Coming to grips with the Employment Claims Tribunal

Mohammed Reza and Shaun Lee, from JWS Asia Law Corporation, outline what to expect from Singapore’s new Employment Claims Tribunal.

You have received an allegation of misconduct against one of the managers in your company. Following a thorough investigation, you have concluded that the allegation was true and that the manager’s termination for cause is justified.

You accordingly advise your company to summarily dismiss the manager. One consequence of summary dismissal is that the manager will not be entitled to salary in lieu of notice.

Currently, if the dissatisfied manager brings his salary dispute to the Ministry of Manpower’s (MOM) Commissioner for Labour, they will be turned away because Professionals, Managers and Executives (PMEs) earning more than S$4,500 a month are limited to seeking recourse through the courts.

The dissatisfied manager therefore faces the difficult choice between foregoing the unpaid salary or commencing court proceedings, which can be protracted and might only be cost-effective if the disputed sum is substantial. However, with the proposed establishment of the Employment Claims Tribunal, which is expected to become operational sometime this year, the dissatisfied manager may have a new option for commencing proceedings against your company.

The tribunal aims to expand the avenues for dispute resolution to all employees, particularly PMEs, by providing an expeditious and cost-effective way of resolving salary disputes with their employers. This is significant because, according to the Singapore National Employers Federation, 30.1% of Singapore’s resident workforce in 2014 were PMEs. Depending on the nature of your company, the proportion of PMEs in the workforce may be even higher.

The idea for a tribunal was first mooted in April, 2014. However, further details were only released by the MOM in its call for public feedback and pursuant to its consultation paper of February 25 this year.

What we know

The tribunal will hear salary-related claims (including claims for contractual bonus payments) for all employees, including PMEs, regardless of their salary levels. Workplace grievances such as unfair dismissal and discrimination are presently excluded from the tribunal’s jurisdiction.

However, there will be a claims limit of $20,000. A higher “claims cap” of $30,000 will only apply to cases that have undergone a formal mediation process (either the Tripartite Mediation Framework for PMEs or MOM conciliation pursuant to the Industrial Relations Act). The MOM’s public consultation paper suggests that while mediation is a necessary precondition to an employee lodging a claim in the tribunal, only mediation in certain forums will lift the claims cap to $30,000.

Employees will have to file their claims within one year from the date on which it arises. If the employment relationship has been terminated, a claim must be brought within six months from the end of that employment.

The tribunal will be a division of the State Courts, similar to the Small Claims Tribunal for civil suits. Employment claims will be heard by tribunal adjudicators, who are expected to have a strong appreciation of the employment and industrial relations landscape here in Singapore.

Issues to note

The claims caps of $20,000 or $30,000 is not insubstantial for salary-related disputes. However, higher claims will still need to be heard in court. Companies looking to enforce an employee’s restrictive covenant or prevent staff misuse of confidential information will also need to seek the courts’ assistance.

It is still unclear whether parties that appear before the tribunal can be represented by external lawyers. Proceedings before the Commissioner of Labour (or the Small Claims Tribunal) do not permit this.

However, even if a company is not allowed to be represented by external lawyers, there may still be merit in seeking external legal assistance, which can help by reviewing documents, assessing the legal merits of a case, preparing submissions for the tribunal and working with the in-house team to present the company’s case.

Stipulating mediation as a mandatory precondition to lodging a claim can be viewed as a net positive for companies, as it provides an early structured process to resolve disputes before a formal tribunal hearing.

It is expected, though not certain, that there will be a right of appeal for a company that is dissatisfied with the tribunal’s decision. However, even if such a right of appeal exists, it might be limited to appeals on questions of law or jurisdiction.

What HR needs to do

The tribunal marks an interesting development in the resolution of employment disputes in Singapore. Once the tribunal is in operation, companies’ HR and in-house legal teams should be prepared for an increase in claims by employees and former employees. The more cost-effective and expeditious the tribunal is in resolving disputes, the lower the barrier is to a disgruntled employee making a claim.

The complexion of salary-related claims that companies will face will also change. Claims before the Commissioner for Labour presently are necessarily lower-value claims. The types of claimants are currently only limited to those covered by the Employment Act, that is non-PMEs earning less than $4,500 a month. With the advent of the tribunal, companies will likely face higher value and more sophisticated claims. Companies may therefore wish to formalise their standard operating processes to seek a waiver of claims by departing employees, where appropriate.

MOM’s public consultation paper has indicated that the jurisdiction of the tribunal will be confined to salary-related disputes. The tribunal’s jurisdiction is envisaged to cover statutory claims provided for in legislation such as the Employment Act as well as salary-related claims “expressly provided in monetary terms in employment contracts”.

HR may therefore expect the company to face claims from employees and ex-employees for non-payment of salary or salary in lieu of notice, overtime payments, unauthorised deductions from salary, non-payment of contractual bonuses, unpaid commission claims, encashment of unused leave upon cessation of employment, and failure to make CPF contributions.

As regards to claims relating to unfair dismissal, discrimination, harassment or whistleblower retaliation, such workplace grievances claims will not be determined by the tribunal.

We will only know the exact ambit of the tribunal’s jurisdiction when the relevant legislation and rule are released. Even then, HR should expect an initial period in which the tribunal works out, through the cases it decides, the scope of its jurisdiction and the types of cases that it will and will not deal with.

To use the hypothetical situation from the beginning of this commentary, the manager would be making a salary-related claim for non-payment of salary in lieu. However, this dispute could concurrently be viewed as an unfair dismissal claim. The tribunal is likely to have to decide whether such a case will fall within its jurisdiction.

HR and in-house legal teams will necessarily play a frontline role in managing employee exits and defending the company from salary-related claims in the tribunal. To the extent that companies take a decision to summarily terminate an employee for cause, they should be prepared to have that decision and its rationale scrutinised by a tribunal adjudicator.

About the authors

Mohammed Reza
Director, JWS Asia Law Corporation

Mohammed Reza is a Singapore-qualified advocate and solicitor. Consistently recognised as one of Singapore’s best litigation lawyers by legal publications, he is “noted for his expertise on multi-jurisdictional financial and funds disputes”. An experienced litigation and arbitration advocate, Reza is frequently sought out to advise on and litigate employment law cases concerning termination of employment and enforcement of non-compete agreements in particular. He also advises on anti-bribery and corruption issues.

Shaun Lee

Supervising Associate, JWS Asia Law Corporation

Shaun Lee is a Supervising Associate in the Dispute Resolution practice at JWS Asia Law Corporation. He is a Fellow of the Chartered Institute of Arbitrators. His practice includes regularly advising and representing domestic and international clients in dispute resolution strategy and arbitration.

 

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