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SINGAPORE \u2013 An employee on probation is entitled to notice or salary in lieu of notice even if the employer decides not to confirm him, the High Court has held.<\/p>\n
The court said a probation period does not automatically turn an employment contract into a fixed-term contract that expires when the probation ends.<\/p>\n
Whether an employee is entitled to notice depends on the language and construction of the employment contract and the circumstances under which it was made, said Justice Sushil Nair from the Court of Appeal.<\/p>\n
In a judgment released on Aug 24, he said a contract that provides for a probation period is not automatically a contract of service for a specified period under the Employment Act.<\/p>\n
Law firm Nanyang Law had appealed against a decision by the Employment Claims Tribunals (ECT) involving its former staff member Ghui Meng Yang.<\/p>\n
Ghui, who was paid $3,000 a month, started work as a paralegal at the firm on April 10, 2023.<\/p>\n
His letter of appointment said he had to undergo three months\u2019 probation, which was due to end on July 9, 2023.<\/p>\n
The employment terms stated that the probation period was meant to establish his suitability for the job. His performance would be reviewed and the firm could extend the probation if necessary.<\/p>\n
Crucially, the clause also stated that either side could terminate the contract during probation by giving one month\u2019s written notice, without having to give a reason.<\/p>\n
On July 7, two days before his probation was due to end, Nanyang Law informed Ghui in writing that it had decided not to continue his service beyond the probation period.<\/p>\n
The firm said his employment would end on July 9, although his last physical day at the office was July 7.<\/p>\n
It offered him an additional seven days\u2019 salary as a goodwill payment, which would have taken his salary payment up to July 18.<\/p>\n
Ghui disagreed, arguing that the employment terms entitled him to one month\u2019s notice or salary in lieu of notice.<\/p>\n
Nanyang Law countered that July 9 was the expiry of his probation, not the termination of his employment, and therefore no notice was required.<\/p>\n
The firm also said there had been issues with Ghui\u2019s performance and punctuality during his probation. He allegedly made several significant errors and did not improve despite counselling.<\/p>\n
Ghui disputed these allegations but did not bring a wrongful dismissal claim.<\/p>\n
Instead, he pursued his claim for notice pay at the ECT in September 2023.<\/p>\n
The ECT in January 2024 decided in Ghui\u2019s favour and awarded him 20 working days\u2019 salary, treating Nanyang Law\u2019s July 7, 2023, letter as notice of termination.<\/p>\n
That amounted to $2,857.14, as he had already been paid for July 7.<\/p>\n
Nanyang Law appealed to the High Court, arguing that a probation period was effectively a fixed period of employment under the Employment Act.<\/p>\n
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.<\/p>\n
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.<\/p>\n
Ghui\u2019s case was that the words in the probation clause of his contract \u201cdo not expressly or impliedly state that the probation period is a fixed term\u201d.<\/p>\n
In his decision, Nair noted: \u201cThe 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.\u201d<\/p>\n
He observed that the drafters of the section on fixed-term contracts in the Employment Act \u201cmay not have specifically considered the issue of probation periods\u201d.<\/p>\n
\u201cHowever, 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,\u201d he noted.<\/p>\n
He said the mere fact that an employment contract specifies a probation period does not mean that the contract is for a fixed period.<\/p>\n
Instead, the court must examine the actual terms of the employment contract.<\/p>\n
\u201cDepending 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,\u201d he noted.<\/p>\n
Nair said the terms of Ghui\u2019s 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.<\/p>\n
The contract provided for different entitlements during probation, including restrictions on benefits and leave.<\/p>\n
But it also contained provisions that clearly contemplated Ghui remaining employed beyond the probation period.<\/p>\n
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.<\/p>\n
He also rejected Nanyang Law\u2019s argument that the absence of a specific clause dealing with termination at the end of probation meant the contract simply expired.<\/p>\n
\u201cThis is too artificial a distinction,\u201d the judge said, adding that the firm could have drafted the contract to make its position clear.<\/p>\n
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.<\/p>\n
Instead, the contract stated that either party could terminate during probation by giving one month\u2019s notice.<\/p>\n
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.<\/p>\n
He upheld the ECT\u2019s decision and dismissed Nanyang Law\u2019s appeal.<\/p>\n
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.<\/p>\n
Nanyang Law was represented by its associate director Ng Yi Neng, while Ghui represented himself in the High Court appeal.<\/p>\n<\/div>\n
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