to replace Dunlop Tyre. The Employment Act of Singapore is the principal statute governing termination of employment. The Employment Act in Singapore covers many areas. Enter your email address to subscribe to this blog and receive notifications of new posts by email. Second, s 38 of the Employment Act actually provides that 44 hours are the maximum work hours per week for employees, not the minimum. Penalty clause. Third, the so-called “bonds” or penalty clauses in their employment contracts are most likely unenforceable. This site uses Akismet to reduce spam. I believe in being an advocate who seeks justice, peace and joy for others. What is an employment contract? Under contract law, contract clauses which stipulate a pre-determined sum of money as damages, known as liquidated damages, may be valid. As a Christian, I strive to live out my faith with integrity, with the grace of God. Inductive Bible Study Method Framework COMA. Please choose a time during our office hours (9:30 - 18:00 weekdays). The court will compel the breaching party to pay this sum as compensation, provided that the sum is not found to be a penalty which is wholly disproportionate to the innocent party’s loss. Failure to do so could depend on the nature of the breach, leading to a fine of $100-$200 per incident, and/or an order from the Ministry of Manpower to rectify the breach. Can I include a term in the employment contract to prevent a former employee from working for a competitor, opening a competing business, or soliciting clients or employees from my business? I also enjoy culture and the arts. The Singapore Employment Act does not apply to all I was furious when I heard about such exploitative wrongdoing. 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