In Pradeepto Kumar Biswas v East India Capital Management Pte Ltd  SGHC 183, the plaintiff Pradeepto Kumar Biswas ("Pradeepto") filed a claim against East India Capital Management Pte Ltd ("EICM") for unpaid salary amounting to S$351,312.64. Notwithstanding the absence of an employment contract between Pradeepto and EICM, the Singapore High Court found in favour of Pradeepto and awarded his claim in full.
In July 2015, Pradeepto and Simon John Hopkins ("Hopkins") began discussions on the formation of EICM and its wealth and fund management business. On 17 August 2015, a shareholders' agreement was signed by Hopkins and other shareholders, including Indian Ocean Group Pte Ltd ("IOG"), which was a company that Pradeepto had direct control over.
EICM was incorporated and on 15 October 2015, Pradeepto commenced work with EICM. It was agreed on 21 October 2015 that Pradeepto would be paid a "notional" monthly salary of S$20,000 when EICM became profitable. In April 2017, Pradeepto agreed to have his salary reduced to S$10,000 to ease EICM's cash flow problems. No written employment contracts or agreements were entered into reflecting the above arrangements.
On 18 June 2017, EICM terminated Pradeepto's engagement on the ground of (alleged) misconduct. Pradeepto claimed against EICM for unpaid salary amounting to S$351,312.64.
Existence of an employment relationship
The court held that an employment relationship existed between the parties because:
(a) Pradeepto, who had direct control of IOG, had introduced IOG into EICM as a shareholder. In return, Pradeepto was to be employed to "find business" for EICM;
(b) it had been agreed that Pradeepto would be paid a "notional" amount of S$20,000 upon EICM becoming profitable. In this regard, the High Court found that this S$20,000 was to be paid also in the event that Pradeepto's employment was terminated (even if EICM was not (yet) profitable);
(c) EICM had paid employer's CPF contribution into Pradeepto's CPF account even though Pradeepto's salary was deferred; and
(d) correspondence, even from Hopkins, made reference to the fact that EICM had "terminated Pradeepto's employment".
The High Court's decision is a reminder that employment relationships in Singapore can exist even in the absence of an employment contract. Informal arrangements should be used sparingly and with certainty over the terms. To mitigate the risk of claims and costly litigation proceedings, employers should ensure that every employee has a written employment contract setting out clear terms and conditions of employment.