Seminar 8

Termination of the Employment

Contract

Any contract may come to an end by 1
or more of 4 ways:
(1) Performance
(2) Agreement
(3) Repudiatory/Fundamental Breach
(4) Frustration

(1) Performance
Any contract may come to an end by
performance.
Example: How can your contract with
NUS come to an end by
performance?
(2) Agreement
A contract may come to an end by agreement (eg: a 2 year
contract may be terminated half-way through by agreement)
without a need for a valid reason.
Since there is agreement, the party initiating the termination
would not incur liability for early termination.
The agreement may arise subsequently.
Alternatively, the agreement may come from the original
contract itself:
- Express provision
- Implied provision (note: in some contracts this implied right
will only apply to one party, in some to both and in some to
neither).
Example: can you or NUS terminate a 4-year contract to study
at NUS without reason and without liability after you have
studied for 1 year?

(3) Repudiatory Breach
A contract may also come to end by a
repudiatory/fundamental breach.
If one party commits a repudiatory/fundamental
breach, the innocent party would have a valid reason
to terminate the contract immediately without
notice (if he wants to) and sue for losses (if any).
Example: what could be a repudiatory/fundamental
breach on your part which would allow NUS to
terminate the contract on the spot?
Frustration
A contract may also come to an end by frustration.
Frustration refers to something happening after the making of
the contract, beyond the control of the parties, which makes
further performance:
- impossible or
- radically different from what was originally envisaged.
If frustration is established, contract automatically comes to
an end and there is no need to give notice.
In such a situation there would be a valid reason for the
termination and the party not providing the service/good
would not incur liability because something happened which
was beyond his control.
Example: How can your contract with NUS come to an end by
frustration?


Performance
Like all contracts, an employment contract too
may come to an end by performance.
Agreement - Notice
For employees not falling under the Employment
Act:
There could be an express clause allowing
termination by notice.
If not there is still an implied right for either party to
terminate the contract by reasonable notice unless
the contract makes it clear that it cannot be
terminated earlier (eg: a genuine fixed term
contract).
In relation to implied right length of notice
depends on many factors such as:
Subject to what is stated in the contract, notice can
be given orally or in writing.

Agreement - Notice
For employees falling under the Employment Act:
Section 10 of EA lays down the amount of notice to
be given: eg:
- 1 days notice if employed for less than 26 weeks,
- 1 weeks notice if employed for more than 26 weeks
but less than 2 years, etc.
However, the Employment Act provides that contract
can provide for a shorter/longer period of notice.
For employees falling under the Employment Act,
notice has to be in writing.

Agreement Salary in Lieu of Notice
For employees not falling under the
Employment Act:
There could be an express clause.
If there is no such express clause,
there may not be an implied right to
terminate by giving salary in
lieu of notice.
Agreement Salary in Lieu of Notice
For employees falling under the
Employment Act:
Either party may terminate it by
giving salary in lieu of notice
section 11

Must there be a valid reason for terminating the contract by
notice or salary in lieu of notice?
Generally, either party to the contract does not have to have any valid
reason for terminating the contract by notice or salary in lieu of notice.

But there are some limited exceptions such as:
A female employees contract cannot be terminated during maternity
leave if she falls with the EA or CDCA.
A pregnant employees contract cannot be terminated during pregnancy
(formally within 6 months prior to delivery) unless there is a sufficient
reason if she falls within the EA or CDCA.
A persons contract cannot be terminated on the grounds of old age under
the Retirement and Re-employment Act.
If the employee is covered by the Employment Act and he feels that his
dismissal is without just cause or reason, he may appeal to the Minister
within 1 month of the dismissal (this includes termination by notice or
salary in lieu of notice) under section 14(2) and the Minister may order
reinstatement or compensation.
Repudiatory Breach - Employer
Employer can commit repudiatory breach eg: does not pay
wages for 2 months.

Employee (whether covered by the Employment Act or not)
can resign without giving notice/salary in lieu of notice - and
sue for damages (if any).

What could be some examples of repudiatory breach by the
employer?

Note also: if employer is in repudiatory breach employee
may not be bound by terms of contract (like ROT/Garden
Leave). Why?
Repudiatory Breach Employee Not Falling
under EA
If an employee not falling under the Employment Act, commits a
repudiatory breach (eg: steals $1m from the office), employer can:
- summarily dismiss employee without having to give notice/salary in lieu of
notice and
- sue for damages (if any).

What could be some examples of repudiatory breaches by the employee?

No procedure (eg: giving employee a chance to be heard) need be
followed before dismissal unless contract provides for it. But there are
some exceptions such as in the case of public or police officers are
involved.






-


(a)If an employee commits a crime outside the employment, in what
circumstances, would that amount to a repudiatory breach?

(b) If it is not clear whether it is a repudiatory breach, but the employer
summarily dismisses the employee, and later the court holds that
it is not a repudiatory breach, the employer will be liable. In light of this,
what can the employer do to better protect himself?

CRIMES REPUDIATORY BREACH?
What happens if employer waives breach?
(a) What happens if
the employer
represents to the
employee that
the breach has
been waived or
forgiven can
the employer
then summarily
dismiss the
employee for the
very same
breach?

(a) What happens if
there is a fresh
new breach of
the same type?
Repudiatory Breach Employee Falling under
EA
For Employees falling under the Employment
Act the position is similar.
For instance, section 11(2) allows summary
dismissal for wilful breach and 14 allows
summary dismissal for misconduct.
However, for employees falling under the
Employment Act, there is a procedure to be
followed before employer can summarily
dismiss for misconduct ie: there must be a
due inquiry.

Lim Tow Peng v Singapore Bus Services Ltd
Employee (bus driver) accused of assaulting a fellow
employee.
Employee summarily dismissed.
Employer did not hold a due inquiry.
Employee not told why he was being dismissed and was not
given a chance to be heard.
Circumstances leading to the assault not examined.
Employee sued for wrongful dismissal.
The court held that the dismissal was wrongful
because there was no due inquiry.




Wrongful Dismissal/Termination
Employees not covered by EA can sue for wrongful
dismissal/termination (eg: insufficient notice given in
breach of contract or summary dismissal where
there are insufficient grounds for summary
dismissal). Typically, they would go to court to sue.
Employees covered by EA can sue for wrongful
dismissal/termination too (eg: as above or no due
inquiry or no just cause for termination by
notice/salary in lieu of notice). For some matters
they can go to court, but for some (eg: section 14(2)
of EA) they can only go to MOM/Minister.
Remedies for Wrongful Dismissal in Court
The most common remedy for wrongful dismissal is damages
or compensation.

Damages are usually based on - how could the employer have
lawfully terminated the contract? Eg: If the contract could
have been lawfully terminated by giving 1 months notice
employee can get what he would have lawfully earned during
that one month.

But note: damages are subject to mitigation ie the
employee must take reasonable efforts to minimize his losses.

Further, the employee cannot claim damages for mental
distress or disappointment as they are difficult to .
Reinstatement
Generally employee cannot get specific
performance (reinstatement).
Why is this so?
However, there are exceptions: eg:
- For employees falling under Employment Act,
pursuant to section 14(2), if it is found that the
dismissal is without just cause or reason the Minister
may order reinstatement. (But note: this is not
commonly done).

General Summary of Termination by
Agreement/Repudiatory Breach
Not Covered by EA Covered by EA
Generally can terminate by notice?
Generally can terminate by salary in lieu of
notice?

If there is no valid reason for either of the
above, can it be challenged?

Must there be a valid reason for summary
dismissal?

If the contract is silent on the matter, is
there a procedure to be followed for
summary dismissal?

Can you get compensation for wrongful
termination/dismissal?

Can you get reinstatement for wrongful
termination/dismissal?

Frustration
The most common event which may frustrate the
employment contract is an employees illness.
However, not every illness will result in frustration.
Whether illness would result in frustration would
depend on factors such as:
- Does the illness end within period of entitlement to
sick pay?
- How long is the illness going to last?
- How long as the employment been thus far?

Frustration
An employees imprisonment
may also frustrate the contract
depending on factors such as the
length of time the employee
would be away etc.
Summary
A contract of employment, like all other contracts, may come to an end in
one of four ways.
The most common way in which the contract of employment can come to
an end is by one party giving notice or salary in lieu of notice. No
justification need be given to terminate the contract in this manner.
However, there are some limited situations whereby the contract cannot be
terminated in this manner.
Another way in which the contract can come to an end is where one party
commits a repudiatory breach. The innocent party can then terminate the
contract without notice or salary in lieu of notice. There is no procedure to
be followed. However, there are exceptions such as where the contract
provides for it or the employee falls under the Employment Act.
Where there is wrongful termination (for example, the employee has been
summarily dismissed when there are no grounds for summary dismissal),
the innocent party can sue for damages. However, he must take steps to
mitigate/minimize his losses. Further, an employee cannot seek to be
reinstated in his former job. However again, there are some exceptions
such as under section 14 of the Employment Act.
Certain events such as prolonged illness or imprisonment may result in
frustration which is yet another way in which the contract may come to an
end. No notice or salary in lieu of notice need be given in such a situation to
terminate the contract.

Readings
Basic Text (6.1-6.2, 6.4-6.6, 6.8, 6.13, 6.18-
6.25, 6.51, 6.55, 6.57, 6.63-6.64, 6.84-6.85,
6.89-6.92, 6.97, 6.100, 6.105, 6.108-6.109,
6.121, 6.123-6.128, 6.131, 6.136, 6.145-6.146,
6.149).
Singapore case referred to in Tutorial 7.