Decision reveals true cost of unfulfilled termination promises
The General Division of Singapore's High Court recently dealt with a dispute about termination of a consultancy agreement.
The worker argued that his former employer's attempt to terminate his engagement immediately was invalid since they failed to pay the promised sum in lieu of notice.
He also maintained that certain disclosures he made after termination were justified by his discovery of financial misrepresentation.
The case raised important questions about when termination takes effect, what happens when promised payments aren't made, and how confidentiality obligations interact with public interest disclosures.
The dispute started when a Malaysian food delivery company engaged a chief financial officer (CFO) through his consultancy firm. Their agreement required three months' notice for termination.
In September 2021, the company attempted to end the agreement immediately by offering to pay three months' consultancy fees - $66,660 - as payment in lieu of notice. However, this payment was never made.
The CFO argued that without the promised payment, the termination wasn't valid and the agreement remained in force. The company disagreed, saying the agreement ended when it announced its intention to make the payment.
The court examined prior cases about when termination takes effect, noting: "It is insufficient that the employee only receive his payment in lieu of notice; he must also receive a clear and unambiguous notification from his employer that such a payment has been made."
After his termination, the CFO contacted company investors and board members about concerns regarding financial reporting. He had discovered misrepresentations about the company's performance metrics.
The company claimed these communications breached confidentiality obligations. However, the court found the CFO had valid reasons for his disclosures, given his findings about financial misrepresentation.
As noted in the judgment: "With [the CFO] having been involved in making representations to potential investors to procure investments into [the company], [he was] obliged to take steps to correct representations that [he] had found to be untrue."
The company blamed the CFO for prompting several employees to take medical leave, claiming this led to operational disruptions. However, evidence revealed different underlying reasons for these business changes.
The court examined documentation showing the company had told employees changes were "due to the current market and economic conditions" and part of a reorganisation to "improve the company's overall performance."
The judgment made several crucial observations about proving losses in employment disputes: "[The employer] has not proved that closure of the [facility] was a response to the employees being absent for a day (or a few days) in September 2021 and [the consultant] quitting (as opposed to the implementation of the strategy to close the [facility] and transition to the use of third party suppliers)."
Two more significant findings emphasised the importance of evidence in employment claims: "Even if [the employer] had established some liability on the part of [the workers], it would have to prove what loss [the employer] suffered as a result."
The court also noted: "When [the employer] sought an extension of time to circulate the [financial statements], it did not say that the reason for the delay was [the employee's] departure. Instead, it said that it was experiencing high turnover of staff within the Finance department which impacted the audit timelines."
