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Whilst most employment relationships tend to start on the right foot with the expectation that the relationship will be a positive one, it is not difficult for the relationship to deteriorate and for things to go sideways quickly if the relationship is not properly managed. The result? Tension in the office, growing mutual distrust, drop in employee productivity and even the termination of the employment relationship. This is the unfortunate reality realized by many employers and employees when the employment relationship and the documents governing the relationship such as the employment contract are poorly handled or drafted respectively.
In this article, we lay out some tips which if adopted can help employers and employees to maintain a healthy employment relationship and hopefully, to avoid any misunderstandings or disputes between them. Read on to see part 1 of our list of 10 do’s and don’ts for employers and employees.
As the key document governing the employment relationship, don’t skimp on the preparation of this important document. Employers should stay away from “cut and paste” employment contracts (or mixing and matching terms from different templates) found on the internet as the terms used in these documents may not accurately reflect the intended terms of the contract and even worse, may contain legally meaningless jargon or legal jargon relevant in another jurisdiction but not Singapore. Such terms may not only lead to confusion, but may also be unenforceable in Singapore, defeating the very purpose of having these clauses in the first place.
It is also common for parties to at the beginning leave things to trust or chance and not have certain key terms expressly written down in the contract. This is especially so for employees who have less bargaining power and may feel “shy” to ask for such terms to be included in the contract for fear of implying distrust in his or her employer. This is a common but grave mistake to make and failing to include or clarify key terms in the contract such as the calculation for payment of commission or even an entitlement to commission may put you as the employee at a significant disadvantage in a dispute. For example, the absence of a clear bonus clause in the contract makes it difficult for an employee to claim bonus as an entitlement against the company even if it is alleged that such a bonus was verbally promised by the employee’s manager (a common allegation).
Even for employers, having such key terms clearly written out in the contract should be an established practice. This will avoid situations such as those mentioned above where the employee may have been promised something during the interview or onboarding but when the time comes, the party responsible for making the promise to the employee may no longer be with the company or denies ever making such a promise. This as you can imagine can only lead to a conflict with the unhappy employee.
You may have heard the oft repeated phrase “ignorance of the law is not a defence”. It is not uncommon that due to shortage of manpower or the focus on profitability that employers overlook their obligations under the law or requirements of relevant authorities such as the Ministry of Manpower (MOM). In fact, it is common for employers to simply not know what they need do not know and act in ignorant breach of the law, rather than deliberately and flagrantly breach the law. However, that will not excuse them from the consequences of such a breach which can include a fine, jail (for the persons responsible) or even debarment from applying for or renewing work passes.
Due to the ever developing and evolving landscape of employment law in Singapore, employers should take steps to ensure that they are on top of things and that at bare minimum, their employment and HR documents / practices are compliant with the law and the relevant guidelines published by the various ministries. For example, employers should be aware of the requirements for safe management measures at the workplace published by the MOM, as well as the requirements of the Fair Consideration Framework and take the steps to integrate these requirements into their organization’s policies.
It is not uncommon that throughout the course of the employment relationship, certain terms need to be amended. Certain amendments are uncontroversial and unlikely to be disputed such as when an increment is given to an employee, or when the employee is given more days of leave. However, what happens when more substantive changes (such as a change in job scope or remuneration scheme) are proposed? What if there is a clause in the employment contract allowing the employer to unilaterally amend the terms of employment?
Generally, employers should seek the consent of the employee when proposing changes to the employment contract even if the changes are minor. Even if there is a clause allowing the employer to unilaterally amend the contract, such amendments would usually be limited to administrative or non-fundamental aspects of the employment contract. For example, an employer may choose to amend their medical claims policy without the need to seek the consent of the employee.
However, an amendment of the fundamental terms of the contract such as salary (especially a reduction) and scope of work would require the employee’s consent.
Whilst it should be painfully obvious to an employee that he is not to divulge confidential information to unauthorized third parties or retain such information upon his / her departure from the company, a grey area often arises in relation to the question of “what is confidential information”? Whilst labels are helpful to a certain extent, employers should help themselves by ensuring that confidential information is properly labelled and stored (at least kept away from employees who have no business accessing such information).
Employers should also have a comprehensive confidentiality clause in their employment contracts to ensure that the definition of what is confidential information is clear, and to state clearly what employees may or may not do with such information.
Employees who routinely deal with confidential information should also familiarize themselves with the company’s confidentiality policies and should exceptions be required e.g. transferring confidential information to an external hard disk for the purposes of working out of the office, permission should first be sought from the company to do so. Otherwise, misunderstandings of potential misconduct could arise.
The employment relationship may be terminated for a variety of reasons – due to the employee underperforming, a mismatch of fit and expectations between parties, employee misconduct or resignation. In each case, the terminating party should terminate the employment contract in accordance with the law and the employment relationship.
With notice terminations are more straightforward – either the employer or the employee seeking to terminate the contract simply needs to give notice or pay salary in lieu of notice. This is a contractual entitlement both parties have and the other party cannot “refuse” a termination or resignation.
However and where the termination is for cause / without notice, employers are obliged under the Employment Act to first carry out a due inquiry and the termination for cause may only be conducted on the basis of misconduct. So even if the employment contract provides for certain conduct justifying summary termination, employers should be careful when relying on certain types of conduct such as late coming and insubordination and ensure that the employee was indeed guilty of misconduct before deciding to terminate the employment contract for cause. Otherwise, the termination may be considered wrongful and a claim may in that event be made against the company.
The above pointers underscores the importance of having the house in order when it comes to employment and HR documentation and practices. If properly handled, the employment relationship will be significantly easier to manage. On the other hand, poorly drafted employment documents and non-compliant HR practices will set the organization up for failure and expose the organization to the risk of costly disputes which can actually be easily avoided.
If you require any assistance for your organization’s employment and HR documents / practices, you may contact:
Disclaimer: This update is intended to provide general information only, and is not and shall not be regarded as legal advice (and consequently relied or acted on) or create any relationship between the reader and Titanium Law Chambers LLC. Should you require any legal advice regarding your specific circumstances, kindly consult a qualified legal practitioner. Copyright in this publication is owned by Titanium Law Chambers LLC and may not be reproduced or transmitted in any form or in any way, in whole or in part, without the prior written approval of our firm.
© 2022 Titanium Law Chambers. All Rights Reserved.