Quantum Technologies Global Pte Ltd v Sia Chien Kian

• Jurisdiction: Singapore
• Judge: Vince Gui
• Judgment Date: 13 April 2023
• Neutral Citation: [2023] SGMC 19
• Court: Magistrates' Court (Singapore)
• Docket Number: Magistrate Court Originating Claim No. 612 of 2022
• Hearing Date: 15 December 2022,03 April 2023
• Citation: [2023] SGMC 19
• Year: 2023
• Plaintiff Counsel: Mansurhusain Akbar Hussein and Pillai Remesha Chandran (Jacob Mansur & Pillai)
• Defendant Counsel: The defendant in-person.
• Subject Matter: Contract,Incorporation of terms,Whether terms of company's employee handbook incorporated into employment contract,Civil Procedure,Pleadings,Claimant pleading one contractual provision but not the other,Whether the Claimant should be allowed to enforce the contractual provision that was not pleaded
• Published date: 16 June 2023

District Judge Vince Gui: Introduction

The Claimant is seeking to recover a sum of monies described as “variable incentive” paid to the Defendant. The payment was made towards the tail-end of his employment with the Claimant. It is undisputed that the variable incentive was essentially a form of bonus paid at the discretion of the Claimant, depending on the performance of the company and the employee.

Facts

The Claimant initially pleaded that the payment was recoverable pursuant to clause 3.3.3 of the Employee Handbook. According to this clause, an employee would not be eligible for the variable incentive if he is serving his notice period in the same month that the variable incentive is declared and/or paid. The relevant portion of clause 3.3.3 is reproduced as follows:

Generally, employees are not eligible for pay-out of variable incentive if … the employee is serving his/her notice period on the date/month that any of the incentives is declared and/or paid.

It is undisputed that the Defendant was serving his notice period in the same month as when the payment was made. In this regard: the Claimant processed payment of the variable incentive on 23 March 2022; the Defendant tendered notice of resignation on 25 March 2022 and his contractual notice period was two months; and the variable incentive was credited into the Defendant’s bank account on 26 March 2022.

I should also add for background information the salient terms on which the Defendant was employed by the Claimant: By a letter titled “Offer of Employment” dated 18 November 2020, the Claimant offered the Defendant the position “Quality Systems Engineer (Grade 6)” from 21 December 2020 onwards (the “Employment Letter”). The Defendant would be paid a basic salary of S$4,500 per month. The Defendant was required to serve a probationary period of three months from the date of his appointment. Upon satisfactory completion of his probation, he would be confirmed on permanent employment (clause 3 of the Employment Letter). Upon confirmation, either party may terminate the contract by giving two months of prior written notice (clause 6(b) of the Employment Letter). The Defendant will enjoy benefits and be subject to such further terms as laid down in the prevailing Employee Handbook, subject to the exclusive right and sole discretion of the Claimant to change such benefits and terms at any time hereafter (clause 9 of the Employment Letter).

The variable incentive sought to be recovered comprise two components: $7,200 paid in cash; and $1,224 paid to the Defendant’s Central Provident Fund (“CPF”) account.

Parties’ originally pleaded case and submissions

The Claimant took the view that the Defendant was not eligible for the variable incentive. The Defendant nevertheless received payment of the same because it so happened that when the Claimant processed payment, the Defendant had not yet tendered his resignation notice. By the time the Defendant tendered his resignation notice, it was too late for the Claimant to reverse payment.

The Defendant submitted that clause 3.3.3 of the Employee Handbook did not form part of his employment contract. He also submitted that he was unaware of this clause. He took the position that the employment contract was confined to the terms set out in the Employment Letter. The Employment Letter did not set out clause 3.3.3 of the Employee Handbook.

The Claimant submitted that the Employee Handbook was incorporated into his employment contract by reference, relying on clause 9 of the Employment Letter. Clause 9 states that:

You will enjoy such benefits and be subject to such further terms as laid down in the prevailing Employee Handbook or elsewhere and the Company expressly reserves, subject to the exclusive right and sole discretion to change such benefits and terms at any time hereafter. …

The Claimant further submitted that the Defendant was aware of the existence of the Employee Handbook.

On the interpretation of clause 3.3.3, the Defendant submitted that it does not give the Claimant a right to claw back the variable incentive after it has already been paid out. The Claimant originally took the position that clause 3.3.3 entitled it to do so, because it operated as a “condition subsequent”. As I will elaborate below, it subsequently took a different view and sought to rely on a different clause in its closing submissions.

Discussion

Two main issues arose from the parties’ originally pleaded case and submissions: Was the Employee Handbook incorporated into the employment contract? Is the Claimant contractually entitled to claw back the variable incentive?

Was the Employee Handbook incorporated into the employment contract?

I am of the view that the Employee Handbook was incorporated into his employment contract by reference pursuant to clause 9 of the Employment Letter. Clause 9 expressly states that the Defendant would be “subject to such further terms as laid down in the prevailing Employee Handbook”. It would be apparent from this that the terms of his employment contract may not be exhaustively set out in the Employment Letter and that the Defendant could be subject to further terms as set out in the prevailing Employee Handbook.

Clause 9 is essentially an express incorporation clause. It seeks to incorporate the terms of the Employee Handbook into the employment contract. Terms incorporated by reference are valid and binding even though they are not reproduced within the four corners of the contract (Press Automation Technology Pte Ltd v Trans-Link Exhibition Forwarding Pte Ltd [2003] 1 SLR(R) 712 (“Press Automation”) at [39]).

The Defendant claimed that he was unaware of clause 3.3.3 of the Employee Handbook. He submitted that the Claimant should have drawn his attention to what he deemed as an onerous clause. I am unable to accept this argument for several reasons.

First, the effect of incorporation clauses is such that the terms being incorporated form part of the contract notwithstanding that one party did not have a copy of such terms or had not read them (Press Automation at [39]). The law places the onus on the party signing the contract to request for a copy of the conditions sought to be incorporated by reference (Bintai Kindenko Pte Ltd v Samsung C&T Corp and another [2019] 2 SLR 295 (“Bintai”) at [62]). As the court in Bintai held, if it “signed the contract without doing so, then it had to bear the risks and the consequences of its omission”. Having signed and accepted the contract, the signatory cannot seek to disclaim knowledge of those terms at the time of contract (Bintai at [63]). Further, the court in Bintai endorsed the holding in Press Automation that there is no need for the other contracting party to draw the attention of the party sought to be bound to onerous and unusual conditions (at [60]).

Further, and in any event, the fact of that matter is that the Claimant was aware of the existence of the Employee Handbook. This is not a case where a contracting party was blindsided by an incorporation clause and the terms sought to be incorporated. In this regard: the Defendant does not deny knowing about the existence of the Employee Handbook; the Defendant testified during trial that a Human Resource (“HR”) staff of the Claimant explained clause 9 of the Employment Letter to the Defendant at the time of contract; by an email dated 9 March 2021, the Claimant informed the Defendant that the latest version of the Employee Handbook was available on the “Public drive”; and by an email dated 23 March 2021, the Claimant informed the Defendant that he has been confirmed as a permanent staff with retrospective effect from 21 March 2021, and with that confirmation, he was now “eligible for the benefits as indicated in the prevailing Employee Handbook”.

Indeed, the Defendant testified that he accepted that certain parts of the Employee Handbook were applicable to him. While he said certain parts of the Employee Handbook were not applicable to him, in my view the Defendant cannot cherry-pick contractual provisions, adopting what is favourable (such as being eligibility for annual leave and bonuses), while discarding what is not favourable to him (such as the conditions on which bonuses are to be paid).

The Defendant also claimed that it did not occur to him that the Employee Handbook would spell out the terms on which bonuses are paid. This is because, according to him, the Employment Letter already states that there were two bonuses to be paid out, one in December and the other in March,...