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Singapore – The View From Our Offices: Dismissal.

29 June, 2015

 

Legal News & Analysis – Asia Pacific – Singapore – Labour & Employment

 

What Is The Minimum Notice Required To Terminate Employment?

 

The parties can agree a notice period in the employment contract. This period may be shorter than the statutory periods set out below, but must be the same for the employer and employee. If the notice period is not expressly provided for in the employment contract, then:

 

All employees (except those in managerial or executive positions earning a base salary of more than SGD 4,500 a month), are entitled to the following minimum notice periods:

 

  • One day if the employee has been employed for less than 26 weeks;
  • One week if the employee has been employed for 26 weeks or more, but less than two years;
  • Two weeks’ notice if the employee has been employed for two years or more, but less than five years; and
  • Four weeks’ notice if the employee has been employed for five years or more.

 

All other employees are entitled by common law to ‘reasonable notice, unless the contract is for a fixed term or it is clear that the parties did not intend the contract to be terminated on notice’. What constitutes ‘reasonable’ for these purposes will depend on the particular circumstances of each case.

 

(Figures stated are accurate as of 16 June 2015.)

 

Is Dismissal Without Notice Possible, And If Yes, On What Grounds?

 

Dismissal can be without notice (or pay in lieu of notice) if the employee:

 

  • Commits a repudiatory or fundamental breach of their employment contract, such as a breach of confidentiality;
  • Is guilty of misconduct, including incompetence, disobedience, dishonesty, abusive behaviour in the workplace; and/or
  • Is guilty of gross negligence.

 

Examples of misconduct may also be set out in the employment contract.

 

For employees governed by the Employment Act (i.e. all employees except those in managerial or executive positions earning a base salary of more than SGD 4,500 a month) payment in lieu of notice can also be made. Such payments must be equal to the gross salary for the relevant notice period.As regards other employees, whether such a right (i.e. to terminate with pay in lieu of notice) exists, and the quantum of the payment, depends on the terms of the contract of employment and the relevant circumstances. In most cases however, even in the absence of an express term entitling an employer to terminate the contract with pay in lieu of notice, there may be an implied right to such effect under the common law, in so far as the employee is not put in a worse position (financially) than if due notice was given.

 

What Are The Remedies For Dismissal In Breach Of Contract (“Wrongful Dismissal”)?

 

Employees governed by the Employment Act (i.e. all employees, except those in managerial/executive positions earning a base salary of more than SGD 4,500 a month) are entitled to a sum of damages equal to the amount the employer would have been liable to pay if they had terminated with notice.

 

(Figures stated are accurate as of 16 June 2015.)

 

What Are Considered “Fair” Grounds For Dismissal?

 

Other than in cases of dismissal without notice (see above), there is no obligation on employers to provide a reason for dismissal.

 

What Minimum Dismissal Process Must Be Followed?

 

There must be ‘due inquiry’ by the employer prior to summarily dismissing employees on conduct grounds. An inquiry would normally consist of a hearing, in which the employee has a right to make representations.

 

It is also recommended that employees be given a right of hearing for summary dismissals based on other grounds (such as wilful breach).

 

Employees governed by the Employment Act must receive written notice of termination.

 

What Are The Remedies For “Unfair Dismissal” (Or Its Equivalent?)

 

Employees who are governed by the Employment Act (i.e. all employees, except those in managerial/executive positions earning a base salary of more than S$4,500 a month) and who consider that they have been terminated without ‘just cause or excuse’ may make further representations to the Minister of Manpower within one month of dismissal. The Minister may call for an inquiry. If, after the inquiry, it is found that dismissal was without ‘just cause or excuse’ the Minister may then direct the employer to:

 

  • Reinstate the employee; or
  • Pay an amount of wages as compensation, to be determined by the Minister.

 

Any directions that are given by the Minister on such an application would operate as a bar to any action for damages.

 

(Figures stated are accurate as of 16 June 2015.)

 

What Statutory Protection Is There For Employees Against Dismissal Because Of Or Connected To The Sale Of A Business?

 

In relation to any employees governed by the Employment Act, if all or part of an undertaking (defined as “any trade or business”) is transferred, the transfer does not terminate the contract of service of any person employed by the seller (the ‘transferor’) in the undertaking. The contract therefore has effect after the transfer, as if it had been originally made between the employee and the buyer (the ‘transferee‘), and the period of employment in the undertaking (or part transferred) at the time of transfer shall count as towards the period of employment with the transferee. If the transferee wants to dismiss a transferring employee, the normal termination rules will apply.

 

There is no similar statutory scheme to govern employees not covered by the Employment Act (i.e. those in managerial/executive positions earning a base salary of more than S$4,500 a month) and the rights of such employees would be dependent on the circumstances and governed by the common law. If, for example, there is a complete sale of the business and the transferor company ceases to trade, the effect of the sale would be to terminate the relevant contracts of employment. Their contracts will come to an end at the date of the transfer under the common law.

 

(Figures stated are accurate as of 16 June 2015.)

 

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For further information, please contact:

 

Jezamine Fewins, Partner, Stephenson Harwood

jezamine.fewins@shlegal.com

 

Chunfai Lui, Partner, Stephenson Harwood

cf.lui@shlegal.com

 

Paul Westover, Partner, Stephenson Harwood

paul.westover@shlegal.com

 

Yeeling Wan, Stephenson Harwood

yeeling.wan@shlegal.com

 
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