Termination of Employment Contract – Serious Misconduct

Phosagro Asia Pte Ltd v Piattchanine louri [2016] 5 SLR 1052

1. Introduction

We acted for the Respondent, Piattchanine louri (“Iouri”) in this appeal against his former employer.

2. Iouri Was the Managing Director

Iouri was the managing director of Phosagro Asia Pte Ltd (“Phosagro”). Iouri was entrusted with authority, responsibility and independence in the conduct of Phosagro’s affairs. He was also the sole authoriser to sign cheques. It had been the practice of Iouri to reimburse his credit card expenses, both personal and corporate, out of Phosagro’s account. Iouri would then settle off his personal claims and reimburse Phosagro towards the end of the year as flagged out by an external accountant. It was found that Iouri had not reimbursed Phosagro for several personal claims as the receipts were not marked (“Expense Accounting Practice”).

One of the issues that was before the Court of Appeal was whether Iouri’s Expense Accounting Practice constitute as a ‘serious misconduct’. The Court of Appeal had in the context of an employment contract to interpret what the phrase ‘serious misconduct’ entailed.

3. Definition of Serious Misconduct 

The Court of Appeal had in the context of an employment contract to interpret what the phrase ‘serious misconduct’ entailed.  The Court held that as there was no definition of ‘serious misconduct’ in the contract, the most principled approach would be to look to the common law principle relating to discharge by breach (i.e a repudiatory breach) for guidance.

In light of this matter, when drafting an employment contract, it is crucial that the employers expressly set out the scope of serious misconduct.  Also, employers may wish to state which of the terms in the employment contract are conditions and identify the situations in which an employee may be summarily dismissed by the employer for cause without notice.