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:
| Legal dismissal | Illegal dismissal |
| Right to dismiss under employment contract | Dismissal based on discriminatory grounds (e.g. age, disability, gender, ethnicity, etc.) |
| Misconduct
E.g. stealing, fighting in workplace | Dismissal for misconduct without holding inquiry |
| Performance
e.g. missing KPIs, lack of skills, poor attitude, etc. | Dismissal for performance without evidence of poor performance |
| Retrenchment | Using the excuse of retrenchment to dismiss employee for illegal reasons |
| – | Forced resignation |
| – | Dismissal to punish employee for exercising employment rights |
| – | Dismissal to deprive employee from claiming entitlements |
What constitutes a legal dismissal?
In Singapore, a dismissal is valid for the following reasons:
| Dismissal reason | Proof required? | Notice required? |
| Right to dismiss under employment contract | No | Yes.
Must provide employee with notice, in accordance with the employment contract |
| Misconduct
E.g. stealing, fighting in workplace | Employer must show proof of employee misconduct | No, as long as an official inquiry is held |
| Poor performance
e.g. missing KPIs, lack of skills, poor attitude, etc. | Employer must show proof of poor performance | Yes.
Must provide employee with notice, in accordance with the employment contract |
| Retrenchment | No | Yes.
Must provide employee with notice, in accordance with the employment contract |
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.
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