Singapore's High Court examines employer’s claim of gross misconduct
The General Division of Singapore's High Court recently dealt with an employment dispute involving a high-ranking executive and his former employer.
The case centred on allegations of misconduct and wrongful termination, with the executive arguing that his dismissal was unjustified and improperly carried out.
He claimed that the allegations against him were either unproven or insufficient to warrant termination, and that the manner of his dismissal breached implied terms of employment and principles of natural justice.
CEO’s dismissal
The dispute involved a worker who had previously held the positions of financial advisor, executive director, and chief executive officer (CEO) of a Singapore-incorporated wealth management and financial advisory services company.
The worker's employment was governed by two agreements: an Advisor Agreement signed on 8 December 2015 and an Executive Service Agreement entered on 4 March 2016.
Under the Advisor Agreement, the worker was entitled to a monthly salary of $13,500 and commissions calculated as specified in the agreement. The Executive Service Agreement was signed after the company was acquired by Old Mutual International Holdings Limited, later rebranded as "Quilter".
The relationship between the worker and the employer started to deteriorate in May 2019 when rumours circulated that the worker was planning to orchestrate a team move to a competitor, St James's Place (Singapore) Private Limited.
This prompted an internal investigation, which uncovered several issues, including the alleged mishandling of confidential information and inappropriate workplace communications.
The investigation findings included:
- The worker had sent documents containing confidential client information to his personal email account.
- The worker had sent an employment contract of the company's former director to a lawyer.
- The worker had sent several derogatory, vulgar and sexually offensive emails to the company's staff.
Based on these findings, the employer started disciplinary proceedings against the worker.
On 24 June 2019, the employer invited the worker to attend a disciplinary hearing scheduled for 26 June 2019. The worker responded by submitting a letter of resignation on 25 June 2019 and stated he was unavailable for the hearing.
Misconduct or wrongful termination?
The main dispute in this case was whether the worker's behaviour justified summary dismissal. The worker argued that the termination was wrongful and that the allegations against him were either unproven or insufficient to warrant such severe action.
He also said that the manner of his dismissal breached the implied term of mutual trust and confidence and the rules of natural justice.
The worker sought several reliefs, including a declaration that his employment was wrongfully terminated, payment of three months' salary, payment of commissions, and an account of all commissions due to him.
On the other hand, the employer argued that it had the right to terminate the worker's employment based on his conduct, which they claimed amounted to gross misconduct.
They pointed to several instances of alleged misconduct, including storing illicit materials on a work desktop, conducting inappropriate searches on work devices, sending offensive emails to colleagues, and breaching confidentiality obligations.
CEO’s gross misconduct and summary dismissal
After considering the evidence and arguments presented, the court found in favour of the employer on several key points. The judge determined that the worker's conduct did indeed amount to gross misconduct, justifying summary dismissal under the terms of the Executive Service Agreement.
Regarding the inappropriate emails sent by the worker, the judge stated:
"Regardless of [the worker's] intention in sending the explicit emails (ie, to make a joke), sending vulgar sexual content using his work email to his colleagues is unbefitting of a CEO and a senior leader. In my judgment, his conduct crosses the boundary of acceptable humour in a modern work environment."
Beyond the issue of termination, the court also addressed several financial disputes between the parties. These included disagreements over bonus payments, commission calculations, and the recovery of allegedly overpaid amounts.
One significant point of contention was the worker's entitlement to a discretionary bonus based on a performance scorecard.
The court found that the worker had agreed to be bound by this scorecard and was not entitled to retain the full amount of the bonus he had received. The judge explained:
"Having determined that [the worker] agreed to be bound by this discretionary bonus arrangement in accordance with the Performance Scorecard, it follows that [the worker] is not entitled to retain the Excess Bonus, ie, the amount of $73,757 representing the difference between $243,000 (the advance payment of the bonus) and $169,243 (the actual bonus to which [the worker] is entitled)."
This ruling highlights the importance of clear communication and documentation when it comes to performance-based compensation structures.
In conclusion, the judge summarised the key findings of the case:
"[The employer] validly terminated [the worker's] employment under cl 7.3.1 of the ESA. There were sufficient grounds for [the worker's] summary dismissal, and the manner in which [the worker's] summary dismissal was carried out was justified."
The judge also addressed the financial aspects of the dispute:
"[The worker] is liable to pay the Excess Bonus to [the employer]... [The worker] is liable to pay the Overpaid Commissions to [the employer]."
Finally, the court provided a breakdown of the financial outcome:
"[The employer] is entitled to set off the sums in the Lapsed Reserve Account against the Excess Bonus and Overpaid Commissions. The amount [the worker] shall pay [the employer] is $85,503.69."
This case highlights the importance of clear employment contracts, proper handling of confidential information, and maintaining professional standards in workplace communications, particularly for senior executives.
It also underscores the potential financial implications of employment disputes and the role of performance-based compensation structures in such conflicts.
