Under Singapore law, employers are required to offer employees a minimum number of paid sick leave days. Now, if one of your employees catches the flu and take a couple days off, that’s nothing to worry about. But what if you have an employee who’s come down with a significant illness, and they have to be hospitalised for several months? In such a situation, a temptation may come over you to let them go so that you can save on the cost of paying their salary. However, is it actually legal to terminate an employee on medical leave in Singapore? Furthermore, even if such terminations were legal, how should businesses approach the ethical quandary of whether to retain or terminate employees who are ill?
To address these questions, this article will examine a few major points:
- An overview of employment law in Singapore
- Minimum amounts of sick leave employers have to provide
- How the purpose and timing of termination affects the legality of letting someone go
- How businesses should treat sick employees
Employment law in Singapore
Singapore is an “at-will” employment jurisdiction. This means that:
- Employers can terminate employees for any reason, except for some specific reasons which constitute illegal/wrongful dismissal
- Employers can terminate employees at any time, as long as notice is served
- The above is also true for employees. They can quit at any time for any reason, as long as notice is served
Most employment contracts will have a notice period. Notice periods, depending on the job, are usually around 30 days. If a notice period isn’t stated in the employment contract, MOM has defined legally required notice periods that you will have to adhere to. As long as employees have been served notice, employers can generally terminate them without repercussion. However, if the employee about to be terminated is currently on sick leave, then the question of legality becomes more complex. In such scenarios, there are some important factors to consider which will be addressed later in this article.
Minimum amounts of sick leave employers have to provide
Employers are legally required to provide employees with a minimum number of days of sick leave. This is an entitlement that all employees are legally allowed to claim.
You must provide your employees with paid sick leave, as long as they meet all 4 of the following criteria:
- Your employee is covered by the Employment Act (basically anyone who is NOT a seafarer, civil servant, or domestic worker), and
- Your employee has worked for you for at least 3 months, and
- Your employee has informed you they are sick and can’t work within 48 hours of their absence from work
- Your employee must be certified unfit for work by a registered doctor (i.e. show you a valid MC)
Category 1: Employee who has worked less than 6 months for you
|Number of months worked||Paid outpatient sick leave||Paid inpatient (hospitalisation) sick leave|
|6 and more||14||60|
Category 2: Employee who has worked 6 months and more for you
For each employee who’s worked 6 months and more, you must provide a minimum of:
- 14 days of outpatient sick leave
- 60 days of inpatient (hospitalisation) sick leave
Purpose and timing of termination
Because Singapore is an at-will employment jurisdiction, you can technically terminate someone while they’re on medical leave. However, there are two critical factors that will influence the legality of such an act:
- Purpose of termination
- Timing of termination
Purpose of Termination: Deprivation of Benefits/Entitlements:
It is illegal to terminate an employee to deprive them of benefits/entitlements.
The Tripartite Guidelines on Wrongful Dismissal have clarified that it is wrongful to fire someone to prevent them from claiming entitlements. Now, recall that paid sick leave is a legal entitlement. If you terminate someone on medical leave to prevent them from claiming their sick leave pay (which would save you money), that is illegal. This would constitute a wrongful dismissal, and MOM can investigate you and take action against your company.
Now, it’s true that employers don’t have to provide a reason when they terminate an employee. However, if the fired employee files a wrongful dismissal complaint and MOM investigates the employer, the company is probably going to have a difficult time presenting a convincing argument for why they terminated the employee.
Unless you have evidence that you terminated the employee because of underperformance, insubordination, or other reasons not related to their illness, you’re probably going to have a very difficult time convincing investigators that you fired them for legitimate reasons.
Let’s take a look at these 2 scenarios to better illustrate what may or may not constitute wrongful termination of an employee on sick leave.
|Scenario 1||Scenario 2||Notes|
|Length of service at current company||1 year||1 year||The employee has served at least 6 months, so they are entitled to the full amount of paid sick leave defined in the law.|
|Amount of paid sick leave||Outpatient: 14 days
Hospitalisation: 60 days
|Outpatient: 14 days
Hospitalisation: 60 days
|This is the minimum legally required amount for employees who’ve worked for at least 6 months with you.|
|Duration that employee was hospitalised||4 months||4 months||–|
|Time that employee was terminated||7 days into hospitalisation||90 days into hospitalisation||–|
|Potential case for wrongful dismissal||Yes||Unlikely||–|
In Scenario 1, the case for a wrongful dismissal is stronger. This is because the employee was terminated before they could claim their full sick leave entitlement of 60 days. In the event of a wrongful dismissal complaint, the employer would have to prove that they fired the worker because of a legitimate reason, and not because they wanted to save on sick leave wage costs.
In Scenario 2, the employee was terminated only after they had claimed their full sick leave entitlements. The employer has thus fulfilled their legal obligations to the employee. Because Singapore is an at-will employment jurisdiction, the employer doesn’t need to provide any reason for the termination. There is likely to not be grounds for wrongful dismissal.
This is why it’s critical to understand the purpose and timing of termination if you plan on letting someone go while they’re on medical leave.
Termination while on paid medical leave, before medical leave entitlement has been fully used up
If the worker has not claimed their full medical leave entitlements, you need to have evidence to show that the dismissal had nothing to do with the sick leave. Some examples might include:
- Records of underperformance
- Records of poor attitude or insubordination
- Records of feedback from colleagues
- And other tangible evidence that could reasonably substantiate that the termination wasn’t due to you wanting to save on sick leave payments
Some businesses will offer their employees more than 60 days of paid hospitalisation leave (e.g. 90 days of hospital leave). In such scenarios, you must honour what was agreed upon in the employment contract you signed with the worker. If you don’t, and fire the employee before they can claim their sick leave entitlements, you can be held responsible for wrongful dismissal.
Termination while on unpaid medical leave, after medical leave entitlement has been fully used up
In such a scenario, you are allowed to terminate an employee. However, it’s best to first consider the compassionate aspects of such an action before terminating the position.
How should businesses treat employees on medical leave
It’s important for employers to treat sick employees with compassion and understanding. If a termination really has to be carried out, it’s key to allow the worker to claim their full medical leave entitlements. If you terminate someone halfway through their sick leave, you need to have hard evidence that the termination was not due to you wanting to cut short the employee’s medical leave entitlements. You’ll need to be able to show that the termination was due to real factors like underperformance, poor attitude, or other issues not related to their illness. If you can’t show this, you could find yourself at the tail end of a wrongful dismissal suit.
It’s also worthwhile to consider the reputational effects of terminating someone on medical leave.
Would their dismissal affect your company’s reputation? If a sick employee makes a social media post about their termination, and their post goes viral, employers could permanently harm their reputation that they’ve worked so hard to build up all these years. This impact becomes increasingly acute for larger companies that have a prominent public presence. An employee who’s sick and gets dismissed could really strike a raw nerve with many other people who might have been dismissed, retrenched, or otherwise have their income affected in some way. Websites like Glassdoor have dramatically increased the transparency for potential new employees. You can’t delete or edit Glassdoor reviews about your company, so any reputational stain you might cause is going to stay with you for a long time. You may want to consider balancing the cost of retaining a sick employee (as a measure of corporate goodwill for their service) against the potentially massive PR fallout you may incur with terminating someone who’s still on sick leave.
Protecting your employees and your company from medical expenses
Work Injury Compensation Insurance: From $5/month – covers medical expenses due to work-related injuries, and pays for lost wages while on medical leave.
Employee Health Benefits (Company Health Insurance): From $16/month – covers medical expenses for both work and non-work injuries/sickness. Pays for hospital bills, surgery, medication, and more. Can be configured to include outpatient visits to GP clinics/specialist clinics/dentists/opticians. Coverage can be configured for Singapore-only treatment or global treatment.