Singapore court examines whether employee solicited clients during notice period
Singapore's Magistrate's Court recently dealt with an employment dispute involving a data science team leader who claimed payment of one month's salary, one month's severance payment, a half month's discretionary bonus, and flexible benefits totalling $27,700.
The employer argued the worker had breached his employment contract by soliciting clients while on garden leave and therefore was not entitled to the claimed payments.
The worker's main arguments centred on denying he solicited clients, claiming he had obtained prior approval for external business activities, and asserting the severance payment was an "undertaking" that qualified as an enforceable contract.
He argued his emails to former colleagues were merely inquiries and that he was entitled to the payments promised in his termination letter.
Data science worker receives redundancy notice
The worker was employed by the data innovation company from 3 January 2022 to 31 January 2024, initially as a data science team lead. In March 2023, the employer promoted him to head of data science consulting for financial services. His salary increased from $9,000 to $10,080 following the promotion.
On 18 December 2023, the employer served a redundancy notice informing him that a two-month notice period would commence from 1 January 2024. His last day of service would be 29 February 2024. The worker was placed immediately on garden leave and not required to report for work.
On 3 January 2024, whilst on garden leave, the worker sent two emails to former employees requesting information about potential clients. These emails became the centre of the dispute. The employer subsequently commenced formal investigations into his conduct during garden leave.
Employer investigates emails to former colleagues
On 16 January 2024, the employer sent a letter putting the worker on notice that his employment agreement terms remained unchanged despite garden leave. The employer alleged he had solicited prospective clients by sending emails to two former employees. Formal investigations were launched.
On 25 January 2024, the employer convened a disciplinary panel that heard the worker's explanations. On 31 January 2024, the worker was terminated with immediate effect for breaching clauses relating to conflicts of interest, policy compliance, and client solicitation. His employment ended over a month earlier than the originally scheduled 29 February 2024 date.
On 1 February 2024, the worker appealed the decision. On 7 February 2024, a second disciplinary hearing with new panel members was convened. On 9 February 2024, the second panel upheld the first panel's decision. The worker subsequently commenced legal proceedings claiming promised severance payments and other benefits.
Worker denies breaches and claims approval
The worker argued he did not solicit or attempt to solicit clients. He contended he had obtained prior approval to conduct "external business activities" because his curriculum vitae sent to the managing director mentioned his consultancy group. He relied on "one paragraph on [his consultancy group]" in his "lengthy" curriculum vitae as evidence of disclosure.
The worker argued his emails were merely casual inquiries. He maintained that even if found to have solicited clients, he had disclosed external business activities by referencing them in his curriculum vitae. He argued the employer was aware of his external business interests before employment commenced.
Regarding the severance payment, the worker argued it was an "undertaking" that "being an undertaking, qualifies as a contract." He maintained he was entitled to the promised payments specified in the termination letter. He also challenged the disciplinary process' impartiality, arguing that panels were prejudiced and "failed to consider the true facts of his defence."
Employer presents contract breach evidence
The employer argued the worker breached multiple contract clauses by failing to disclose his sole proprietorship throughout employment. The worker never stated in his curriculum vitae that his consultancy group was actually a sole proprietorship owned by him. The employer argued this constituted failure to obtain expressed written permission for external activities.
The employer discovered the worker had been involved in a project for the Bhutan government. The worker only revealed this project for the first time during the disciplinary hearing in January 2024. The employer argued the worker worked on this project between 2022 and 2023 without disclosing his continuing involvement.
Regarding the emails, the employer argued they constituted clear client solicitation. The emails inquired whether a specific client had accepted the employer's business proposal. They stated the worker could undertake the same proposal at lower costs. They asked former colleagues to divert clients to the worker and provided personal contact information while exhorting recipients to keep emails confidential.
Court finds disclosure obligations breached
The court found the worker breached his contract by failing to disclose his sole proprietorship and external business activities. The court stated the worker "eventually conceded that at no point did the [worker] ever inform the [employer] of the sole proprietorship."
The worker "conceded at trial that he was aware that he had to obtain written permission from the [employer] to engage in any other prejudicial external business activities."
Regarding the Bhutan project, the court stated, "it is not a question of when the [worker] began his involvement in the [project]." Rather, "it is a question of his failure to disclose his continuing involvement with it during his employment with the [employer]." The worker had admitted that the project only concluded during his time with the employer.
The court emphasised the contract clause "disallows the [worker] from engaging in any activity...that may interfere with the performance of [his] job." The court stated "it is not for the [worker] to decide whether he found any 'relevance' between the work he did for the [project] and the work he did for the [employer]." The employer needed to be informed to determine potential conflicts of interest.
Court analyses emails as deliberate solicitation
The court examined the two emails sent on 3 January 2024 to former employees. The court noted they were "almost identical" except for two additional sentences. The court stated, "plainly, these were not casual emails. These were deliberate and intentional emails. They were carefully planned and crafted."
The court identified key solicitation indicators. The worker inquired if a specific client had accepted the employer's business proposal. He stated he was able to undertake the same proposal at lower costs. He asked recipients to divert the client to him if cost was an issue. He provided personal contact information and exhorted recipients to keep emails confidential.
The court stated, "It is clear that by the two emails, the [worker] was attempting to solicit business for himself from the existing clients of the [employer]."
The court found "by offering to provide the same products to the clients of the [employer] at lower costs, the [worker] was undercutting the [employer] in pricing." This was "plainly to entice these clients to divert their business to him."
Court examines severance payment enforceability
The court found the worker was not entitled to the severance payment because it lacked valid consideration. The court applied the principle that "for any such agreement to be enforceable, it must be backed by consideration."
The court examined three possible forms of consideration: performing existing duties after receiving a termination notice, forbearing to sue for wrongful termination, or accepting termination in expectation of benefits.
The court found "there is an absence of consideration for the [s]everance [p]ayment to be enforceable." The worker "was placed on garden leave upon receiving the [t]ermination [l]etter and no work had been done." The court noted "it is not the [worker's] case that there was any request made by the [employer] for the [worker] to forebear from commencing litigation."
The court accepted the severance payment "was offered to the [worker] as a means to assist the [worker] in transitioning into a new phase of his career." The worker "conceded in court that there was no contractual basis for him to claim for the [s]everance [p]ayment." He "agreed that the [employer] had extended the [s]everance [p]ayment to him out of goodwill, and it was withdrawn after the disciplinary hearing."
Court dismisses disciplinary process complaints
The court addressed the worker's complaint about the disciplinary process' impartiality. The worker had argued he was entitled to "at least one independent witness, one independent member" on the disciplinary panel. The court found this was not provided for in the employment contract or the employer's disciplinary policy.
The court applied the principle that "there is no basis to import any process-related obligations or rights beyond anything that is specifically provided for in the contract." The court stated, "it is not for the [worker] to unilaterally impose the requirement to appoint an external third party to be a part of the [employer's] internal disciplinary proceedings."
The court also addressed the worker's allegation that the disciplinary panel "was prejudiced, failed to consider the true facts of his defence and blindly relied on the two emails." The court stated, "the question of whether the employer failed to observe due process is not relevant to the court in considering whether an employee's dismissal was justified."
The court's role was to determine "whether, on a balance of probabilities, the evidence before the court supports the employer's case that the employee's dismissal is justified." The claim was dismissed, and the worker was ordered to file submissions on costs.
