The full text of decision may be accessed here.
Why this is Important
This case applies the implied term of mutual trust and confidence found in employment contracts (“Implied Term”) in the context of investigations and suspensions of employees and provides useful guidance on how employers should conduct themselves.
Background
The plaintiff, one Mr. Dong Wei (“Dong Wei”) was employed as a Senior Freight Trader by the first defendant, Shell Eastern Trading (Pte) Ltd (“Shell Eastern”). The second defendant, Mr. Lim Ming Way (“Ming Way”) was his line manager.
In October 2017, Shell Eastern’s Business Integrity Department (“BID”) commenced an investigation (“BID Investigation”) against Dong Wei based on: (1) allegations that he proffered the services of a friend’s shipping company to a Vitol Asia Pte Ltd (“Vitol”) trader regarding a deal that Shell Eastern was not a party to; and (2) allegations that a similar incident occurred in 2016 involving a freight broker and a Vitol deal. The outcome of the investigation was inconclusive and was not disclosed to Dong Wei. In early 2018, Shell Eastern terminated his employment. Dong Wei requested to know the investigation outcome, but his request was denied.
Following the termination of his employment, Dong Wei claimed that he was rejected by four other companies in the freight trading industry when seeking new employment. It was alleged that three out of the four companies rejected him because he could not provide a letter elucidating the outcome of the BID Investigation.
Dong Wei commenced a claim against the Defendants for, inter alia, conspiracy, negligence, tort of malicious falsehood and, most significantly, a breach of the Implied Term. In particular, the Plaintiff claimed that the first Defendant was obliged by the Implied Term to act in a manner which would not undermine his current employment and future job prospects by damaging his reputation, as well as not to suspend him without proper and reasonable cause.
Decision
The Court accepted that there is an implied term of mutual trust and confidence in employment contracts but found that the Defendants had not breached it here. [1]
This e-briefing will only cover the findings on the alleged breach of the implied term of mutual trust and confidence in respect of the investigation and suspension of Dong Wei by Shell Eastern.
Key Findings
In assessing whether the employer had acted in line with the obligation of mutual trust and confidence when suspending and investigating allegations levelled against an employee, the Court will look at fairness. The Implied Term does not import all the obligations of natural justice or due process obligations that may apply in other contexts, including informing of investigation outcome, or suspending and investigating allegations against employees in a particular way. However, a minimum level of fairness is required of the employer. This will depend on the facts of the case. Nonetheless, the Court did set some guidelines:
- Fairness would entail that the procedures adopted and the manner of investigation not amount to a hatchet job, i.e. that the outcome of the investigation was preordained against the plaintiff or be so unfair that it went to destroy the basis of any expected continuation of the relationship of employment.
- Allegations put to the employee must be sufficiently clear such that he understands the case made against him and has an opportunity to clarify his position.
- Suspending an employee precipitately as part of a “knee-jerk” reaction to an unclear or unspecific allegation with dubious credibility may fall below the minimum level of fairness required.
In this case, suspension of the Plaintiff and non-disclosure of the investigation outcome were not found to be breaches of the Implied Term because there was sufficient explanation for what happened which were reasonable and appropriate on the facts.
- No improper involvement and influence by Ming Way It was natural for Ming Way to be involved in the investigation because he was able to provide necessary information as the Plaintiff’s line manager. BID had diligently conducted its fact-finding process by gathering information from various sources and evaluating the materials independently.
- No pre-judgment by the Shell Eastern Even though BID was aware of the opinions held by other members of the Shell Eastern, there was no evidence that BID gave any weight to them in coming to their conclusion. Further, the fact-finding process by BID involved a review of the Plaintiff’s electronically stored information and interviews with witnesses who were directly involved in the incident. This demonstrated their focus on uncovering the truth based on reliable and probative sources of information which is consistent with what is expected of a fair investigation.
- Chance to respond The Plaintiff was afforded a fair opportunity to respond to the allegations made against him and he used it to put forward his side of the story.
Non-disclosure of investigation outcome
- For the non-disclosure to amount to a breach, the court would look at whether there the employer’s conduct is objectively likely to destroy or seriously damage the relationship of trust and confidence required for the employment relationship to function. Objectively, non-disclosure of the investigation outcome would not have disrupted the proper functioning of the employment contract or relationship, though it might disappoint the subjective expectations of the employee.
- Reasonable and appropriate for Shell Eastern to withhold the investigation outcome from the Plaintiff on the grounds that it was inconclusive and irrelevant to its decision to terminate the Plaintiff’s employment.
Suspension of the plaintiff
- In view of the gravity of the situation and credibility of the sources of information, Shell Eastern did not breach the Implied Term when it decided to suspend the Plaintiff while conducting investigations in the meantime.
- There was proper explanation for continued suspension even after the investigation had concluded, Shell Eastern was deliberating on whether the plaintiff’s employment ought to be continued and was arranging for a meeting to convey their decision to terminate.
There had been an article in a trade publication reporting on the Plaintiff’s suspension. The Plaintiff argued that Shell Eastern had a duty to correct inaccuracies in the report. The court held that the Implied Term does not impose a duty on employers to combat misinformation or to take reasonable care to safeguard an employee’s reputation.
- The Implied Term is not breached by just any act which could undermine an employee’s future job prospects. It has to be an act that is carried out in a “corrupt manner” such as a dishonest or corrupt business.
- An employment contract does not envisage the employer as a protector of its employee’s reputation, including his professional reputation. The purpose of the trust and confidence Implied Term is to facilitate the proper functioning of the employment contract by preserving the employment relationship.
- An employee cannot be said to be unfairly treated by his employer for failing to correct market rumours and misinformation, especially when such rumours and misinformation do not originate from the employer.
For further information, please contact:
Suressh S.
Partner | Harry Elias Partnership LLP
suressh@harryelias.com | +65 6361 9883
Jaclyn Leong
Senior Associate | Harry Elias Partnership LLP
jaclynleong@harryelias.com | +65 6361 9806
[1] Do note that even though this case was dismissed by the Singapore High Court, it is currently pending appeal.