Jurisdiction - Singapore
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Singapore – Mutual Trust And Confidence Damages.

26 February, 2015

 

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

 

In August 2014, the Singapore Court of Appeal confirmed that in a claim for constructive dismissal, an employee’s damages will be limited to the amount they would have received under the employment contract, had their employment been lawfully terminated.

 

Facts

 

Mr Wee Kim San Lawrence Bernard was employed by Robinson & Company (Singapore) Pte Ltd (Robinson) for six years. On 24 August 2012, Mr Bernard resigned from Robinson and although his employment contract provided for only two months’ notice, Robinson paid Mr Bernard four months’ salary in lieu of notice.

 

Mr Bernard claimed that he had been forced to resign as a result of persecution and unreasonable bias directed against him by Robinson and its officers. He sought damages (in addition to the amount already paid by Robinson) for constructive dismissal, or alternatively, breach of the implied duty of mutual trust and confidence.

 

Decision

 

The Court of Appeal held that Mr Bernard was not entitled to the relief he sought.

 

The Court’s Reasoning

 

The Court of Appeal confirmed that the damages awarded to an employee for a constructive dismissal claim are limited to the amount the employee would have received under the employment contract had the employer lawfully terminated the contract by giving the required notice or payment in lieu of the notice. In this case, Mr Bernard received more than what he would have received if his contract had been lawfully terminated. He was therefore not entitled to the relief he sought.

 

In respect of Mr Bernard’s alternative claim for breach of the implied term of mutual trust and confidence, the Court of Appeal noted that:

 

  • the damages for a constructive dismissal claim represent the financial loss the employee suffers as a result of premature termination of his or her employment; and
  • by contrast, a claim for breach of an implied term of mutual trust and confidence may give rise to losses of a different nature, such as continuing financial losses (where the breach affects the employee’s future employment prospects).

 

However, the Court said that where the loss alleged to be suffered as a result of the breach of the implied term is limited to the financial loss resulting from premature termination (as it was in this case), then the damages are limited to that loss. Mr Bernard was therefore not entitled to additional damages simply because he also alleged a breach of the implied term.

 

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For further information, please contact:

 

George Cooper, Partner, Ashurst

[email protected]

 

Sumin Ahn, Ashurst

[email protected]

 

Jennifer Goedhuys, Ashurst

[email protected]

 

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