Are Codes of Conduct Legally Binding in Singapore?
Codes of conduct are typically found in workplace settings across all industries, with the purpose of outlining how every staff member is expected to interact with others and operate at work by establishing norms and expectations.
While codes of conduct are not a panacea to all issues in the workplace, the value add of such codes is that those who understand their expected behaviour, may be more effective in their positions as they feel more at ease at work and work harmoniously with each other. Outlining company guidelines and rules may also serve as a communication tool to stakeholders about its values and commitment to them.
In this article, we will cover:
- What is a code of conduct?
- What is typically included in a code of conduct?
- Can I include a code of conduct within a contract?
- Is a code of conduct legally binding?
What is a Code of Conduct?
While not all codes of conduct are the same (some are more liberal than others in their enforcement, focusing on education and community-building rather than punishment and exclusion), the key denominator across codes of conduct is that they are generally standards that lay out the expectations of ethical behaviour and its adherence to their stipulated standard.
A good code of conduct utilises clear and concise language, covers a comprehensive range of issues, is flexible enough (not too prescriptive; can be contextually adapted), ensures accountability of employees, and is regularly updated. When written well, a code of conduct can be motivational and inspiring for employees to perform well in the workplace, instead of fear-mongering and serving as a negative piece of policy.
- Examples of well-written code of conduct clauses include Sport Singapore’s inclusion of key ethical standards and integrity in their actions:
- “Exercise self-awareness and evaluate how your values and actions influence your coaching activities positively or negatively.”
- “Uphold the values of clean, dope-free sport, by complying with all relevant anti-doping rules… Be a positive influence to those under your charge with respect to the values of clean sport.”
- On the other hand, code of conduct clauses that may be fear-mongering include clauses worded similarly to “Employees who violate company policies will be subject to immediate termination.”
What is Typically Included in a Code of Conduct?
The scope of a code of conduct depends on the needs and requirements of the specific organisation. Some professions require more stringent codes of conduct (e.g., legal, banking/ finance, medical), and would therefore have both a wider, and more in-depth coverage within its code, along with a more comprehensive and rigorous conduct investigation and rule enforcement if so.
They typically cover issues such as employee values (e.g., honesty, integrity, respect), confidentiality requirements, compliance with relevant rules and regulations, and the avoidance of conflicts of interests, with the end goal of creating a culture of ethical behaviour which upholds a high standard of morality. Such coverage helps lay out workplace norms from workplace bullying or harassment/poor conduct, to issues of gift receiving and giving.
The following are examples of what codes of conduct may include:
- The Monetary Authority of Singapore lays out 4 key guiding principles:
- Personal and professional behaviour
- “… highest standards of conduct and behaviour in and outside MAS to safeguard MAS’ reputation and interests…”
- Duty of confidentiality
- “… during the course of our employment with MAS and even after we leave MAS.”
- Conflicts of interest
- “… avoid situations that may give rise to actual, potential, or perceived conflicts of interest…”
- Use of MAS’ resources
- “…in a responsible and appropriate manner.”
- Personal and professional behaviour
- The Singapore Retailers Association lays out 4 main sections:
- Part A – Conduct and Spirit of Negotiations
- “… must adopt a consensual approach to negotiate in good faith, which includes acting honestly and fairly…”
- Part B – Leasing Principles for Key Tenancy Terms
- 11 key tenancy terms within
- Part C – Data Transparency
- “…must share sales data metrics by…”
- Part D – Dispute Resolution & Enforcement
- “For non-compliant practices, parties can report these cases to the FITC…”
- Part A – Conduct and Spirit of Negotiations
Can I Include/Enforce a Code of Conduct Within a Contract?
Yes, you can, if it is stated that its adherence is a requirement for parties who choose to enter into the contract. However, the contract itself must be legally valid before a code of conduct can be enforced.
Is a Code of Conduct Legally Binding?
A Code of conduct is typically a form of good corporate governance practice and self-regulation. It is not strictly legally binding unless the company decides to specifically put it within a legal instrument as a material clause (e.g., within the employment contract or within the employee handbook). This means that adherence to the code is legally binding and any subsequent violation could amount to a breach of contract. The employer/company can then take legal action against the employee for the breach.
For example, in a 2023 case, a company sued its employee for quitting after receiving his bonus. A clause in that company’s “Employee Handbook” provided that employees were not eligible for bonuses if they were serving their notice period on the date/month when such bonuses were paid out. The employee claimed that he was unaware of the clause as it was not stated in his employment contract, but the company referred to a clause in the employment contract which, among others, proavided that employment benefits were subject to terms laid down in the Employee Handbook. The district judge held that in this case, the employee handbook was part of the employment contract.
You may wish to read our other article on breach of contract for more information.
On the other hand, any violation of a non-legally binding code could render the employee subject to internal disciplinary processes and the potential consequences would depend on the company’s internal governance processes.
There may also be situations where the code of conduct comprises a clause that can result in both internal and external disciplinary action. This can include situations of employee misconduct that result in the employee’s failure to fulfil the conditions of employment in the contract of service. For example, if a company includes an anti-harassment policy in its code of conduct, and an employee subsequently commits workplace harassment, the employee could be dismissed in addition to potentially facing criminal liability under the Protection from Harassment Act and/or penalties from other relevant bodies.
Do note that according to the MOM’s website, if an employee is accused of misconduct, it is the employer’s duty to inform the employee of their alleged misconduct and that they will be conducting an inquiry (no fixed procedure) which should take no more than a week to complete. Any extensions would be on a case-by-case basis. The employee concerned would be paid half their salary, before the appropriate form of disciplinary action to be taken is decided. Do also note that the person hearing the inquiry should not be in a position which may suggest bias, and the employee should have the opportunity to present their case too.
All in all, whether or not a code of conduct is legally binding, and the respective consequential punishments are highly contextual and depend on the circumstances of the situation, as well as the relevant clauses and contracts involved.
To recap, codes of conduct can be implemented in contracts, and they could form a requirement of performance that parties agree to be bound by as part of their relationship. Non-compliance may be considered a breach of contract. Both employers and employees should pay close attention to these codes and especially the specific nuances within.
If you require further advice on the legal implications and/or enforcement of certain codes, you should consult an employment lawyer to assist in helping you gain clarity in the matter.
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