Breach of Employment Contract in Singapore

As with any other contract, there is always the possibility of breach of an employment contract – both the employer and the employee can violate the agreement.

The law provides that one party can file a civil lawsuit against another who fails to perform their contractual or common law duties.

In Singapore, employment contracts are generally governed by the Employment Act and common law. The Employment Act prescribes specific minimum terms, and if the employer fails to comply with these provisions, they can be found guilty of an offence under section 112 of the Act. Of course, the employer also has remedies if the employee breaches the contract.

This article will look at what constitutes a breach of an employment contract and briefly touch on the remedies available to the other party.

What is a breach of contract?

An employment contract is a legally binding agreement between the employer and the employee. If either party breaks one of the terms, they are in breach of the contract. Some terms are implied in the contract, and non-compliance with such terms can also amount to a breach. An example includes a duty of trust between an employer and employee implied by common law.

You may have heard lawyers talk about a “material breach of contract”? A material breach is a breach that goes to the heart of the contract; it is a fundamental breach.

For example, employees are entitled to payment in return for performing their duties. Payment and performing duties are fundamental to an employment contract – without those elements, we cannot talk about “employment”. Failure to pay the employee or acting recklessly in performing employee duties amounts to a breach of a fundamental term of the employment contract.

In some cases, the law deems specific actions, or absence of action, as a breach of an employment contract.

Deemed breach of contract

Section 13 of the Act deals with situations where the employer or the employee is deemed to have broken the employment contract.

• If the employer fails to pay the employee’s salary in accordance with Part 3 of the Act, section 13 provides that the employer is deemed to have broken the employment contract. If found guilty, the employer can face a fine of between $3,000 and $15,000 or be liable to imprisonment for up to 6 months, or both.
• Likewise, section 13 provides that the employee is deemed to have broken the contract of service if the employee is absent from work for more than two consecutive days without prior leave from the employer and
  • the employee doesn’t have a reasonable excuse,
  • or the employee doesn’t inform or attempt to inform the employer of the absence.

Breach of employment by the employee

Employment law in Singapore protects both employees and employers against breach of employment.

Common examples of breach by employees include:

• Absence from work without a valid reason or notice.
• Breaching confidentiality agreements, e.g., sharing trade secrets with competitors, taking client lists to a new employer, etc.
• Disorderly or immoral conduct at the workplace, e.g. arriving at work under the influence of alcohol or drugs, sharing inappropriate content on work emails, etc.
• Gross negligence or reckless behaviour. e.g. ignoring safety regulations when operating equipment.
• Theft or misappropriation of company assets.

What can the employer do?

• Depending on the situation, the employer will try to settle the matter informally, but there are compelling legal remedies available if the issue is serious or cannot be resolved informally.
• In most cases of serious misconduct, the employer can terminate the employment contract as long as all contractually agreed procedures and policies are followed. This includes proper investigation, warning letters, disciplinary procedures, etc.
• Depending on the circumstances, the employment can be terminated with or without notice or salary instead of notice.
• Where appropriate, the employer can claim for financial loss resulting from the breach. For example, if the employee left without notice – the employer could claim if they had to hire a locum as a temporary replacement.
• If the employee breaches a restrictive covenant, the employer can apply for an injunction to prevent the employee from sharing trade secrets with competitors, for example.

Common breach of contract by employers

Non-payment of salaries or wrongful dismissal are the most common forms of breach by employers. Discrimination and harassment are also forms of breach of contract.

Non-payment of salaries

Failure to pay salaries or unlawful deductions can amount to a breach of contract. Although a single incident might not qualify as a material breach, continued or repeated non-payment or late payment can be considered a fundamental breach.

What can the employee do?

The employee has a few options:

They can leave the employment without notice if payment is overdue by seven days from the stipulated payment date. However, this is not always the desired outcome for the employee.

Other remedies include:

• Filing a claim with the Tripartite Alliance for Dispute Management (TADM) for non-payment of salary or non-payment of bonuses or overtime pay. An employee can claim a maximum of S$20,000.
• Alternatively, an employee can approach the Employment Claims Tribunal (ECT) or enter a settlement under the Employment Claims Act for a maximum of S$20,000.
• Approaching the TADM for mediation to try and resolve the dispute amicably. In such cases, employees can claim up to S$30,000.

Wrongful dismissal

An employer cannot terminate the employee’s contract without just cause and excuse. Forcing an employee to resign unwillingly also amounts to wrongful dismissal. If the release is without just cause or excuse, it doesn’t matter if it was with or without notice.

There are times when an employee may be dismissed without notice. However, there must still be due process and a proper investigation before dismissal. The employer must give a valid reason for the dismissal.

If the employer fails to give a reason or substantiate the dismissal, it could constitute wrongful dismissal in breach of the contract.

Examples of wrongful dismissal amounting to a breach include:

• dismissing an employee who filed a workplace safety complaint.
• forcing an employee to resign, for instance, by refusing to give maternity leave.

What can the employee do?

• The employee can approach the TADM for mediation to try and resolve the dispute. If the mediation is successful, the mediator will issue a settlement agreement, which the employee can register as a binding agreement. The employer has two weeks to comply with the agreement.
• If mediation is unsuccessful, the employee can approach the ECT for a resolution. This is a cost-effective option, but if the claim exceeds S$20,000, the employee will have to forego the excess.
• An employee can also file a civil claim in the Magistrate’s Court, although this is often seen as a last resort.

Discrimination and harassment

Although the employment contract may not specifically mention protection against harassment or discrimination, common law and specific legislation provide that discrimination against an employee based on age, race, or gender, for example, may amount to a breach of employer duties.

Similarly, harassment can amount to a breach of employment rights and duties.

What can the employee do?

• Employees who experience discrimination or harassment can contact the Tripartite Alliance for Fair & Progressive Employment Practices (TAFEP). They will investigate the matter and take the necessary steps to ensure fair employment practices.
• Harassment may amount to an offence under the Protection from Harassment Act, and the employee may seek a Protection Order against the employer.
• The employee can also take the matter to the civil courts and claim monetary compensation.

Workplace safety

The employer has a duty to provide a safe working environment. It does not need to be stated in the employment contract. The law places such a duty on employers.

Failure to provide a safe workplace amounts to a breach of duties, and the employer can face a civil claim.

What can the employee do?

An employee can claim under the Work Injury Compensation Act for any work-related injury without filing a civil lawsuit. However, if the employee claims under the Work Injury Compensation Act, they cannot also file a civil suit.

What to do when facing a claim of breach of employment contract

When facing a claim of breach of your employment contract, it is essential to contact an employment lawyer as soon as possible. Whether you stand accused of breaching the Employment Act or the contract, the stakes are high, and you must understand the law and your rights.

An experienced employment lawyer will guide you through the law and advise you on the best way forward. Often, the dispute can be resolved by mediation, saving time and money. If mediation does not reach an acceptable outcome, an employment lawyer can assist with a sound litigation strategy to ensure the best outcome for your situation.

First prize is obtaining legal advice when drafting employment contracts by a professional employment lawyer who understands Singapores employment law landscape. A carefully drafted employment contract can avoid many disputes and clarify what conduct will amount to a fundamental breach.