6 Common Employment Disputes & What You Can Do

Employment disputes may arise in the course of employment, or even during the hiring process. In the event of a dispute, it is important for all parties to know their legal rights and obligations.

This article aims to provide a general overview of the common types of employment disputes you might come across and what you, as an employee or employer, can do to resolve such disputes.

What are Employment Contracts?

Employment contracts (also known as a contract of service) set out the terms and conditions of employment with a company/organisation. The contract must include key employment terms and essential clauses pertaining to employment. These include an employee’s work hours, salary, leave benefits and job scope. Such a contract is usually in writing and can be in the form of a letter of appointment or employment.

For more details on employment contracts, you may refer to this guide to employment agreements in Singapore.

What are Some Common Employment Contract Disputes? 

Common employment contract disputes include wrongful dismissal, dismissal without just or sufficient cause, and wage-related disputes. The enforceability of non-compete clauses may also be disputed when an employee leaves the company to join a competitor organisation.

Apart from employment contracts, occasions of harassment and discrimination in the workplace may also lead to aggrieved parties bringing claims against their employer.

This article discusses 6 common employment disputes:

1. Wrongful termination/dismissal
2. Wage-related disputes
3. Workplace harassment
4. Workplace discrimination
5. Severance agreements
6. Non-compete clauses

1) Wrongful termination/dismissal

The employer and employee both have the right to terminate the employment contract. The contract can be terminated when the employee resigns, the employer dismisses the employee, or if the contract terms have expired.

In the case where the employer dismisses the employee, the employer has to give notice of the dismissal. The notice period will then have to be served before the employee can be dismissed. The notice period will typically be stipulated in the employment contract or will otherwise depend on the length of employment. For example, if the notice period is 30 calendar days, the employee can only be effectively dismissed 30 calendar days after he/she has been notified of his/her dismissal.

The dismissal will amount to a wrongful dismissal if the employee was dismissed without just or sufficient cause, as explained below.

Termination/dismissal without just or sufficient cause 

Under the Employment Act, dismissing an employee without just or sufficient cause (i.e. without a valid reason) is wrongful. Generally, a ‘just or sufficient cause’ would include the employee acting dishonestly, employee conduct that demonstrates gross negligence or frequently being absent from work.

The only exception for dismissal without notice under the Employment Act is on the grounds of the employee’s misconduct. Misconduct includes but is not limited to theft, dishonest or disorderly conduct at work, insubordination, and bringing the organisation into disrepute. However, a dispute may arise where the employer dismisses an employee on the grounds of misconduct, but the employee wishes to dispute the allegation.

If the employer alleges misconduct, the employer must conduct a due inquiry before dismissing the employee on this ground. Failure to conduct such an inquiry will also amount to a wrongful dismissal. 

An example where an employee may be dismissed on the grounds of misconduct is as follows: The employee handbook states that employees are not allowed to steal any of the company’s property. The employee was found to have stolen one of the company’s laptops for personal use. The company conducts a due inquiry, allowing the employee to explain why they had done so. If the employee is not able to justify their actions, they may be dismissed without notice on the ground of misconduct. This would not be a case of wrongful dismissal.

However, if the employee was not allowed to explain his case or it was found that the employee was given permission from a superior to use the company’s laptop for their personal use during their employment, their behaviour might not amount to misconduct. If the employee was dismissed without notice under these circumstances, this would amount to a wrongful dismissal.

Other grounds of wrongful termination/dismissal

Where an employer dismisses an employee on the following grounds, it will amount to a wrongful dismissal, even if notice was given to the employee:

• Dismissal on discriminatory grounds (e.g., age, race, gender religion etc.)
• Dismissal to deprive an employee of benefits or entitlements (e.g., to deprive an employee of her maternity benefits, leave entitlements etc.)
• Dismissal to punish an employee for exercising an employment right (e.g., dismissal after employee submitted a request to authorities for salary-related claims)

A dispute between an employee and employer may arise if the employee believes they have been dismissed on discriminatory grounds. For example, the employer dismisses the employee with notice and no reason was given. However, the employee observed that the employer had made multiple discriminatory comments about the employee’s race and culture, casually stating that he prefers to hire someone of his race instead. The employer’s comments were heard by other employees.

In such a situation, the employer had taken a discriminatory attitude towards the employee, and the employer might have dismissed the employee on discriminatory grounds. This would amount to a wrongful dismissal.

For more information, you may refer to this guide on wrongful dismissal in Singapore.

2) Wage-related disputes

Most employment contracts will state the prescribed pay structure, giving employees certainty on when they will be paid and the amount to be paid. Pay structures can be on an hourly basis or a monthly basis, depending on the terms of the employment contract. However, there may be situations where employees find that they have not been paid their salary due to them or have not been paid on time. In these circumstances, there are many types of disputes that may arise.

For example, a part-time employee may realise upon calculation that his/her salary payment did not include the promised pay rate for working on a public holiday. A dispute may occur when the employee raises this issue to the employer, and the employer disagrees with the calculation. In such a situation, both parties should discuss what was agreed upon. The employee can show proof of the promised rate, if any. If both parties are not able to agree on a specified rate, they should refer to MOM’s website for the standard public holiday pay rate.

Another example is if the employer withholds the employee’s salary for month X because the employee failed to meet his/her performance targets for that month. A dispute may arise if the employee asks to be paid despite failing to meet the targets and the employer refuses. According to the Employment Act, the employer must pay the employee’s salary once a month. However, if the employment contract stipulates how and when commission is to be paid, payment of the commission would depend on the terms of the employment contract or existing policies or practices. In such a situation, it is likely that the employer will have to pay the employee his/her basic salary, but may be entitled to withhold any commission if it is in accordance with the terms of the employment contract or the company’s policies.

Employers and employees alike should be aware of the company’s policies with regard to wages, and ensure that they do not contradict any statutory provisions in the Employment Act.

For more details and information on wage-related disputes, you may refer to this article on employee salary.

3) Workplace harassment

Workplace harassment can occur when someone at the workplace acts in a way that causes, or is likely to cause you to feel harassed, distressed or alarmed. This includes, but is not limited to, the following acts:

• Verbal abuse (e.g threatening, insulting language used, cyberbullying, or non-verbal gestures)
• Physical abuse (e.g being pushed, slapped, or punched by a colleague or employer)
• Stalking
• Sexual harassment

For example, A and B are colleagues working together in the same team and in close proximity with one another. A loudly and repeatedly talks about A’s intention to have a sexual relationship with B to other co-workers in an explicit and insulting manner, knowing that B can hear this. This causes B to feel very distressed. Such conduct would therefore amount to workplace harassment.

Using the above example, disputes in the workplace may arise if B has brought up B’s discomfort to the company and they dismiss B’s concerns or do not deal with it appropriately. For instance, B raises concerns about A’s comments and behaviour to their organisation’s Human Resources department and requests to be assigned to a different team from A. If the company simply dismisses B’s concerns without conducting any investigation into A’s behaviour and B has to continue working in close proximity with A, B may have ground to take action against the company for not creating a safe working environment.

Employers should ensure that they are well-equipped and prepared to handle such situations swiftly and in a sensitive manner. Some best practices that employers should have in place include:

• A procedure where employees can report incidents of harassment;
• An independent and impartial body to review such incidents;
• Assistance and closure provided to the victim; and
• Punishment or counselling for the harasser.

Employers can refer to the Tripartite Advisory on Managing Workplace Harassment for more information on best practices it should follow. 

Employees should also be familiar with workplace harassment-related procedures in the organisation. Generally, employees should be able to report the matter to the Human Resource (HR) department and an internal investigation should be conducted. If the victim feels that their safety is still at risk, they should file a police report. Do note that harassment within and outside the workplace can also be an offence under the Protection from Harassment Act (POHA).

Employees and employers alike should check with their respective organisations on the relevant procedures and policies in place. For more details and information, please refer to this article on workplace abuse and possible remedies in Singapore.

4) Workplace discrimination

Workplace discrimination occurs when the employee is being discriminated against or treated unfairly due to factors like the employee’s age, gender, race, religion, language, marital status and family responsibility, disability.

Disputes may arise if employers deny employees opportunities or treat them unfairly due to the factors mentioned above. For example, employers should not make snide remarks about nor ban religious headcovers in the workplace if it does not pose any safety risks. Female employees who are pregnant should also not be denied work opportunities or be passed on for job promotions simply because they have to take maternity leave after giving birth.

The Tripartite Committee on Workplace Fairness (Tripartite Committee) released an interim report in February 2023 which proposed new laws and rules to protect workers from discrimination.These include protecting workers from discrimination based on age, nationality, sex, marital status, pregnancy status, caregiving responsibilities, race, religion, language, disability and mental health conditions.

A more detailed discussion can be found in our other article on the New Proposed Discrimination Laws in Singapore. 

Currently, employers are expected to abide by the Tripartite Guidelines on Fair Employment Practices (TAFEP Guidelines), to recruit and select employees based on merit, to treat employees fairly, provide employees with equal opportunity, reward employees fairly and to abide by labour laws. If employees feel that they are denied opportunities or rewards simply due to any of the factors mentioned above, they may raise an issue with the employer.

For more information on discrimination in hiring practices, employers may refer to this article on discriminatory hiring practices in Singapore. 

5) Severance agreements

A severance agreement outlines the financial terms on which the employee will be terminated. Severance pay is often offered as part of the terms of the severance agreement, in exchange for an employee’s release of their claims against the employer. Employees who have served the company for at least 2 years are eligible for severance pay, along with other retrenchment benefits. Those with less than 2 years’ service could be paid a severance pay out of the company’s goodwill.

Employers may choose to offer severance pay to employees who are terminated, usually involuntarily. The primary reasons for offering a severance package are to help employees who are laid off or affected by a retrenchment or restructuring exercise taken by the company. 

Disputes arising from severance agreements may be due to aggrieved employees not wanting to leave the company and not ready to enter into unemployment.

The most common dispute, however, is regarding the compensation amount or the severance pay. For example, employees may demand that the compensation package comprises more benefits, such as an increased payout. As MOM states that the prevailing norm is to pay a retrenchment benefit of between 2 weeks to 1 month’s salary per year of service, depending on the company’s financial position and the industry. Employers should do their best to assist the affected employees when offering a severance package, especially if the company is in a good financial position. 

MOM also encourages employers to help affected employees look for alternative jobs as part of the severance package. This may include helping employees look for jobs in associate companies, or through outplacement assistance programmes such as job fairs and career fairs. Employers who are intending to retrench workers and retrenched employees should refer to MOM’s website for advice.

6) Non-compete clauses

A non-compete clause may be found in your employment contract stating that you may not engage in business in certain markets and/or geographies for a certain period of time, often from the point when you join and/or leave the company. For example, a non-compete clause may state that the employee is not allowed to work with a competing company in the same industry for 5 years after they end their employment with their current employer. It is most frequently used in the finance and tech industries, largely due to the highly sensitive nature of the work and the importance of cultivating strong trade connections.  

Disputes arising from non-compete clauses typically center around the enforceability of these clauses. For example, an ex-employee at company A may have secured a position at a rival company, B, shortly after leaving company A. If the employee had a non-compete clause in his employment contract but wishes to work at company B, he may claim that the clause is unenforceable.

While employers are entitled to include such clauses in their employment contracts, these clauses are usually not enforceable in Singapore. Whether such clauses are enforceable will depend on 2 factors:

1. The non-compete clause has to protect a “legitimate proprietary interest” of the employer; and
2. The scope of the non-compete clause is reasonable

Where the employee had access to the company’s trade secret or confidential information, the non-compete clause may be enforceable if it is of a reasonable scope. For example, where there is a high chance that the employee could easily divert business away from the company using the confidential information he had acquired during his employment, the non-compete clause may be enforceable.

Employees should be aware of the non-compete clause they are entering into and be prepared to commit to it should they agree to it. Employers should be mindful of the enforceability of such clauses and should ensure it is reasonable if they wish to include a non-compete clause.

For a more detailed discussion, you may refer to this article on the enforceability of non-compete clauses in Singapore.

Where Can I Get Help in the Event of an Employment Dispute?

TADM and ECT

The type of assistance or legal recourse that can be sought would depend on the nature of the dispute. Generally, employers and employees can direct their queries and/or seek advice from Tripartite Alliance for Dispute Management (TADM).

Where parties cannot come to a conclusion among themselves, they may file a mediation request with the TADM. TADM will facilitate the mediation to reach an amicable and fair resolution between the employees and employers. The parties’ legal and contractual obligations will be discussed, defined and drafted into a settlement agreement, which will be legally binding on all parties. The settlement agreement will state the terms parties agreed upon, which may include a compensation amount and/or an undertaking by the employer to fulfil certain obligations.

If the dispute is still unresolved at mediation, parties may file a claim with the Employment Claims Tribunals (ECT) and attend a case management conference to resolve the dispute. An ECT hearing may take place if parties are still unable to resolve their dispute. During the hearing, both the employer and employee can present their case. Upon which, the Tribunal Magistrate will make an order which may include dismissing the claim, ordering the employer to award the employee compensation for wrongful dismissal, reinstating the employee, etc. 

TAFEP

For matters regarding workplace discrimination, harassment and/or unfair practices, aggrieved employees may file a complaint with TAFEP by filling in an online form. A TAFEP officer will contact you to follow up on the details of the incident.

TAFEP will then approach the employer to put in place fair employment practices and ensure that there are no further discriminatory practices. TAFEP can also report discriminatory practices to MOM for further investigations. The organisation will be penalised accordingly should there be any lapses or unfair practices found.

MOM

Aggrieved employees may also report employment infringements through MOM’s 24-hour online service. MOM oversees and investigates reports of employment infringement. These include violations of the Employment Act or workplace safety lapses. Appropriate action will then be taken against the offending employer.

On issues of workplace discrimination and unfair practices, employees may report them to MOM and these firms may be placed on the Fair Consideration Framework (FCF) Watchlist. Employers placed on the FCF Watchlist will have their work pass applications more closely scrutinised for any discriminatory hiring practices and will receive guidance from TAFEP to improve their HR practices.

Should employees disagree with the retrenchment benefits they are given, they may raise them with MOM through the Labour Relations Department. MOM may, on a case-by-case basis, look at the financial state of the company, among other factors, to assess if it is capable of paying a higher severance pay.

You may refer to our other article for a comprehensive list of where to seek help in the event of an employment dispute. Generally, employees and employers may request for mediation or seek advice from TADM in the event that the dispute cannot be resolved. It is also advisable to consult an employment lawyer at first instance for an assessment of the case or matter at hand and seek advice on the best way forward.

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Employers should try their best to ensure healthy relationships in the workplace and a safe workplace for all to prevent disputes.

Employees and employers alike should consult an employment lawyer for legal advice/assistance and to better assess their rights in relation to any employment contract or workplace dispute. You may also seek advice from TADM or TAFEP for further guidance and/or advice on employment-related matters. Employers may additionally refer to MOM’s website for guidance on good employment practices.

Alternatively, you can book a phone consultation with an experienced employment dispute lawyer.