Employee on probation entitled to notice pay: High court

The firm also said there had been issues with Ghui’s performance and punctuality during his probation. He allegedly made several significant errors and did not improve despite counselling.

Ghui disputed these allegations but did not bring a wrongful dismissal claim.

Instead, he pursued his claim for notice pay at the ECT in September 2023.

The ECT in January 2024 decided in Ghui’s favour and awarded him 20 working days’ salary, treating Nanyang Law’s July 7, 2023, letter as notice of termination.

That amounted to $2,857.14, as he had already been paid for July 7.

Nanyang Law appealed to the High Court, arguing that a probation period was effectively a fixed period of employment under the Employment Act.

It argued that the purpose of probation was for the employer and employee to assess whether they were suitable for each other and then decide whether the employment should continue or end automatically.

It would be pointless to have a probation period if notice is still required, and pointless to have the employee continue at work when the employer has determined that the employee is unsuitable for employment, the firm argued.

Ghui’s case was that the words in the probation clause of his contract “do not expressly or impliedly state that the probation period is a fixed term”.

In his decision, Nair noted: “The Employment Act is silent on what amounts to a contract of service for a specified period of time, and there is a dearth of local authority on this specific issue.”

He observed that the drafters of the section on fixed-term contracts in the Employment Act “may not have specifically considered the issue of probation periods”.

“However, what is clear is that Parliament, in formulating the provisions of the Employment Act, sought to maximise the freedom of employers and employees to contract and to prevent labour rigidities,” he noted.

He said the mere fact that an employment contract specifies a probation period does not mean that the contract is for a fixed period.

Instead, the court must examine the actual terms of the employment contract.

“Depending on the precise contractual language, a probation period can be effected through the creation of a separate, fixed-term contract, just as a fixed-term contract may itself have a probation period,” he noted.

Nair said the terms of Ghui’s employment were more naturally read as a contract of service rather than a fixed-term contract, with different conditions applying during the first three months.

The contract provided for different entitlements during probation, including restrictions on benefits and leave.

But it also contained provisions that clearly contemplated Ghui remaining employed beyond the probation period.

For example, the contract provided for annual salary reviews and increasing annual leave entitlements based on length of service. Such terms would serve no useful purpose if the contract were only for a three-month period, the judge said.

He also rejected Nanyang Law’s argument that the absence of a specific clause dealing with termination at the end of probation meant the contract simply expired.

“This is too artificial a distinction,” the judge said, adding that the firm could have drafted the contract to make its position clear.

If the employee would not be retained after the expiry of the probation period, the contract could have specified whether there would be no notice, a shorter notice period or payment in lieu of notice.

Instead, the contract stated that either party could terminate during probation by giving one month’s notice.

The judge said the firm had failed to establish that the employment contract was a fixed-term one that would automatically expire on July 9 if Ghui was not confirmed.

He upheld the ECT’s decision and dismissed Nanyang Law’s appeal.

Nair ordered Nanyang Law to pay Ghui $2,887.14, comprising $2,857.14 in salary in lieu of notice and $30 in disbursements, as well as the costs of the appeal.

Nanyang Law was represented by its associate director Ng Yi Neng, while Ghui represented himself in the High Court appeal.