In Wong Sung Boon v Fuji Xerox Singapore Pte Ltd [2021] SGHC 24, an employee successfully brought an unlawful dismissal claim against his former employer. The Singapore High Court awarded the employee S$1.4million in damages, which are comprised of salary in lieu of notice, contractual bonuses and unconsumed annual leave.

Background Facts

The plaintiff employee was the defendant's former Senior Managing Director and Chief Executive Officer. His appointment was governed by a letter of appointment dated 1 April 2016 (Employment Contract) which was due to expire on 31 March 2018. On the expiry of his Employment Contract, the plaintiff would be entitled to a contractual End of Term payment of approximately S$1.3million.

Towards the end of 2017, the defendant appointed an external firm to carry out an audit investigation. As part of the investigation, the firm held a meeting with the plaintiff but there were no specific questions or allegations raised for the plaintiff to respond to, and the plaintiff had left the meeting early as he was feeling unwell.

Just three months before his contract expired, on 21 December 2017, the defendant issued a notice of termination to summarily terminate the plaintiff's employment. The notice of termination provided that the defendant had been "looking into [the plaintiff's] actions in relation to and [the plaintiff's] handling of several past transactions" and found that these gave rise to grounds of termination without notice and without any entitlement to the End of Term Payment. The plaintiff was not told of the specific reasons for his summary dismissal.

It is important to note that the termination had taken place before April 2019 when the core provisions in the Employment Act (Cap. 91), including requirement to conduct due inquiry in summary termination for misconduct, were extended to managers and executives such as the plaintiff.

The plaintiff brought an action before the Singapore High Court seeking damages for unlawful dismissal and breach of the Employment Contract.

The defendant argued they were entitled to summarily dismiss the plaintiff as he had breached the Employment Contract, the company policies and his fiduciary duties. The defendant filed a counterclaim for S$2.9million against the plaintiff for losses they had allegedly suffered as a result of the plaintiff's actions.

The High Court's decision

In the course of the trial, the defendant claimed that the summary termination was justified as the plaintiff was in breach of the Employment Contract, the company policies and fiduciary duties in that the plaintiff, amongst others:

  • exposed the defendant to liability by entering into agreements to supply products and services which was not in the defendant's ordinary business;
  • failed to obtain the requisite approval before entering into certain business activities; and
  • failed to properly evaluate the credit-worthiness of the relevant counterparties and to procure the appropriate personal guarantees.

On the facts, the High Court held that the defendant's case for the plaintiff's summary termination was not made out as, amongst others:

  • there were no internal company restrictions on the defendant's scope of business;
  •  the plaintiff had complied with his duties to the defendant and the relevant internal procedures. Specifically on the failure to obtain approvals, the breaches were rectified as the required approvals were subsequently obtained. The High Court also noted that the relevant company policies and operations manual were silent on the requirement to obtain personal guarantees.

The High Court made brief comments on the interpretation of clauses on termination for misconduct. In particular, in interpreting the term "gross default or misconduct" under the Employment Contract, the High Court considered:

  • the holding in Phosagro Asia Pte Ltd v Piattchanine, Iouri [2016] 5 SLR 1052 that a "serious misconduct" must be a breach "that is so serious that it would justify [the employer] in terminating [the employee's] employment without more"; and
  • the rules relating to discharge by a repudiatory breach in RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR(R) 413.

The High Court held that while the Employment Contract required the plaintiff to "strictly comply with" the defendant's company policies, this does not mean that any breach of the policies would entitle the defendant to summarily dismiss the plaintiff. The defendant had to show that the breach constituted a breach of a "condition" (ie a breach of a term that parties regard as so important that any breach would entitle the innocent party to terminate the contract regardless of the actual consequences of the breach).

On the facts, the Employment Contract suggested that breach of the relevant policies did not give rise to a right to summary termination unless it was a serious case or a previous warning had been given but the violation was repeated within a year. This was not satisfied.

Damages for unlawful dismissal

In assessing damages for unlawful dismissal, the High Court applied the minimum legal obligation rule and assess the damages based the following considerations:

(a) what is the least costly way that the employer could lawfully terminate the employment?

(b) would the employer have terminated the employment in the manner in (a)?

The court found that rather than waiting for the plaintiff's contract to expire on 31 March 2018 and giving him 3 months' actual notice, the defendant could and would have given the plaintiff 3 months' salary in lieu of notice.

Additionally, the Employment Contract provided that if the plaintiff's employment was terminated for any reason other than summary termination, the defendant would pay him an End of Term payment. As the defendant's case for the summary termination was not made out, the plaintiff was entitled to the End of Term payment.

The High Court also granted the plaintiff a variable bonus under the Employment Contract (though not for the full amount as the plaintiff was unable to prove that he had met all the relevant KPIs) and salary in lieu of accrued leave.

Key Takeaways

The case highlights the importance of carrying out thorough investigations before summarily dismissing an employee.

While the High Court in this case made no express finding on the lack of proper investigation leading to the plaintiff's summary termination, from April 2019, an employer is statutorily required to conduct a due inquiry prior to dismissals without notice on the ground of misconduct. This requirement applies to all employees, regardless of their seniority. The Tripartite Guidelines on Wrongful Dismissal also make clear that, where misconduct is cited as the reason for dismissal, the employer bears the burden of proving that ground for dismissal.

Before taking disciplinary action including summary dismissal, employers will need to identify the misconduct, conduct a fair investigation and present the allegations to the employee so that the employee can properly respond to such allegations. Moving forward, we anticipate that the courts will rigorously assess the quality of the due inquiry process in unlawful dismissal cases.