In September 2015, Time published an online article about the most sought-after doctor in the world: Dr. Google1. Self-diagnosis using the Internet has been gaining steam and, like it or not, easy access to information on the Internet means that an increasing majority of the public are turning to their trusty keyboards to obtain a first diagnosis for symptoms—never mind that Dr. Google does not actually have a medical degree.

The same is true about the human resources (HR) industry. With the advent of the Internet, sample templates of employment and dismissal letters are widely available online. It has become common for HR professionals to populate their own precedents with templates of dismissal letters obtained online and issue letters as and when management requires.

A common summary termination template found online may take the following form:

This letter serves as notice that your employment as a [position] of [Employer Company] (the ‘Company’) is terminated pursuant to the terms of the employment contract dated [date] (the ‘Employment Contract’).

The termination takes effect immediately.

Subject to such deductions as the Company is entitled to make, the Company will arrange payment of such monies that may be due to you. In this respect, the Company is looking into the amount, if any, to be paid to you on account of the termination of your employment. Any amount to which you are entitled will in any case be subject to deductions to be determined by the relevant authorities.

The Company reserves the right to withhold any payment which may otherwise be due to you on account of any breach of contract and/or any misconduct or non-observance of the Employment Contract and/or breach of any of your fiduciary duties and/or in the event that a claim is to be made against you, whether for misrepresentation or otherwise or in relation to your non-performance/inadequate performance of your duties.

But what happens when subsequent to the issuing of the template letter a fraud or a breach of employment duties is discovered? Can the employer refuse to abide by the terms of the termination (stated as the basis for termination) and refuse to pay either salary in lieu of notice or the requisite severance package on the basis that there has been a repudiation of the employment agreement by the employee through acts of misconduct?

The Case

The answer to this precise question was decided in the seminal decision of Piattchanine, Iouri v Phosagro Asia Pte Ltd [2015] SGHC 259 (Piattchanine), where the Singapore Courts held that the answer was an emphatic ‘no’.

In Piattchanine, the former managing director of Phosagro Asia Pte Ltd (the Employer) was terminated with ‘immediate effect’ via a standard termination letter. Subsequent to the termination letter—almost three weeks later—the Employer sent another letter purporting to summarily terminate the managing director’s employment on the basis of misconduct and breach of the employment agreement. On this basis, the Employer sought to withhold salary and bonus payments, which were contractual entitlements due under the employment agreement even if there was a termination with ‘immediate effect’.

The problem was that the Employer had already terminated the employment of the managing director via the termination letter.

As the employment agreement provided for a minimum one-off payment of a year’s salary if the managing director was terminated prior to an initial threeyear period, the managing director brought claims for wrongful dismissal, expenses incurred, and contractually vested bonus. The Employer sought to rely on the managing director’s misconduct to argue that the managing director had repudiated the employment agreement and therefore should not be entitled to any payments.

The Singapore Court held that the Employer was wrong. The key findings can be put simply:

  1. As the Employer had already terminated the employment agreement via a termination letter, one had to look at the terms of the termination letter; and
  2. As the termination letter relied on the contractual provisions for summary termination, the Employer could not then argue that there was a repudiation by the managing director—i.e., the Employer cannot go back, investigate, and find another basis to justify termination and nonpayment of sums due under the contractual termination provisions.

Although it reduced the quantum, the Singapore Court upheld the managing director’s claim for wrongful dismissal.

Previous Cases

The scenario that arose in Piattchanine is not uncommon. It arose in some similar form in the earlier decision of Cousins Scott William v The Royal Bank of Scotland plc [2010] SGHC 73 (CSW), where an employee who had been made redundant and who had signed a redundancy agreement was found after investigations to have misconducted himself. The employer in that case then sought to invalidate payments under the settlement agreement on the basis of the later discovery of misconduct and raised a counterclaim.

The Singapore Court in CSW had also ruled that the employer’s refusal to pay under the redundancy agreement and its counterclaims could not be supported in law.

Learning Points

It is incomplete and superficial to simply take away from the cases of Piattchanine and CSW that one must ‘draft termination letters with precision and caution’.

The basis for the rulings in Piattchanine and CSW is more fundamental and more basic—an employer cannot simply terminate or end an employment on one basis and then seek to renege on that termination in favor of another basis discovered later. Both Piattchanine and CSW dealt with a situation where the contract of the employee had been validly terminated by the employer through earlier documents—through a termination letter or a redundancy agreement. After validly terminating those contracts, and triggering liability or obligations through such a termination, the employer cannot wind back the clock to then assert another basis of termination with different liabilities and obligations even if the employer subsequently discovered earlier misconduct.

The key points are really to ensure that a decision to terminate has been made properly after careful consideration and to be prepared to live by the termination.

The following general tips may be useful:

  1. Prior to termination, always conduct a thorough assessment on the basis for termination;
  2. If an employee is in a high-risk role where there may be a chance of misconduct, try to postpone issuing a termination until the investigations are complete and, in the interim, suspend or ‘garden leave’ the employee until such time as the investigations are over;
  3. If the employee is a low-level employee with minimal risks, it may be better to terminate with notice or salary in lieu of notice to prevent claims for wrongful dismissal; and
  4. Any final letter of termination to a high-risk employee should be carefully worded and constructed setting out all the bases for the termination. Although precise details are unnecessary, setting out the precise breach of obligation would place an employer in good stead before the Singapore Courts.