Investment manager seeks unpaid salaries under oral contract

A District Court in Singapore recently dealt with a case involving a dispute over an alleged oral employment contract.

The court's decision discussed the complexities of proving the existence and terms of such agreements, particularly when the parties' accounts differ significantly.

In this case, a worker sought summary judgment against her employer for unpaid salaries under an oral employment agreement.

The employer, on the other hand, contested the existence of the alleged contract beyond a specific period and argued that the work performed by the worker was not pursuant to the oral agreement.

Background of the case

The worker's version of events displayed a longstanding friendship with the employer's director, which eventually led to the formation of the oral employment contract.

According to the worker, she was to be employed as an Investment Relations Manager with a monthly salary of $7,800. To support her claim, the worker presented various pieces of evidence, including:

"The events leading up to the issuance of the [worker's] Employment Pass suggest that the [employer] intended to employ the [worker]. The [employer] applied and paid for the issuance of the [worker's] Employment Pass... Further, the [worker] and the [employer] provided a signed declaration to MOM that affirmed the existence of an employer-employee relationship between the parties and the fact that the [worker] was to be paid a monthly remuneration of $7,800."

The court noted that the worker's case appeared to be "internally consistent and not inherently unbelievable" when considered on its own.

The employer, however, presented a different account of the oral contract. It argued that the worker's employment was “conditional” upon her securing a substantial investment from her husband and that her employment was not renewed beyond September 2022 due to her failure to meet this condition.

The employer also contended that any work performed by the worker was done under a separate consultancy agreement with another company owned by the worker.

Employer’s credibility questioned by court

The court expressed concerns over the employer's credibility, highlighting its shifting positions and the lack of documentary evidence to support its assertions.

"The [employer's] shifting positions on matters which are well within its knowledge underscore the overall lack of credibility in its case. Given that the [employer] was represented when it initially denied the existence of an employment relationship, the evolution of its case in a short span of two months suggests that its present account of the Oral Contract is no more than an afterthought."

Furthermore, the court noted that the employer failed to provide evidence to substantiate its claims regarding the conditional nature of the worker's employment or its cessation after September 2022.

Despite the court's reservations about the employer's case, one aspect gave the court pause: the status of the consultancy agreement between the worker's company and the employer.

The scope of services under this agreement appeared to be similar to the work the worker claimed to have performed under the oral contract.

The court acknowledged that "the lines are not altogether clear, and [it] cannot rule out the possibility that the [worker] had performed the work claimed as a consultant under the [consultancy agreement]". This factor prevented the court from granting summary judgment outright in favor of the worker.

Employer allowed to defend claim

Ultimately, the court decided to grant the employer permission to defend the claim, but with a condition: the employer had to furnish security for the entirety of the worker's claim.

The court reasoned that while it could not "rule out the possibility that the [employer] will succeed at trial, it appears improbable that the [employer] can do so, given the strength of the [worker's] case" (para 55).

The court emphasized that "the quantum of security imposed must not be one that the [employer] would find impossible to comply with".

However, it found that the employer had not persuaded the court that it would be impossible to comply with the condition, as the employer failed to make full and frank disclosure of its financial position.

In conclusion, the court stated:

"For the foregoing reasons, I grant the [employer] permission to defend on the condition that it furnish security of $81,120, which is to be paid into court by no later than 12 April 2024, failing which judgment will be entered against the [employer] in the sum of $81,120."