Employers need to tread carefully when it comes to maintaining the professional relationship
The duty of mutual trust and confidence is an implied term that requires the employer not to act in such a way as to undermine the employment relationship. This duty had been thought to be good law in Singapore, however, it is now unclear if this is the case.
“It's not that it's not a defined concept. It is also recognized in Singapore case law, specifically in prior High Court decisions,” Dawn Tan, MD at Ashurst ADTLAW, told HRD. “It’s important to recognize the distinction between the concept (as enunciated by the courts) having been acknowledged to exist and asserting that it is of general application.”
Most claims of this kind are brought by employees against their employer. When this happens, the employee needs to show that the effect of the employer’s conduct was likely to seriously damage the mutual trust and confidence between the parties.
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Tan said, “It is contemplated that such a breach is fundamental in nature. It is something that destroys the trust and confidence that is reposed in the employer and employee relationship.”
In the case of Dong Wei v Shell Eastern Trading (SET), both the General Division and Appellate Division of the Singapore High Court found that there was no breach of mutual trust and confidence. Dong Wei had sued SET following an inquiry into Dong Wei's conduct concerning a conversation during a phone call with a gas oil trader at Vitol Asia. Dong Wei was dismissed from employment with notice.
The person Dong Wei had the phone call with, told his chartering manager of the contents of the call. The chartering manager then made two complaints during a meeting with Dong Wei’s supervisor.
- Circumvention of market practice and alleged involvement with a third-party shipping broker.
- A similar incident involving Dong Wei where a broker had made a marketing call to Vitol that only Dong Wei knew about.
SET launched an investigation. Dong Wei was placed on leave with full salary and informed that he would be told the outcome of the investigation. SET did not inform Dong Wei of the outcome, which was found to be inconclusive.
It turned out that there was a history of incidents in which Dong Wei's conduct had been called in question, and for which Dong Wei had received informal and formal warnings.
SET eventually terminated his employment saying it had nothing to do with the investigation but that his history meant that they were no longer able to work with him.
Dong Wei sued, stating that SET not informing him of the outcome of the investigation was a breach of mutual trust and confidentiality. He lost in the General Division of the High Court at first instance then appealed and again lost in the Appellate Division of the High Court. On appeal, the Appellate Division examined a previous Singapore Court of Appeal decision and stated that it was not settled by the Court of Appeal that the implied term of mutual trust and confidence forms a part of Singapore law.
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“The [General Division of the] High Court accepted that such a duty exists as a matter of Singapore law, but found on the facts that there was no breach,” said Tan. “I think the Appellate Division was trying to draw the distinction between the existence of the concept which all the courts have recognized or perhaps even taken for granted. And the way they tried to deal with that was to say that well in those cases it did not really directly arise from the facts, and they would want to see a future case where there were facts which will directly support the existence of that duty before they will pronounce on it.”
Tan said that the breach would have to be something far more fundamental than SET not keeping good on its promise to inform Dong Wei of the outcome of the investigation and the decision to terminate Dong Wei's employment was done contractually. “I think in all the cases the statements of principle that accompany the duty it was contemplated that such a breach had to be fundamental in nature. It is something that destroys the trust and confidence that is reposed in the employer and employee respectively,” said Tan.
The case has shown that employers should consider whether an employee might find it meaningful or productive to be told about the outcome of an investigation. It is only fair if they are the subject of that investigation.
“If you read between the lines,” said Tan, “one reading could be that cumulatively there was something that had destroyed the relationship between Dong Wei and his employer, although the court did not actually give explicit recognition to that.”
*ADTLaw LLC and Ashurst LLP together form Ashurst ADTLaw in Singapore. Ashurst LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary. The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.
