Month: July 2021

Suffering an employee death is one of the hardest things that an employer (to say nothing of the deceased’s family) will have to handle. If the employee passes on due to work-related causes, employers will face significant liability under Singapore law.

The 7 things businesses MUST do if faced with an employee death:

1. Notify MOM
2. File a Work Injury Compensation Claim (if you have Work Injury Compensation Insurance)
3. Pay deceased employee’s family any salary owed
4. If deceased employee is a foreigner, cancel Work Pass and repatriate body
5. If death was work-related, pay mandatory compensation
6. Return employee’s belongings to family
7. How to protect your business against liability for work-related death

Step 1. Identify whether the employee’s death occurred due to work OR occurred at a workplace:

The responsibilities of the employer will vary depending on how OR where the employee died. Employers must act immediately to identify which the 2 scenarios below apply:

• Scenario 1: The employee’s death was not related to work OR occurred outside the workplace.
• Scenario 2: The employee’s death occurred due to work OR at the workplace

Scenario 1: Employee’s death occurred due to non-work-related causes OR outside the workplace

If an employee dies due to non-work-related causes, or dies outside the workplace, then employers don’t need to report the incident to MOM. Employers are not liable under the Work Injury Compensation Act for such deaths.

Examples:

1. Employee slipped and fell outside the office, after knocking off work. Employers are not liable under the Work Injury Compensation Act for injuries while travelling to and from work, from home. Since the employee death occurred outside the workplace, and was not work-related, the employer does not need to report the incident.
2. Employee was killed in a road accident while on public transportation, on the way to work. Same rationale and outcome as point (1). Employer does not need to report the incident.
3. Employee has been battling stomach cancer for past 6 months. The cancer was not related to work. The employee eventually succumbs to the disease while hospitalised in ICU. Employer does not need to report the death to MOM. The employee death was not related to work, and the death occurred at the hospital which is outside the workplace.

Scenario 2: The employee’s death occurred due to work OR at the workplace

Employee’s death due to work:

If an employee dies from work-related causes, employers must notify MOM of the passing immediately. Examples of work-related causes would be falls at construction sites, being electrocuted while working on wires, or getting hit by vehicles while on the way to lunch.

Employee’s death at the workplace:

If an employee dies at the workplace, employers must notify MOM immediately. Workplaces would be any area where the employee is assigned to work. It could be the company office, a third-party project site the employee needs to visit, a client’s office, etc.

If there is doubt over whether the death was related to work or happened at the workplace, then employers should err on the side of caution and report the incident to MOM ASAP.

Step 2: Notify MOM/Commissioner for Workplace Safety and Health ASAP

You must notify the Commissioner for Workplace Safety and Health ASAP. To do this, employers can send an email to [email protected]

In the email to the Commissioner, employers should state the following:

• Date and time of employee’s death
• Place of death
• Name and identification number of deceased employee
• Your company name
• Name of workplace occupier. This refers to the person or organisation who controls the premises the employee works in. For instance, if the deceased employee had died while working in a retail shop, the workplace occupier could be the shop owner or landlord. If the workplace occupier is a factory that is registered with MOM, the workplace occupier is the individual whose name is on the factory’s certificate of registration.
• Description of accident that caused the death
• Name and contact details of individual who sends the email to the Commissioner

Step 3: File a Work Injury Compensation Insurance claim ASAP

For employers who have a Work Injury Compensation Insurance policy, notify your insurance broker or insurance company immediately after you notify the Commissioner for Workplace Safety and Health. Do not delay notifying your broker or insurer, or your claim may not be accepted.

If MOM finds that the employee’s death really was due to a work-related cause, Work Injury Compensation Insurance will cover the mandatory compensation that you’ll need to pay to the deceased’s family. This can go up to $225,000 or more – more on that later in this article.

Step 4: Submit an incident report to MOM, within 10 days of the employee’s work-related death

To file the incident report, employers may use the WSH incident reporting online tool.

Employers who fail to make the necessary reports can be jailed up to 6 months, and or fined up to $10,000.

Employers must include the following in the incident report:

• Description of accident/disease that caused employee death
• Personal details of employer
• Company details
• Employee personal details
• Details of Work Injury Compensation Insurance

Employers are required to keep all incident reports for at least 3 years, so it’s a good idea to save the report, and/or print it out and store it in a secure location.

Once employers submit the incident report, MOM will begin its investigation process.

Must employers report worker deaths while travelling?

It depends.

Employee death while travelling between work and home does not need to be reported.

Employee death while travelling from work to other work sites needs to be reported.

Must employers report deaths for workers who died on their lunch breaks?

Yes. Lunch breaks are counted as part of work and such deaths must be reported.

Travelling to and from lunch breaks is counted as part of work, and such deaths must also be reported.

Example: Tim is an employee of Company ABC (names fictitious). Tim was driving from his company’s office to a client’s office when he got into a road accident. Tim passed away. This was a work-related incident, so Company ABC must report the death to MOM.

Step 5: Pay any outstanding salary owed to deceased employee

A deceased employee may have salary, bonuses, overtime payment, and other sums that were owed to them before they passed on. These accrued sums belong to the employee’s personal representative, which is the person the employee legally nominated to manage their affairs upon death. Most often, the personal representative will be a member of the employee’s family, such as their spouse.

Before making any payments to the employee, it’s best to contact the employee’s next-of-kin, to determine who is managing the deceased’s affairs. Most employers will collect an “emergency contact” from their employees – this will work also. Employers should contact the employee’s emergency contact first, because the deceased employee’s bank account will usually be frozen when the bank is informed of their death. Contacting the next-of-kin first allows employers to arrange the logistics of which bank account to pay the sums owed.

The amount that employers must release to deceased employees will depend on how salary is calculated in the worker’s employment contract. For instance, employees who receive monthly payments should have their salary pro-rated to reflect the number of days worked before they passed away. For daily-wage workers, the daily wage should be pro-rated to reflect the number of hours worked before the worker passed away.

Payment of maternity leave pay, if employee dies while on maternity leave, before childbirth

If an employee dies while on maternity leave, but before childbirth, the employer must pay her remaining maternity leave pay in full. This is compulsory under Section 79 of the Employment Act.

Some key facts to note about paying maternity leave benefits for expecting employees who pass on:

1. Maternity leave pay is the employee’s gross pay. (Gross pay = basic pay + allowances + overtime/bonuses/commissions/etc. Exclude CPF).
2. Paid maternity leave varies from 12 to 16 weeks.

Employers must pay the remaining maternity leave pay to the person nominated by the worker to receive such payments. Often, it will be the deceased employee’s spouse. If no one has been nominated, the employer should pay the employee’s personal representative.

Step 6: Pay mandatory compensation for work-related deaths

By law, employers must pay compensation to the family of employees who die from work-related causes. This is mandated under the Work Injury Compensation Act (WICA).

Minimum amount employer must pay, for each work-related death: $76,000

Maximum amount employer must pay, for each work-related death: $225,000

The above amounts can be adjusted higher depending on the age of the employee. The families of younger employees will have to be paid more compensation for work-related deaths. The amount will be determined by MOM after they have conducted their investigation into the employee’s demise. MOM will issue employers a Notice of Assessment (NOA), which will inform employers of how much compensation they must pay.

Not paying required compensation under the Work Injury Compensation Act is punishable by jail and/or fine.

WICA covers all employees in Singapore, regardless of nationality. This means even if the worker is a foreigner worker, employers must pay the foreign worker’s family in their home country. Also, WICA operates on a no-fault basis. This means that even if the worker who died at (or from) work due to their own carelessness, the employer must compensate the worker’s family. Even if the employer had no responsibility for the employee’s death, it is irrelevant.

Death compensation is a lump sum compensation. Given the size of the required compensation, companies that don’t have WICA Insurance may go bankrupt.

Exceptions for WICA compensation:

Employers are not liable to pay compensation under WICA if:

• Employee commits suicide or deliberately injure themselves
• Employee dies or gets injured while under the influence of alcohol or drugs
• Employee’s death was not work-related

Step 7: Returning belongings

Employers should arrange for the employee’s personal belongings at the workplace to be packed and delivered to the family, depending on how the family wishes for their loved one’s belongings to be handled.

Protect your business from liability from employee deaths:

As established earlier, businesses in Singapore are liable for $76,000 to $225,000 (or more) for an employee passing away due to work-related causes. This is a massive amount of money, and could easily send most SMEs into serious financial trouble, or even bankruptcy. Work Injury Compensation Insurance will pay this amount for you. It also covers medical expenses for work-related injuries/sickness, including Covid-19 (up to $45,000), and also covers compensation for temporary/permanent disability.

Buy Work Injury Compensation Insurance from $5/month online

Whether someone is in a contract of service vs contract for service for your company has important consequences. For instance, you must pay workers in a contract of service CPF, and they are entitled to a whole host of other labour rights. For instance, contracts of service workers must have sick leave, maternity/paternity leave, non-working days, overtime and more. However, workers in a contract for service are not entitled to such rights.

We’ll explain:

• What is a summary of contracts of service vs contracts for service?
• What is a contract of service?
• What is a contract for service?
• What are the 11 legal differences between contracts of service vs contracts for service?
• What’s a legal case demonstrating the difference between contracts of service vs contracts for service?
• Why is it important to differentiate contacts of service from contracts for service?
• How to protect your company from liability for workers under contracts of service?

What is a summary of Contracts of Service vs Contracts for Service?

What is a contract of service?

A contract of service is an agreement where one party agrees to hire another party as an employee. Contracts of service are the standard form of contracts for hiring employees. Contracts of service apply to both full-time and part-time employees.

A contract of service is usually provided in the form of an Employment Agreement. Such an agreement will list out the Key Employment Terms for the employee.

Employers must provide certain entitlements, and are responsible for certain liabilities, for workers under a contract of service. We cover these responsibilities towards the end of our guide, under the section titled “Why is it important to differentiate contacts of service from contracts for service?”.

What is a contract for service?

A contract for service is an agreement between where one party agrees to hire another party as a freelancer/ independent contractor. A freelancer is typically paid to carry out a particular job or project, with a set fee. Examples of freelancers/independent contractors include:

• Individuals providing services like graphic design, house renovation, odd-job labourers, etc.
• Vendors providing services like IT consulting, strategy consulting, printing services, shipping services, etc.
• Vendors providing products like vending machine rentals, industrial machine wholesale, food wholesale, etc.

Sometimes, independent contractors are engaged on a long-term basis via retainer payments. Common examples include external lawyers kept on monthly retainers, or Public Relations firms paid a regular retainer to advise on marketing needs.

Freelancers are not allowed to claim various entitlements that are provided to employees, such as overtime, leave, and compensation for work-related injuries. We cover these differences under the section titled “Why is it important to differentiate contacts of service from contracts for service?”

What are the 11 legal differences between Contracts of Service vs Contracts for Service?

You have to look at the totality of the 11 criteria to decide. There is no single, one-size fits-all criteria. This is the same process that the Courts will apply, if a lawsuit is filed to decide whether a person is under a contract of service (or contract for service). Such lawsuits are typically filed because the person feels they have been mistakenly classified under a contract for service, and therefore been deprived of the various rights that workers under contracts of service enjoy.

Differentiating factor 1: Independent contractor clause

Most freelancer agreements will contain an “independent contractor” clause. This is a clause that clearly marks that person as a freelancer.

Here’s a sample independent contractor clause:

1. The Service Provider is an independent contractor, and not an employee
2. The Service Provider shall have control over the manner and form in which work is to be performed, in the best interests of the Hiring Company
3. The Service Provider will supply their own equipment and manpower and resources to complete the Project”

If such a clause is absent, then the Courts will look at the other 10 factors to decide whether the person is under a contact for service or contract of service. In some rare cases, some employers may try to insert this independent contractor clause into their hiring agreement, but the degree of control they exercise over the person may actually tilt the person towards being an employee. In such scenarios, the Courts will also look at the other 10 factors to decide whether the worker is an employee or freelancer.

Differentiating factor 2: Control

The Courts will examine the level of control that the company exerts over its workers. For employees, the employer will have control over what work is to be done, and how it is to be done. For instance, an IT company can dictate to its employees what software to build, what programming language to use, what lines to code to insert, what functions to perform – the list goes on.

For freelancers, the level of control that the hiring company can exert will vary, depending on the nature of the project. Some freelancer arrangements may involve a high level of control by the hirer. For instance, a company hiring an IT vendor can specify what software it needs to build, what programming language/tech stack to use, what functions to perform, and more. However, other situations may see the hirer having significantly less control over freelancers. For instance, a company hiring a freelance graphic designer to design a corporate logo is unlikely to be able to tell the freelancer exactly how to draw the logo (if it could, then the hirer would just draw the logo themselves!). The hirer may provide generic ideas about the kinds of emotions they want to convey, the kinds of corporate colours that should apply, etc., but it’s unlikely to be able to control the freelance designer’s work with too much force.

Because of the level of variation in control, this is not a hugely important factor in differentiating contracts of service vs contracts for service. This will form merely one part of the overall analysis.

Differentiating factor 3: Importance of work to company

The Courts will consider the level of importance of the work completed by the worker. For instance, does the worker perform menial or peripheral tasks for the company? Business owners frequently outsource non-core functions like HR, accounting, and IT support to vendors or freelancers, via contracts for service. If the function is core to the business, then it usually only makes sense for companies to keep such workers as employees. Companies are unlikely to outsource their competitive advantages.

Differentiating factor 4: Method of payment

Generally, employees are paid a fixed salary each month. This salary may include other additional incentives like bonuses, annual wage supplements (AWS), allowances, overtime pay, etc. Whatever the case may be, the focus is on whether a salary is paid.

Freelancers, on the other hand, are more likely to not be paid a salary. The nature of hiring a freelancer is to avoid such fixed overhead costs. Therefore, freelancers are more likely to be paid via tips, commissions, or general ad-hoc payments. Examples would be a freelance graphic designer, who is paid $100 per icon that they design. This payment is not a regular monthly salary, but an ad-hoc payment done for a single job.

Differentiating factor 5: Restriction on external employment

Employees are almost always contractually bound to work for only one employer. They cannot have outside employment (i.e. moonlighting). If a contract states that there is an obligation to work for only one employer, it is likely that the Courts will find that the person is an employee.

Freelancers do not generally have this restriction, as they can work for multiple companies.

Differentiating factor 6: Working hours

Employees generally have fixed working hours. This can be your standard Monday to Friday, 9AM to 5PM hours. It could be delegated in shifts, or three-days-on-two-days-off schedules.

Freelancers tend to not have fixed working hours. Generally speaking, they have more control over their own schedules. For instance, an outsourced IT company will respond whenever the client contacts them to fix an IT bug or start a new project, but otherwise, the IT vendor won’t be working for the client from 9AM to 5PM every day, unlike an employee would.

In terms of importance in determining whether a contract is of service or for service, the Courts usually will not place a great importance on evaluating working hours. There is a great deal of variation in working hours, so this will just be one aspect of consideration.

Differentiating factor 7: Overtime pay

Only employees have a legal entitlement to overtime pay.

Freelance workers do not have a legal right to overtime pay. If a hiring company does pay freelancers for overtime, that is done purely out of goodwill.

If a worker receives overtime pay from their company regularly, that can be good evidence that an employer-employee relationship (i.e. a contract of service) exists. Otherwise, why would the company bother paying for overtime?

Differentiating factor 8: Annual Leave, Sick Leave, Maternity/Paternity leave

Only employees have a legal entitlement to annual leave, sick leave, and maternity/paternity leave.

Freelance workers do not have a legal right to these types of leave. If a hiring company does provide freelancers with leave, that is also done purely out of goodwill.

If a worker is able to apply for and claim leave from their company (especially if that leave was approved multiple times), that can point strongly to a contract of service, rather than a contract for service. Most hiring companies will not give their freelancers paid leave since it’s an extra expense.

Differentiating factor 9: Right to terminate, dismiss, or suspend

The majority of employment contracts will contain a clause stating that the employer has the right to terminate, dismiss, or suspend the employee. This is a key factor in contracts of service. Most contracts for service will not contain this clause.

Differentiating factor 10: Delegation authority

Generally, employees don’t have the ability to delegate tasks to a third-party. For instance, if a boss of a strategy consulting company tasks their subordinate to complete a consulting project, the subordinate is unlikely to be able to hire a sub-contractor to finish the project for them. Even if the subordinate were able to hire a sub-contractor, it’s likely that it would only be for specific parts of the project that required specialist knowledge which the subordinate doesn’t possess. It’s unlikely that the subordinate would have the authority to outsource all their work without seeking their boss’ approval.

On the other hand, independent contractors tend to have greater ability to delegate their work to a third-party. For instance, let’s take the same example of the corporate strategy consulting company mentioned above. In this case, let’s say the boss of the company was hired as an independent contractor to advise on an M&A deal. In this case, let’s say the boss needs to delegate his work to some external parties, like accountants and financial valuation experts to assist on the project. The boss is likely to be seen as an independent contractor because he has the power to delegate his work to other third-parties.

Differentiating factor 11: Provision of Accommodation, Uniforms, Name Cards, Other Material with Company Logos, Access to Company Events, etc.

Usually, only employees have access to these benefits. Company housing, company uniforms, company name cards with their position stated, etc. It is uncommon that independent contractors will receive such items.

What’s an example of a contact of service vs contract for service lawsuit?

A great example to illustrate the factors above is the 2019 case of Public Prosecutor v Jurong Country Club (JCC). In this case, JCC was facing potential legal penalties for not making CPF contributions to an alleged employee, known as Mr. Yusoff, from 2003 to 2016. Mr. Yusoff was hired by JCC as a fitness instructor for its gym. The Court of Appeal ruled that Jurong Country Club was not liable for CPF contributions to Mr. Yusoff, because Mr. Yusoff was not in fact an employee at all.

The Court of Appeal found that the following factors rendered Mr. Yusoff an independent contractor/freelancer, rather than an employee of JCC:

Factor 1: Control

The club’s level of control over Mr. Yusoff only extended to requiring him to be at the JCC gym daily. It exercised little control over the specific way Mr. Yusoff conducted his training sessions.

Factor 2: Delegation authority

Mr. Yusoff did not have delegation authority, as he was not allowed to find a replacement gym instructor if he could not be present to train members. However, the lone fact that Mr. Yusoff did not have delegation authority does not prove that he was an employee, rather than a freelancer. Since Mr. Yusoff was JCC’s sole gym trainer, it was reasonable for JCC to expect Mr. Yusoff to provide the training services himself. Also, Mr. Yusoff had decades of training experience. A replacement trainer may not have the same depth of skill and fitness knowledge that Mr. Yusoff would have had, providing for a poorer experience for JCC’s gym clients. It was therefore logical that JCC would not want a replacement of potentially inferior quality, and would instead insist on such a highly experienced trainer providing the services himself.

Factor 3: Method of payment

Mr. Yusoff’s compensation was weighted more heavily towards a commission. He also had a monthly retainer.

While a compensation scheme that has a larger commission component is not itself indicative of being a freelancer, it is part of a broader pattern of facts that points towards Mr. Yusoff being on a contract for service.

Factor 4: Work arrangements

Factor 4 proved to be critical in demonstrating that Mr. Yusoff was on a contract for service. Mr. Yusoff was not counted as an employee, and was therefore excluded from JCC’s internal manpower roster for budgeting purposes. Mr. Yusoff was not invited to staff-only events, such as JCC’s “Dinner and “Dance”. This Dinner and Dance was compulsory for all employees, with penalties for those who did not show up.

Furthermore, Mr. Yusoff:

• Did not report to the HR department
• Was not issued an HR manual for study
• Was exempted from employee performance reviews
• Did not have KPIs to meet

This was not the case for employees, who had to comply with the criteria set out above.

Mr. Yusoff was also not provided with an access card that would allow him to enter all areas of JCC. This was unlike employees, whose access cards permitted them to go to every (or almost every) part of JCC. His access card only permitted him access to the gym.

Mr. Yusoff’s JCC identification number was also different compared to all other employees.

Mr. Yusoff was also allowed to conduct training sessions for non-members for his own additional income. This was unlike employees, who were barred from engaging in activities at the club to earn extra income. JCC’s HR manual stated that employees who engaged in such activities were to be fired.

Factor 5: Benefits

Mr. Yusoff did not have Work Injury Compensation Insurance from 2003 onwards. This is because Work Injury Compensation Insurance only applies to employees, and does not cover independent contractors.

Mr. Yusoff was not provided with annual leave, sick leave, and hospitalisation benefits. This is unlike employees, who received these entitlements/benefits.

After evaluating this series of factors, the Court of Appeal ruled that Mr. Yusoff was actually an independent contractor, hired by JCC under a contract for service. This case illustrates are taken into consideration when evaluating whether a worker is under a contract of service, or a contract for service.

What should employers do if there is a legal dispute over Contracts of Service vs Contracts for Service?

Employee has dispute with employer (contract of service dispute)

Most contracts of service (i.e. employment agreements) will usually include a “dispute resolution” clause. This clause will usually specify that disputes must first be settled in mediation or arbitration, before lawsuits can be filed. Alternatively, such clauses may have the employee waive their right to take legal action against their employer, and compel employees to resolve matters strictly in arbitration.

It’s important for business owners draft your contract of service/employment agreement well, to limit the extent of your liability against disgruntled employees.

Freelancer/vendor has dispute with hiring company (contract for service dispute)

Most hiring contracts will include a “dispute resolution” clause also. This clause will state the methods of resolution available if there is a dispute or breach of contract. For instance, the clause may have the freelancer/vendor waive their right to pursue civil litigation, and instead only settle disputes via arbitration.

It is vital that business owners include a dispute resolution clause in their contracts with external vendors. This protects their company in case the freelancer/vendor makes allegations (e.g. breach of contract) and decides to sue you.

Another not-uncommon scenario is when workers who are under a contract for service (i.e. freelancers) argue that they are actually under a contract of service (i.e. employees). This is most commonly done when workers feel they have been deprived of certain benefits that employees are entitled to.

In such scenarios, speak with a lawyer who can advise you on the best course of action. Don’t engage the disgruntled worker in negotiations before you get advice from a lawyer. It’s also best to have a legal professional present during any negotiations you hold with the person in question.

How are Contracts of Service, and Contracts for Service, terminated?

Ending a Contract of Service

An employer can simply rely on their contractual right to the end the contract of service. This will be spelled out in the Employment Agreement. No other reason, other than this right to terminate the contract, needs to be given.

Employees can end their contracts of service by quitting. For employees on time-limited contracts, the Employment Agreement will end upon expiry of the contract.

Ending a Contract for Service

A contract for service may be terminated if the performance of the project or service is disrupted due to unforeseen circumstances, or it becomes impossible to continue on a project that is already in progress.

It is important for the independent contractor or freelancer to negotiate the terms of the contract for service carefully. This is so that the contracting counter-party or client is aware of the alternatives that might be available in the event of an unforeseen or sudden termination of a project or service.

It is also important for the independent contractor or freelancer to ensure that his or her interests are safeguarded in the event that the client chooses to prematurely terminate the freelancer’s services.

For example, the freelancer may negotiate for a clause that ensures that he or she is remunerated for the time and effort that has already been spent working on the project, as well as to prevent the client from using the freelancer’s work and/or ideas, in whole or in part, without adequate compensation.

Why is it important to differentiate Contracts of Service from Contracts for Service?

Business owners must provide for many labour rights for employees, since they under contracts of service. However, businesses do not have to provide these rights for freelancers, since they are under contracts for serivce. Knowing who is an employee and who is a freelancer will help ensure that businesses do not become liable for mistakenly classifying someone as a freelancer, and then incurring serious legal liability because they did not provide these various rights to them.

Rights that apply only to contracts of service (i.e. employees) include:

#1. CPF contributions:

Only employees are entitled to CPF contributions made by their employers. CPF contributions vary by age, and can make up a substantial amount of additional earnings over time. For instance, workers under 55 are entitled to 17% of their salary as CPF contributions, to be made by their employer.

Both part-time and full-time employees are entitled to CPF contributions by their employers. Freelancers are not entitled to CPF contributions by the companies who hire them.

#2. Rights under Employment Act:

Only employees are entitled to the various employment rights granted under the Employment Act. The Employment Act provides many protections for workers. This includes rules on maximum working hours, mandatory overtime pay, mandatory rest days, extra mandatory compensation if for being made to work on rest days or public holidays, and more.

Freelancers are not covered by the Employment Act, and therefore do not have these rights.

#3. Rights under Work Injury Compensation Act (WICA):

Only employees are entitled to the rights granted by the Work Injury Compensation Act. This Act makes it legally compulsory for companies to compensate workers for their work-related injuries/diseases, including Covid-19. Companies must pay for up to $45,000 in medical expenses for treatment of work-related injuries (e.g. fracture after falling at work), or work-related sickness (e.g. lung disease from breathing in sawdust at work).

The Work Injury Compensation Act also makes it compulsory for lump-sum compensation to be paid in case the worker dies or becomes temporarily/permanently disabled due to work. Compensation for work-related death can go up to $225,000 (can be higher in some cases). Compensation for work-related disability can be up to $289,000 (can also be higher in some cases).

Freelancers are not covered by the Work Injury Compensation Act, and therefore cannot claim compensation if they happen to suffer work-related injuries/sickness.

#4. Employer’s vicarious liability for employee’s mistakes/misdeeds:

Vicarious liability only applies to actions committed by employees, not independent contractors.

Vicarious liability means being legally liable for the actions of someone else. In the case of employers, this means that companies can be held legally liable (i.e. sued) for mistakes or misdeeds committed by their employees. For instance, a driver employed by a shipping company may get into a road accident, damaging someone else’s car and hurting them in the process. The driver of the damaged car can sue the company, holding them vicariously liable for the damage and injuries he’s suffered.

Vicarious liability can also apply to cases where employees use their company positions to cheat other people. For instance, a worker may send fake invoices to defraud customers of the company. Defrauded customers can then sue the company, claiming they are vicariously liable.

How to protect your company from liability for workers under contracts of service?

For employees (i.e. those under a contract of service), you should carry Work Injury Compensation Insurance to protect them. Employers in Singapore are legally liable for any work-related injury/disease contracted by employees, including Covid-19! Employers must pay the following costs:

• Employer must pay up to $45,000 medical expenses for employee’s work-related injury/disease
• Employer must pay up to $225,000 in case of employee’s work-related death
• Employer must pay up to $289,000 in case of employee’s work-related temporary/permanent disability

Work Injury Compensation Insurance will cover all the costs above. Get Work Injury Compensation Insurance from $5/month now!

You should also strongly consider the following protections for your business:

Get Public Liability Insurance from $9/month

Get Commercial Property Insurance from $12/month

Get Professional Indemnity Insurance from $42/month

Get Directors & Officers Liability Insurance from $42/month

Sometimes, an employee just isn’t right for the job. They might not have the necessary skills to do the jo properly. They might lose motivation, and their work quality might suffer. Other times, companies might not be in good financial shape, and be forced to cut manpower costs. There’s a million different reasons why companies may have to let their workers go.

Whatever the specific reason for ending an employee’s contract, it’s important to know how to do it legally. In Singapore, there are 4 legal reasons that employers can use to end an employment contract. If you don’t want to get sued by your employee for illegal dismissal, make sure that you know what these legal reasons for terminating employees are.

In this guide, we’ll explain:

• Summary of legal vs illegal reasons for termination
• What are the 4 legal reasons for terminating employees?
• What are some important guidelines to follow when terminating employees?
• What method of termination carries the least legal risk?
• What are the 6 steps to terminating employees smoothly?
• How should I protect myself from employee termination lawsuits?

Summary of legal vs illegal reasons for termination

If you’d like to know more about the illegal reasons for dismissing employees, read our excellent guide on Unfair and Illegal Dismissals in Singapore.

What are the 4 legal reasons for terminating employees in Singapore?

The dismissal of employees is governed by the Employment Act. This is a piece of legislation first passed in 1968, and was most recently amended in 2019. The Employment Act stipulates 4 legal reasons for terminating employees from your company.

These 4 permissible reasons are:

#1. Right to dismiss under employment contract

Singapore is an at-will employment jurisdiction. This means that the employer-employee relationship can end at any time, for any reason (as long as it’s not a reason that’s considered illegal). Either the employer or employee has the power to terminate the relationship.

This means that employers can terminate employees by simply relying on their right to end the employment contract. No other reasons (e.g. “you’re not performing well”, “management doesn’t think you can make it”, etc.) have to be explicitly cited.

In such dismissals, notice must be given. The notice period should follow the period stated in the employment contract (e.g. 1 month notice, 2 months’ notice, etc.).

#2. Misconduct

Misconduct refers to behaviour that does not fulfill the terms of the employment contract.

Examples of misconduct include:

• Lying or displaying unethical behaviour
• Stealing
• Absenteeism
• Taking MCs by feigning illness
• Fighting
• Aggressive/threatening behaviour
• Insubordination
• Negatively affecting the company’s reputation
• Disruptive behaviour
• Sexual harassment

Misconduct is the only reason that does not require a notice before dismissal. However, a due inquiry must be conducted by your employer, on the alleged act of misconduct, prior to making a decision on dismissal.

#3. Performance

Employers can dismiss employees for performance-related reasons. For instance, if your employee is not meeting KPIs, is lazy, is not producing quality work, or is just generally not capable of meeting the demands of the job, you can dismiss them.

However, if you dismiss an employee for poor performance, you must provide evidence of their sub-par performance. This means that if you are preparing to dismiss someone for not meeting the demands of the job, start collecting evidence now.

Examples of evidence to prove lacklustre performance include:

• Missed goals, missed sales targets, missed KPIs, etc.
• Negative performance reviews
• Feedback from superiors about poor performance
• Cuts in bonuses or other performance-related pay
• Lack of promotions compared to other employees

Have this evidence clearly documented in writing, because you will have to provide this evidence when you terminate the employee.

If the dismissed employee files an unfair dismissal claim against you later on, you must show this evidence to prove that the dismissal was fair. If you have properly document evidence of the employee’s poor performance, then your dismissal will be considered permissible and you won’t run into thorny legal issues.

#4. Retrenchment

If employers need to cut costs due to financial difficulties, they can perform retrenchments.

There are certain legal procedures that you must follow if you perform a retrenchment:

1. Notify MOM, if you have at least 10 workers, and you’re retrenching 5 or more workers:

Employers who meet the following criteria must notify MOM of retrenchments that they are undertaking/have undertaken:

• Your company has at least 10 employees
• You have retrenched 5 or more employees within a 6-month period

2. Provide your employees with notice

You must provide notice to your retrenched employees, in accordance with their employment contracts.

FAQs on Conducting Retrenchments:

Are retrenchment benefits compulsory?

No. Unless the employment contract you’ve issued to the employee contains a retrenchment benefit clause, there is no legal requirement to pay retrenchment benefits. Employers are encouraged to pay retrenchment benefits out of fairness and recognition for their employees’ contributions. However, this is not compulsory.

Retrenchment benefits are governed by Section 45 of the Employment Act. This section states:

“No employee who has been in continuous service with an employer for less than 2 years shall be entitled to any retrenchment benefit on his dismissal on the ground of redundancy or by reason of any reorganisation of the employer’s profession, business, trade or work.”

As you can see, it does not mandate employers to make payment of retrenchment benefits.

How much retrenchment benefit to pay:

If retrenchment benefit is stated in the employment contract:

If you’ve stated in the contract how much you will pay during a retrenchment exercise, then you must pay that amount. For instance, if the employment contract states that retrenched workers will be entitled to 1 months’ retrenchment benefit, and the retrenched worker’s salary is $4,000/month, then you owe the retrenched worker that $4,000 sum.

If retrenchment benefit is not stated in the employment contract:

If you choose to pay the benefit out of goodwill, then the market norms are between 2 weeks to 1 months’ salary, per year of service.

Are retrenchment benefits subject to CPF contributions?

No. Both the employer and employee do not have to make CPF contributions for retrenchment benefits.

The TADM has release guidelines on performing retrenchments. These guidelines are not legally binding, but employers should take heed of them:

What are important guidelines to follow when terminating employees?

If you want to avoid legal trouble when terminating employees, make sure you follow the guidelines below.

#1. Terminating foreign employees

Foreign workers on Employment Pass/S-Pass:

Employers must cancel the Employment Pass/S-Pass within seven days of firing the workers. The Employment Pass/S-Pass holder will receive a 30-day short term visit pass, after which they must leave Singapore. If the Employment Pass/S-Pass holder has other passes attached to it, e.g. a Dependent’s Pass, all such other passes will also be cancelled.

The employer must notify IRAS of the termination. The employer must withhold all payments due (e.g salary, bonus) to the foreign employee from the day the employee is notified of their termination. This is to perform the tax clearance proceducre. IRAS will make sure that all taxes have been paid by the foreign employee. Once IRAS completes their tax clearance procedure, they will issue a tax clearance certificate. The employer can then release the payments due to the employee.

#2. Provide the proper notice period

In most cases, the employment contract with the worker will state the required notice period. Most notice periods are usually 1 month, although some contracts will stipulate notice periods of 2 or 3 months.

The employee is still entitled to their salary during the notice period. This includes CPF contributions. Just treat notice period pay as regular pay.

When the decision to terminate the employee has been made, give notice to the employee that their employment is terminated in writing. Note that the notice period includes the day on which the notice is served onto the employee.

If the employment contract doesn’t state the notice period, then use the following notice periods:

#2. If you don’t serve the employee notice, you have to pay salary in-lieu

Sometimes, employers don’t want the terminated worker to serve their notice period. For instance, financial firms or technology companies may deal with highly sensitive information, and terminated workers must immediately be barred from receiving such information.

If you don’t allow the employee to serve their notice period, then you must pay them salary in-lieu. This is also commonly known as letting them take “gardening leave”. You will have to pay the salary that’s equal to the notice period. For instance, if a terminated employee earns $5,000/month, and their notice period is 1 month, you’ll have to pay $5,000 to them as salary in-lieu.

CPF contributions do not have to be made for salary in-lieu of notice. This means that if you don’t require the terminated employee to stick around to get work done, it is more cost-effective to pay them salary in-lieu, rather than have them serve the notice period.

#3. Offsetting notice period with annual leave

Employees can use their annual paid leave to offset (i.e. shorten) the notice period served.

#4. Offset notice period vs being on annual leave during notice

There is a difference between offsetting the notice period versus simply being on annual leave during the notice period.

Offsetting the notice period means to shorten the notice period. For instance, if a worker’s notice period is 1 month, and the worker has 15 days of annual leave, they can shorten the notice period by 15 days. The employer will only have to pay for 15 days’ of salary, since that is the notice period served. Offsetting is often used if the worker has gotten another job, and wants to start employment at the new company ASAP.

If the worker does not offset the notice period, they can simply choose to take annual leave. The employer must pay the salary for the full notice period. For instance, if the notice period is 1 month, a worker can choose to take 15 days of annual leave during the notice period. The employer will have to pay for 1 months’ salary.

For terminated workers who leave with unused annual leave, they can encash the unused leave. The employer must pay the terminated worker for each day of unused annual leave.

#6. Sick leave during notice period

Sick leave cannot be used to offset/shorten notice periods. However, sick leave that’s taken will be counted towards an employee’s notice period.

#7. Maternity Leave and termination

An employer cannot terminate an employee who is on maternity leave. This is illegal. Read more about this in our guide on unfair dismissals, or our maternity leave guide for employers.

Employees cannot use their maternity leave to offset their notice period. However, employees can still apply for maternity leave while they’re serving their notice period. Each day that the employee is on maternity leave will count as part of their notice period.

All maternity leave that is not consumed before the end of the notice period will be forfeited. Outstanding maternity leave cannot be transferred to the new company.

Example: Jane is a new mother who’s unfortunately been retrenched. Jane’ notice period is 1 month. Jane still has 2 months of maternity leave remaining. Jane can apply for 1 months’ maternity leave. This way, she can stay home to take care of her child, while still serving her notice period. The remaining 1 month of her maternity leave will be forfeited once she leaves her current company.

An employer must pay maternity benefits that his/her employee would otherwise be eligible for if a notice of dismissal is given without sufficient cause within 6 months of an employee’s confinement if the employee is retrenched within 3 months of her confinement. This payment is in addition to any retrenchment benefit which the employee is entitled to.

#8. Childcare/Infant care leave and notice period

Childcare leave to offset/shorten the notice period.

#9. Employee cannot start work with another company until the end of the notice period

When an employee is serving their notice period, the employment contract is still live. The employee cannot start working for their new company until the date of termination. The employee must continue to fulfill their responsibilities until the notice period ends.

What method of termination carries the least legal risk in Singapore?

Since Singapore is an at-will employment jurisdiction, you have a right to terminate the employment contract simply because you want to. So, if you need to dismiss an employee, an employer can simply say: “I’m exercising my right to terminate your employment contract.” That’s it. No long stories about not meeting expectations, or not doing this or that. End it there.

Simply exercising your right to end the employment contract is the legally safest method to terminate an employee. You do not have provide any other reasons. Remember, if you cite poor performance as a reason, you must provide evidence. If you don’t have proof of poor performance, your employee can sue you for illegal dismissal.

When you rely on your right to terminate the employment contract, and provide the proper notice period, it becomes much more difficult to build a legal case against you for unfair dismissal.

Some legal risks remain, which employers should be wary of:

• Ensure that you are not terminating the employee for illegal reasons, such as discrimination or deprivation of entitlements (e.g. maternity leave). If you are in fact dismissing a worker for such reasons, and there is strong evidence to prove this, you can be sued. In our guide on whether you can terminate employees during medical leave, we explain how it is not difficult to sue employers for firing workers to deprive them of medical leave entitlements.
• If you are conducting a retrenchment, state this openly. Do not disguise a retrenchment as individual terminations, as there is little benefit in doing so. It’s also illegal, and MOM will take enforcement action against errant employers.

How to terminate employees (relatively) smoothly?

Letting someone go is tough. Here’s how to get your dismissal right. Remember that it’s not personal – it’s just business.

Step 1: Inform HR

Let HR know that you need to terminate an employee. HR will be most familiar with the legal procedures for terminating someone. They’ll make the necessary arrangements for terminating workers. For instance, they’ll inform IT to cut the employee’s access to digital materials.

Step 2: Plan transitions

Have discussions with the relevant stakeholders if you want to terminate an employee. It’s good to get team buy-in if a worker needs to go, so that other stakeholders (e.g. team leaders) can make the necessary arrangements to find replacements.

Get started on finding a replacement once the decision has been made internally to terminate the employee. You don’t have to wait till after they’re gone to look for new candidates.

Step 3: Do it at the end of the work day

If you’re in the office, do it when most other employees have left. This minimises the amount of embarrassment for the employee.

Step 4: Get straight to the point

“Tim, it’s been a pleasure working with you. I need to let you know that you’ve been let go.”

Different managers will handle employee terminations differently. Some managers like to engage in small talk first to sooth nerves (usually, their own!) before dropping the inevitable bombshell. That isn’t technically wrong – everyone has their own style of handling delicate issues. However, there isn’t really a lot of meaning behind engaging someone in friendly banter, if at the end of it you’re going to fire them. Small talk makes them think that this is just going to be another nice “chat with the boss”, which heightens the disappointment later on. You’re going to make a decision that will significantly alter the course of their careers (at least temporarily). The sooner you let them know, the quicker you can both move on with your professional lives.

When informing an employee that they’re being let go, remember that you don’t need to provide explanations. If you cite poor performance, remember that you are legally required to provide evidence. If you cite misconduct, remember that you are legally required to have held an inquiry before the termination. If you don’t have the required evidence for either of these reasons, simply say that you’re letting them go and leave it at that.

Step 5: Cover specifically what happens next

Lay out specifically the employee’s notice period, their pay, consumption of any remaining company benefits, unused annual leave, employment references, explanations to clients and co-workers, handovers of projects, etc.

Step 6: Thank the employee and wrap up

Keep it cordial. Terminations are not personal, but professional. Let the employee know that their contributions are appreciated, and wish them the best for their next job.

How should I protect myself from employee lawsuits?

Workers who are terminated can respond in highly unpredictable ways. Disgruntled employees can launch employment-related lawsuits against you. Whether the case has merits or not is a separate matter – once the lawsuit hits your door, you’re going to have to spend money defending it!

A particularly damaging way for lawsuits to be launched is to personally target the company’s directors and officers. Directors include board directors, and officers include people inthe company with managerial authority (e.g. C-Suite down to junior HR managers who handle employees’ termination matters). When directors/officers are targeted personally in lawsuits, the limitation of liability offered by a “Private Limited” entity won’t protect them.

That’s why having a good Directors and Officers Liability Insurance policy is critical. This type of insurance protects you from many types of lawsuits, such as:

• Unfair dismissal lawsuits
• Employee harassment lawsuits
• Oppression and other shareholder lawsuits
• Negligence lawsuits
• Defamation lawsuits
• …and more

Directors and Officers Liability Insurance pays for your lawyer’s fees (which can be hundreds of thousands), plus court damages/settlements. Having a Directors & Officers Liability policy could save you huge sums of money – millions, even.

Get Directors & Officers Liability Insurance to protect you from employee lawsuits. From just $42/month!

In this guide, we’ll walk you through the 5 key types of dismissals that are unfair, illegal, and wrongful in Singapore. Letting employees go is never easy. However, there are certain types of termination that are illegal in Singapore. For instance, firing an employee to stop them from taking maternity leave is illegal. If an employee files a report with MOM, the employer can be brought to Court and charged with a criminal offence.

We’ll explain:

• Summary of legal vs illegal dismissals
• What constitutes a legal dismissal?
• What constitutes an unfair/illegal/wrongful dismissal?
• What are the consequences for unfair/illegal/wrongful dismissal?
• What is the least risky way to dismiss employees?
• What is the time limit for claims for unfair dismissals?
• How to protect your company from employment lawsuits?

Summary of legal vs illegal dismissals:

What constitutes a legal dismissal?

In Singapore, a dismissal is valid for the following reasons:

What constitutes an unfair/illegal/wrongful dismissal?

There are 5 main dismissal reasons that are against the law in Singapore:

• Discrimination on age, disability, gender, ethnicity, family commitments, and more
• Deprivation of benefits or entitlements
• Dismissal for poor performance or misconduct without evidence
• Forced resignation
• Punishing employee for exercising employment rights

If you fire an employee for any of the above reasons, they have legal grounds to sue you. Government bodies like MOM may also take disciplinary action against your company.

Unfair Dismissal 1: Discrimination on age, disability, gender, ethnicity, family commitments, and more

Businesses are prohibited from terminating employee for the following reasons:

• Age
• Disability
• Gender
• Ethnicity
• Religion
• Family commitments
• Marital status
• Country of origin
• Pregnancy

Most countries don’t allow employers to terminate employees for the reasons above, and for good reason. It is not good for society for businesses to terminate employees for having a disability, or needing to take care of their families.

Example: Marie is a 55-year old accountant working for an accounting & auditing firm. One day, Marie is told she’s being let go. When Marie probes the reason for her dismissal, the HR director tells her it’s because she’s “too old to do the job”. The HR director explains that, at 55, she’s too slow to get tasks done, and the company could hire younger employees who could work faster.

In such a situation, Marie can file a wrongful dismissal claim against her employer with the TADM (Tripartite Alliance for Dispute Management). If the case is not resolved at the TADM, it will be referred to the Employment Claims Tribunal, to be heard by a judge. The judge can then award Marie damages for discriminatory termination.

Unfair Dismissal 2: Depriving an employee of benefits or entitlements

Businesses cannot terminate an employee to stop them from claiming company benefits, or legal entitlements.

Examples of legal entitlements include:

• Maternity leave
• Paternity leave
• Paid sick leave

It’s important to note that entitlements are legal rights. Employers cannot deny these rights to their employees. Preventing employees from accessing their entitlements is an offence. Employers who fire employees to deprive them of benefits can be jailed and/or fined.

Often, companies who fire employees to deprive them of entitlements do so to save money. For instance, maternity leave can be up to 16 weeks, and some unethical employers may want to save on paying for 4 months of salary for an employee who won’t be working. This is why some employees rightfully complain about being terminated shortly after informing their company that they are pregnant. Other employers may want to terminate employees who are hospitalised, so they won’t have to pay for hospitalisation leave for the injured/sick worker.

Example 1:

Cheryl is pregnant, and is just a few weeks away from her expected birth. She applies for 16 weeks of maternity leave, which she’s entitled to by law. Cheryl’s employer fires her within a few days of her maternity leave. Cheryl can file an unfair dismissal claim with the TADM. Cheryl may also file a civil lawsuit against her former employer.

Example:

Thomas was diagnosed with a kidney ailment and had to be hospitalised for 2 months. Singapore law provides for a minimum of 2 months (60 days) of paid hospitalisation leave, if the employee has worked at the company for at least 6 months. Shortly after Thomas informs his employer that’s been hospitalised, his employer fires him so they won’t have to pay Thomas’ salary while he’s in hospital. Thomas can file an unfair dismissal claim with TADM. Thomas can also file a civil lawsuit against his former employer.

Unfair Dismissal 3: Forced resignation

Employers cannot force employees to resign. This is usually done when the employer makes life so difficult for the employee that the worker feels they have no choice but to quit.

Example:

You run a wholesaling business. You decide you want to terminate one of your senior employees, named John. However, John has a 2-month notice period in his employment contract. You know that when you terminate John, you have to pay him 2 months’ worth of salary. You also know that John is unlikely to be productive once you tell him he’s being let go. In order to save on paying John his notice period pay, you decide to make life exceptionally difficult for him. You suddenly demote John by making him report to a junior employee. You task John with impossible deadlines, and overload him with work. Soon, John gets the message and quits.

John can file a complaint with the TADM, or sue you in court for forcing him into an involuntary resignation. John can argue that you placed him under immense distress, and had no choice but to quit. As a result, John was deprived of his entitlement to 2 months’ notice pay (remember: deprivation of entitlements is illegal!). John has a legal case against you for unfair dismissal. If you’re found guilty, you will have to pay John compensation, and you may even face jail time or fines.

Unfair Dismissal 4: Dismissal for poor performance or misconduct without evidence

Employers must remember that if you dismiss a worker for i) poor performance or ii) misconduct, you must provide evidence to support the dismissal. If you don’t provide any evidence, it is considered an illegal termination.

Dismissal for poor performance:  

If an employee is dismissed for not performing at work (e.g. missing KPIs, bad quality of work done, etc.), you have to provide evidence. If you’re intending to terminate an employee because they’re not performing, make sure you start collecting evidence ASAP. You’ll need to show this evidence when you terminate the employee. Also, if you get sued later on for this, you’ll need to rely on this evidence to defend your company.

Dismissal for misconduct:

You have to hold an official inquiry if you accuse an employee of misconduct. The employee must be given the opportunity to defend themselves. Only after holding an inquiry can you dismiss an employee for misconduct.

Unfair Dismissal 5: Punishing employee for exercising employment right

You cannot terminate an employee to punish them for exercising their employment rights.

Here’s a list of some key employment rights:

• Right to request mediation if employer doesn’t pay salary
• Right to overtime pay if work hours exceed hours stated in employment contract (only for non-managers/executives, or manual workers earning under $4,500/month, or office-based workers earning $2,600/month)
• Right to report suspicious activities within the company to relevant authorities (e.g. police)
• Right to have salary paid within 7 days from end of salary period (14 days for overtime pay)
• Right to access legal entitlements for paid sick leave, paid maternity/paternity leave
• Right to have an inquiry held, and to defend oneself, before being dismissed for alleged misconduct

Example:

Tim witnesses a senior executive in his company physically abusing workers. Assault is a criminal offence. Tim gathers evidence of the senior executive’s criminal acts, and reports the executive’s behaviour to HR, and also files a police report. Shortly after Tim reports the executive’s behaviour, he is fired. Tim can lodge an unfair dismissal claim against his former employer. Both Tim and the victims of the abuse can file lawsuits against their employer, for unfair dismissal and assault, respectively.

What are the consequences for unfair/illegal/wrongful dismissal?

When an employee files a claim against an employer with the TADM, the TADM will mediate the issue between the employee and employer.

The TADM and ECT can award the following:

• Award for loss of income from unfair dismissal: Up to 3 months of employee’s salary (calculated using gross rate of pay, which is basic pay + overtime + bonuses)
• Award for harm caused to the unfairly dismissed employee: Up to 3 months of employee’s salary (calculated using gross rate of pay, which is basic pay + overtime + bonuses)

The final award can be adjusted (increased or decreased) by up to 50%. The judge will consider if there have been aggravating factors. Examples include harsh employment conditions like abusive superiors, false statements made by the employer to justify the dismissal, or particularly egregious acts by the employer. The judge can also consider mitigating factors, like if the employee was dishonest or if there was poor work performance.

What is the time limit for claims for unfair dismissals?

It depends on who the employee wishes to file a claim with.

Filing an unfair dismissal claim with TADM or MOM:

The time limit to file an unfair dismissal claim is 1 month from the last day of employment. It’s a short timeline. Employees who feel they’ve been unfairly dismissed must do so quickly, if they want to lodge a complaint with TADM or MOM.

Women who face unfair dismissal due to pregnancy-related reasons have a longer window. They can file complaints with TADM or MOM within 2 months from their child’s birth.

Filing an unfair dismissal claim with the Courts (e.g. Magistrate’s Court):

The time limit is 6 years from the last day of employment.

Given the high level of awareness around employment rights, it’s not uncommon for workers to file complaints if they feel they’ve been unfairly dismissed. Given the high level of emotion associated with being fired, unfairly dismissed workers can gather evidence with great energy within 1 month for filing a complaint with MOM.

Also, there is a long deadline of 6 years for suing employers in civil court. This means that employers have to carry 6 years of liability for employees who’ve been dismissed. Even workers who were fairly dismissed, but feel they were unfairly terminated, can bring lawsuits against their employer. The

How to protect your company from employment lawsuits?

Employers can face significant liability from terminating their workers. If not done properly, you can face serious legal issues. Since employees have up to 6 years to sue you in court, you will carry potentially significant liability for a long time.

If employees feel they’ve been unfairly terminated, they can launch lawsuits against both the company, and against its directors and officers. Directors include board directors, and officers are anyone in the company with managerial authority (e.g. C-Suite down to junior HR managers who process the employee’s termination). Directors and officers can be sued personally, which means that the limitation of liability offered by a “Pte Ltd” entity won’t apply.

That’s why Directors and Officers Liability Insurance is critical. It covers a broad range of lawsuits, like:

• Unfair dismissal lawsuits
• Employee harassment lawsuits
• Oppression and other shareholder lawsuits
• Negligence lawsuits
• Defamation lawsuits
• …and more

Directors and Officers Liability Insurance pays for your lawyer’s fees (which can easily cost you hundreds of thousands of dollars), plus court damages/settlements. If you face a lawsuit from a disgruntled employee, having a Directors & Officers Liability policy could save you huge sums of money – millions, even.

Get Directors & Officers Liability Insurance to protect you from employee lawsuits. From just $42/month!