In Public Prosecutor v Jurong Country Club and another appeal [2019] SGHC 150, the Singapore High Court held that Mohamed Yusoff Bin Hashim ("Yusoff") had been engaged as an independent contractor by Jurong Country Club ("JCC") and not as an employee. JCC was therefore not liable to make any Central Provident Fund ("CPF") contributions to Yusoff.

Background Facts

Yusoff began employment with JCC in 1991 as a gym instructor. He was initially employed as an employee with JCC. On 1 November 1998, JCC purportedly converted Yusoff's status from an employee to that of an independent contractor. Yusoff stopped receiving CPF contributions and other benefits such as paid annual leave, medical coverage, and annual wage supplement.

In his time at JCC, Yusoff worked under a series of contracts which were negotiated on an annual or biennial basis (the "Contracts").

Investigations began in 2016 when Yusoff approached the CPF Board to enquire whether he was entitled to CPF contributions by JCC, after he found out that JCC was closing down. The Singapore District Court found that Yusoff had been an employee of JCC all along, and convicted JCC on four charges for non-payment of employer's CPF contributions under Section 7(1) read with Section 58(b) of the Central Provident Fund Act ("CPFA").

JCC appealed against the convictions. Following the hearing of the appeal, the High Court overturned the decision of the District Court and held that Yusoff had been an independent contractor.

The key issues before the High Court were:

(a) what was the appropriate legal test for determining whether a worker is an employee for the purposes of the CPFA; and

(b) whether Section 58(b) of the CPFA was a strict liability offence.

Appropriate Legal Test

The High Court endorsed the use of a multi-factorial test to determine whether a worker is an employee or an independent contractor. Under this test, no particular weight or emphasis would be placed on any one set of factors. Instead, the Court would take a pragmatic and holistic view of the circumstances, with due regard to all relevant factors. The Court preferred this approach for its flexibility and adaptability to different industries and working conditions. In doing so, the Court rejected the "structured approach" recommended by the Prosecution, under which the key factors for consideration were control, personal service and mutuality of obligations.

The High Court noted that in every case the question of whether a particular worker ought to be deemed an employee for the purposes of the CPFA is to an extent an issue of contractual interpretation, and due regard should be had to the parties' intentions. The use of a label (e.g. that of an independent contractor) would not be determinative of the working relationship. The relative bargaining powers of the parties must also be taken into account in deciding whether the terms of any agreement truly represented what the parties agreed to.

In this case, the High Court held that Yusoff was an independent contractor and not an employee. In reaching this conclusion, the High Court considered factors such as the fact that Yusoff:

(a) was not on JCC's list of employees which was used for budgeting purposes, and was not invited to staff functions which were compulsory for all employees;

(b) did not report to the HR department, was not issued the HR manual, was not subject to JCC's employee performance appraisal framework and had no key performance indicators to meet (which meant that he was not eligible for annual increments in salary).

(c) was given biometric access only to the gym, unlike employees who could access all areas of JCC's office; and

(d) was not given medical benefits, hospitalisation leave, or medical leave under the contracts he entered into with JCC.

Whether Section 58(b) is a strict liability offence

The issue of whether Section 58(b) of the CPFA was a strict liability offence was also canvassed before the High Court. Section 58(b) reads:

"58. If any person -- ...

(b) fails to pay to the [Central Provident] Fund within such period as may be prescribed any amount which he is liable under this Act to pay in respect of or on behalf of any employee in any month;

he shall be guilty of an offence."

The High Court held that Section 58(b) is a strict liability offence, given that the offence pertains to an issue of social concern. The employer's honest belief that such obligations have been complied with is therefore insufficient to avoid liability under section 58(b) of the CPFA. However, employers may be able to raise a defence of reasonable care, if they can show that they have taken all reasonable steps to ensure that their obligations under the CPFA have been complied with.

Key takeaways

This case should not be read to suggest that it is easy for employers to categorise workers as independent contractors. Careful analysis should be undertaken and employers should ensure that there are genuine differences between their employees and independent contractors.

The multi-factorial test means that employers should scrutinize every aspect of their employment arrangements to ensure that the form of employment is as intended by the parties. Further, in light of the High Court's ruling that Section 58(b) of the CPFA is a strict liability offence, legal advice should be sought if the employer is unclear about its obligations under the CPFA.