Internal Investigations for Employee Misconduct in Singapore: When and Why Your Company Needs One

Employers in Singapore frequently need to conduct internal investigations into employee misconduct before deciding whether disciplinary action or dismissal is appropriate. Whether the allegation concerns theft, sexual harassment, criminal breach of trust, forgery or confidential information, a properly conducted workplace investigation protects both the employer’s legal position and its commercial interests.

It usually starts with a tip-off. An HR manager notices stock levels don’t add up. A colleague reports an uncomfortable remark from a manager. Finance flags an invoice that looks slightly off. Or IT discovers that a departing employee copied the entire customer list to a personal drive the night before resigning.

In each of these situations, the employer faces the same question: what now?

Jumping straight to dismissal is one of the most common mistakes an employer can make. Under Singapore law, terminating an employee for misconduct without first conducting a proper internal investigation can expose the company to legal claims, regulatory scrutiny, and reputational damage, or make it more difficult for the company to recover lost monies.

This article sets out:

• When an internal investigation is legally required
• The most common scenarios that trigger one
• Why getting the process right protects both your company’s legal position and its bottom line

WHAT COUNTS AS EMPLOYEE MISCONDUCT REQUIRING INVESTIGATION?

Under Singapore’s Employment Act, an employer who wants to dismiss an employee without notice for misconduct must first conduct a “due inquiry.” This requires that:

• The employee is informed of the allegations against them
• The employee is shown the evidence relied on
• The employee is given a genuine opportunity to respond before any decision is made

In certain circumstances, employers hire external legal advisers to conduct this internal investigation before deciding to terminate an employee.

COMMON SCENARIOS THAT REQUIRE AN INTERNAL INVESTIGATION

1. Theft

• Unauthorised taking of company property (cash, inventory, equipment, or assets) is among the most frequent reasons for a workplace investigation.
• Theft in the workplace is a criminal offence, meaning a police report may run in parallel with the internal process.
• Employers should preserve CCTV footage, access logs, and inventory records early, as these are time-sensitive and can be overwritten or lost if action is delayed.

2. Sexual Harassment

• Harassment complaints require particular care and typically carry a higher risk of claims of bias or retaliation if handled poorly.
• MOM’s Tripartite Advisory on Managing Workplace Harassment requires employers to keep the identities of the complainant, the alleged harasser, and any witnesses confidential, save where disclosure is necessary for safety reasons.
• Many companies appoint an external legal adviser to investigate, particularly where a senior employee is implicated.

3. Criminal Breach of Trust and Forgery

• Where an employee entrusted with money, goods, or authority over company property misuses that position, for example by diverting company funds to a personal account, this may amount to criminal breach of trust under the Penal Code.
• Falsifying documents, signatures, invoices, or records to conceal a wrong or gain an improper benefit may separately amount to forgery, and often surfaces alongside breach of trust in the same investigation.
• These cases often involve a paper trail across banking records, approval workflows, and internal systems, and typically warrant early legal input given the overlap between internal disciplinary action and potential criminal liability.
• Using an external legal adviser can help employers minimise financial losses and facilitate recovery of diverted company funds.

4. Theft of Confidential or Proprietary Information

• This is one of the fastest-growing categories of workplace investigation.
• Common examples include an employee exporting customer lists, pricing data, or trade secrets before resigning to join a competitor or start a rival business.
• These investigations often turn on IT forensics, such as access logs, file transfer records, and email activity, and frequently intersect with confidentiality and non-solicitation clauses in the employment contract.

WHY COMPANIES SHOULD CONDUCT A PROPER INTERNAL INVESTIGATION

1. Minimising Legal Risk

An internal investigation is not just good governance. It is often a legal requirement:

• Section 14 of the Employment Act obliges employers to conduct due inquiry before dismissing an employee for misconduct. A poorly run or non-existent investigation can result in the employee successfully claiming wrongful dismissal, even where the underlying misconduct actually occurred.
• The Tripartite Guidelines set expectations around confidentiality and fair process. Getting these wrong can expose the company to claims, and/or complaints to MOM or TAFEP.

A properly documented, independent, and fair investigation, with clear records of what was alleged, what evidence was reviewed, and what opportunity the employee was given to respond, is the company’s strongest defence if the outcome is later challenged.

2. Protecting the Company’s Bottom Line

Beyond legal exposure, poor handling of misconduct has a direct financial cost:

• Claims for wrongful dismissal can result in damages, legal fees, and lost management time.
• Mishandled terminations can damage morale and drive attrition among employees who no longer trust the organisation to act fairly.
• In cases involving theft of confidential information or breach of trust, a delayed or incomplete investigation can mean losing the evidentiary trail needed to recover losses, enforce restrictive covenants, or pursue a departing employee who has taken company assets or clients with them.

KEYPOINT A properly conducted investigation is not a cost centre. It is what stands between a contained internal matter and a drawn-out, expensive dispute.

WHEN SHOULD A COMPANY BRING IN EXTERNAL COUNSEL?

Not every internal investigation needs a lawyer from day one. However, certain situations call for early legal involvement:

• The allegation involves senior management or a conflict of interest that makes an unbiased in-house investigation difficult.
• The conduct may amount to a criminal offence (theft, criminal breach of trust, forgery), raising the prospect of parallel police involvement.
• The matter involves potential litigation, such as enforcement of restrictive covenants against a departing employee who has taken confidential information.
• The company anticipates the employee may challenge the investigation or bring a counterclaim.
• The company needs the investigation findings and materials to attract legal privilege.

Our firm regularly advises employers on internal investigations involving employee theft, workplace harassment, criminal breach of trust, confidential information, fraud and disciplinary dismissals. We assist with planning investigations, interviewing witnesses, preserving evidence, advising on due inquiry requirements under the Employment Act, and defending subsequent employment or civil claims. If your organisation is dealing with a workplace misconduct issue, contact us for confidential advice.

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