You have received an allegation of misconduct against one of the managers in your company. Following a thorough investigation, you have concluded that the allegation was true and that the manager’s termination for cause is justified. You accordingly advise your company to summarily dismiss the manager for cause. One consequence of summary dismissal is that the manager will not be entitled to salary in lieu of notice. Currently, if the dissatisfied manager brings his salary dispute to the Ministry of Manpower's (“MOM”) Commissioner for Labour, he will be turned away because Professionals, Managers and Executives (“PMEs”) earning more than S$4,500 a month, and who have a salary dispute with their employer, are limited to seeking recourse through the courts.

The dissatisfied manager therefore faces a difficult choice between foregoing the unpaid salary or commencing court proceedings, which can be protracted and might not be cost effective unless the disputed sum is substantial. However, with the proposed establishment of the Employment Claims Tribunal, which is expected to become operational sometime this year, the dissatisfied manager may have the option of commencing proceedings against your company before the tribunal.

The tribunal aims to expand the avenue for dispute resolution to all employees, particularly PMEs, by providing an expeditious and cost effective way of resolving salary disputes with their employers. This is significant because 30.1% of Singapore's resident workforce in 2014 were PMEs. Depending on the nature of your company, the proportion of PMEs may be even higher.

The idea for a tribunal was first mooted in April 2014. However, further details were only released by the MOM in its call for public feedback and pursuant to its consultation paper on 25 February 2016.

Employment Claims Tribunal – what we know

The tribunal will hear salary-related claims (including claims for contractual bonus payments) for all employees, including PMEs, regardless of their salary levels. Workplace grievances such as unfair dismissal and discrimination are presently excluded from the tribunal’s jurisdiction.

However, there will be a claims limit of S$20,000. A higher "claims cap" of S$30,000 will only apply to cases which have undergone a formal mediation process (either the Tripartite Mediation Framework for PMEs or MOM conciliation pursuant to the Industrial Relations Act). The MOM’s public consultation paper suggests that while mediation is a necessary precondition to an employee lodging a claim in the tribunal, only mediation in certain forums will lift the “claims cap” to S$30,000.

Employees will have to file their claims within 1 year from the date on which the claim arises. If the employment relationship has been terminated, a claim must be brought within 6 months from the end of that employment.

The tribunal will be a division of the State Courts, similar to the Small Claims Tribunal for civil suits, and employment claims will be heard by tribunal adjudicators, who are expected to have a strong appreciation of the employment and industrial relations landscape here in Singapore.  

Issues to note

The claims cap of S$20,000 or S$30,000 is not an insubstantial sum for salary-related disputes. However, higher claims will still need to be heard in court. Companies looking to enforce an employee’s restrictive covenant or prevent an employee’s misuse of their confidential information will also need to seek the courts’ assistance.

It is still unclear whether parties that appear before the tribunal can be represented by external lawyers. Proceedings before the Commissioner of Labour (or the Small Claims Tribunal) do not permit representation by external lawyers.

However, even if a company is not allowed to be represented by external lawyers, there may nevertheless be merit in seeking external legal assistance, as external lawyers may assist by reviewing documents, assessing the legal merits of a case, preparing submissions for the tribunal and working with the in-house team to present the company’s case to the tribunal adjudicator.

Stipulating mediation as a mandatory pre-condition to lodging a claim can be viewed as a net positive for companies as it provides an early structured process to resolve disputes before a formal hearing before the tribunal. It is expected, though not certain, that there will be a right of appeal for a company which is dissatisfied with the tribunal’s decision. However, even if such a right of appeal exists, it might be limited to appeals on questions of law and/or jurisdiction of the tribunals. In other words, if the tribunal’s decision is factually wrong, there may be no recourse.

What HR needs to Expect and Execute

The tribunal marks an interesting development in the resolution of employment disputes in Singapore. Once the tribunal is in operation, companies’ HR and in-house legal teams should be prepared for an increase in claims by employees or former employees. The more cost effective and expeditious the tribunal is in resolving disputes, the lower the barrier is to a disgruntled employee making a claim before the tribunal.

The complexion of salary-related claims that companies will face will also change. Claims before the Commissioner for Labour presently are necessarily lower value claims. The types of claimants are currently only limited to those covered by the Employment Act i.e. non-PMEs earning less than S$4,500 a month. With the advent of the tribunal, companies would likely face higher value claims and more sophisticated claimants. Companies may therefore wish to formalise their standard operating processes to seek a waiver of claims by departing employees, where appropriate.

MOM’s public consultation paper has indicated that the jurisdiction of the tribunal will be confined to salary-related disputes. The tribunal’s jurisdiction is envisaged to cover statutory claims provided for in legislation such as the Employment Act as well as salary-related claims “expressly provided in monetary terms in employment contracts”.

HR may therefore expect the company to face claims from employees and ex-employees for non-payment of salary or salary in lieu of notice, overtime payments, unauthorised deductions from salary, non-payment of contractual bonuses, unpaid commission claims, encashment of unused leave upon cessation of employment, and failure to make CPF contributions.

As regards claims relating to unfair dismissal, discrimination, harassment or whistleblower retaliation, such workplace grievances claims will not be determined by the tribunal.  We will only know the exact ambit of the tribunal’s jurisdiction when the relevant legislation and rule are released. Even then, HR should expect an initial period in which the tribunal works out, through the cases it decides, the scope of its jurisdiction and the types of cases that it will or will not deal with. To use the hypothetical in the first paragraph, the manager would be making a salary-related claim for non-payment of salary in lieu. However, this dispute could concurrently be viewed as an unfair dismissal claim. The tribunal is likely to have to decide whether such a case will fall within its jurisdiction.

HR and in-house legal will necessarily play a frontline role in managing employee exits and/or defending the company from salary-related claims in the tribunal. To the extent that companies take a decision to summarily terminate an employee for cause, they should be prepared to have that decision and its rationale scrutinised by a tribunal adjudicator.