My Day at Labour Court – Case Study

display_imageTaken from the book: A Guide to The Employment Act and its Practical Applications, By Martin Gabriel, © HRmatters21

This case involved a lorry driver who chalked up five accidents over the last ten months. The driver worked for the company for just slightly less than a year. As a driver, his performance was certainly not on par with his fellow colleagues’. The company wanted him to learn a lesson and deducted his salary in order to make good on repairs to the lorry. Insurance reports showed that the driver was at fault and his company was made to pay over S$15,000 in third party claims. The company deducted S$1,000 over two months (S$500 each month) from the driver. The driver’s salary was about S$3,500 per month including OT claims. We shall call the driver Jack Lee to maintain anonymity. The company shall be called ABC Pte Ltd. In a fit of anger, Jack went to see his supervisor to resolve the matter. He was clearly fuming mad when he and the supervisor spoke. The supervisor maintained that the company had the right to deduct his salary as the accidents happened as a result of his negligence and that the insurance report clearly favoured the other parties who had made claims against ABC Pte Ltd. Jack asked his supervisor to return the salary that was deducted from his pay. However, the supervisor refused and tried his best to justify the deductions. The conversation took place at the parking bay, where all the lorries were parked, and not at the site office. As the supervisor spoke, Jack became frustrated and he threw the lorry ignition key on the dirt road before storming off. The next day, Jack did not turn up for work. ABC Pte Ltd had to scramble to find a replacement driver. His last salary was withheld as he did not serve notice and did not turn up for work. Jack later filed a complaint at MOM regarding the unauthorised deductions and his last salary which was being withheld by the company. Up till this stage, I was not involved in the case. A mediation was called for by MOM. However, both parties stood their ground. The company refused to pay anything even though MOM urged the company to take the middle ground and part ways by offering some kind of compensation. Unsuccessful in getting ABC Pte Ltd to reach a compromise, the case was referred to labour court. It was only at this stage that I was called up by the company to help draft a defense for them. I was then appointed as their HR advisor.

The following are the claims from Jack:

  1. Last salary withheld by the company which was about half a month’s salary.
  2. S$1,000 which was deducted from his salary for causing damages to the lorry. He wants the S$1,000 back.
  3. Jack was also claiming deferred mid-year bonus payment. Imagine the audacity of this chap, even after causing five accidents, he felt he was entitled to a bonus, a reward which was basically performance based. I cannot imagine any company that would accept a rate of five accidents within a timeframe of ten months as performance that is good enough to qualify for bonus payment. Anyway, those were his claims.

According to MOM, the hearing of this case was based on unauthorised deduction of salary based on the following provision of the EA;

Sec 26.  No deduction shall be made by an employer from the salary of an employee, unless the deduction is authorised by or under any provision of this Act or is required to be made — (a) by order of a court or other authority competent to make such order”

The following were our rebuttal to the claims made by Jack:

  • Last salary withheld by the company which was about half a month’s salary. Jack vacated office without serving notice on 23 Oct. Registered letter was sent on 29 Oct stating that since he vacated office, he owed ABC Pte Ltd notice-in-lieu.
  • We added that since Jack was unhappy about the deductions, he should have used the grievance procedure and wrote in or spoke to Management about the matter. Instead, Jack took matters into his own hands and vacated office without serving notice nor paying in-lieu of notice. This was highly irresponsible and a gross breach of contract.
  • The return of the S$1,000 which was deducted from his salary for causing damages to the lorry through his negligence.
  • We argued that the deduction for the S$1,000 was due to negligence and that the company had the right to deduct his pay based on the following EA section;

“27(1)(b) deductions for damage to or loss of goods expressly entrusted to an employee for custody or for loss of money for which an employee is required to account, where the damage or loss is directly attributable to his neglect or default”

MOM asked us to show cause. Our reply was that Jack was given sufficient time and opportunity to put forward his case. The insurance report showed that Jack was at fault and it resulted in the company having to pay a substantial amount of money.

  • Bonus claim

As far as we were concerned, bonus was based on performance and Jack’s five accidents clearly showed poor performance as a driver. Also, it is the prerogative of the company to pay bonuses based on staff performance evaluation. Jack had no right to demand for bonus that was not contractual but based on his performance which was substantiated by an appraisal system. An employee also had to be in employment to receive bonus payout as bonus payment is paid as part of a retention and reward scheme. Bonus payment is non-statutory. It is based on a system of performance rewards. Jack had no right to dictate its terms and conditions by asking for bonus.

Our Summary Pointers

  • By vacating office without notice, Jack had caused ABC Pte Ltd substantial damage in productivity.
  • Jack took matters into his own hands and did not use the grievance procedure based on policy.
  • Jack’s history of five accidents reflected his poor performance. Ironically, he wanted to claim bonus, when such payments are clearly a reward system for high performers and are based on merit. As such, his claims are frivolous. The insurance report was used to substantiate negligence as the insurance company was a neutral party.
  • Jack clearly had no regard for safety. Lives could have been lost due to his negligence. His five accidents in over ten months reflected tardiness in his duty as a driver. In addition, if lives had been lost in those accidents, the company could have been held accountable.
  • The court would be mocking the company and all it stood for if an underperforming employee who breached his contract by vacating office is rewarded with monies.
  • The company had endeavoured to strike a balance between business objectives and human relations.
  • The company cannot be seen to be ‘rewarding’ Jack with bonus payment for such poor performance as that would set a very dangerous precedence. Other drivers may receive the wrong message.
  • The use of authority (MOM & labour court) to even the score with ABC Pte Ltd was an abuse by Jack.

Court’s Verdict

The hearing was completed within two days, and we were to meet in the afternoon after lunch to hear the verdict.

The judge awarded us the notice-in-lieu, as he agreed with us that Jack was obliged to serve notice or notice-in-lieu as it was a contractual obligation. Therefore, this amount was off-set against his last salary that was being withheld, which was more or less about the same as his notice period. It amounted to about half a month’s salary for a non-confirmed employee.

The judge did not agree with our deduction of S$1,000 for the five accidents. He said that a lorry could not be considered as ‘goods’. The EA states that we could deduct an employee’s salary “for damage to or loss of goods expressly entrusted to an employee”. If a lorry wasn’t ‘goods’, then what is a lorry? I’m quite certain that it has a monetary value and the EA also did state that “or for loss of money for which an employee is required to account, where the damage or loss is directly attributable to his neglect or default”. I was concerned at such an interpretation. If all employees entrusted with vehicles knew that being negligent and causing accidents would not affect their pockets, I wonder what sort of impact it would have on their work performance.

When the judge made his decision pertaining to the bonus claim, I almost fell off the chair. Bonus payment of about S$800 were to be paid to Jack, the lorry driver! Now where was this coming from? I could hardly believe what I was hearing and interrupted him several times before he scolded me and said that the company could appeal his decision. Which company in their right mind would appeal to the high court for a mere S$800? The MD of the company was also fuming mad and said that we should appeal. At that point of time we were all emotional, so I allowed about two days to pass before persuading the MD that we should let this case pass, as the effort and resources needed to make an appeal to the high court wasn’t worth it. I’m glad the MD agreed with me.

By Martin Gabriel, Senior HR Consultant, HRmatters21

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