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Pre termination penalty in employment contract

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samSG2012
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Pre termination penalty in employment contract

Postby samSG2012 » Thu, 31 Jan 2013 2:58 pm

Dear All,

I'm a qualified professional employed with a Singapore based software company. I joined in Feb 2012 with EP at a salary of S$5000. My EP would expire on 28th Feb 2013.

Compensation from employees for terminating a contract :
As per the clause in my 2 years employment contract, I may be asked to pay back a value equivalent to 3 months of salary (in addition to 3months notice period), if I leave before 12 months of my employment. Kindly note that, company has not incurred any additional expenses on me in the form of training, etc.

When I checked this with MoM, I got a response as below :
"The terms pertaining to monetary compensation for premature termination of the contract is a private contractual agreement and not governed by the Employment Act. The Civil Court will have jurisdiction in deciding such disputes. You may wish to consult a lawyer on this matter. "

As you all are aware, consulting a lawyer in SG is expensive affair.

1. Pls suggest if the compensation amount has to be paid, even if my EP expires.

2. Am I still bound under contractual obligation after EP expiry.

3. Since my EP expires on 28th Feb 2013, can I have the right to refuse extension/renewal of my EP. Would this cause any impact when any other company applies for my Singapore EP at a later stage.

4. Assuming that if I submit my resignation on 30th Jan 2013, would my notice period become ineffective as on 1st March 2013. Am I required to serve this notice period after 28th Feb 2013.

Appreciate any response on the above points.


Thank you.
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sundaymorningstaple
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Postby sundaymorningstaple » Thu, 31 Jan 2013 3:25 pm

If you earn over $2000/month you are not covered under the employment act. Therefore, if you signed the contract, then you are bound by it. Take it to court if you want to waste even more money. You are bound by the terms of the contract you signed. Full Stop.

That's why you should always read ALL of your contract and not just the part that says how much you earn and how much leave you can take.

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Re: Pre termination penalty in employment contract

Postby the lynx » Thu, 31 Jan 2013 3:36 pm

samSG2012 wrote:Compensation from employees for terminating a contract :
As per the clause in my 2 years employment contract, I may be asked to pay back a value equivalent to 3 months of salary (in addition to 3months notice period), if I leave before 12 months of my employment. Kindly note that, company has not incurred any additional expenses on me in the form of training, etc.


And to add to SMS's response, the 'additional expense' would be in form of re-hiring someone new to replace you, whether they spent the same amount on you previously or not.

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Postby samSG2012 » Thu, 31 Jan 2013 4:09 pm

Thanks a lot for your response.

Do you have any contact of lawyers (preferably cheaper ones) whom I can go for an additional advice.

How much do they charge on an avg.

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Postby the lynx » Thu, 31 Jan 2013 4:17 pm

samSG2012 wrote:Thanks a lot for your response.

Do you have any contact of lawyers (preferably cheaper ones) whom I can go for an additional advice.

How much do they charge on an avg.


The ones at Chinatown and Little India are well-known for being cheap. But I have not used them personally. The last lawyer I used was located in People's Park and I won't recommend it because the fee was expensive.

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Postby beppi » Thu, 31 Jan 2013 6:02 pm

I think the question here is whether the penalty is due even if emplyment ends due to EP non-renewal.
I don't know the answer, but think it would be fair to not impose a penalty for things beyond the OP's control. Unfortunately, this won't help him/her, as EP renewal is applied for by the company and decided on by MoM and OP has no way to prevent the company to apply (short of resigning beforehand, which definitely kicks in the penalty) or MoM to grant renewal.

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Re: Pre termination penalty in employment contract

Postby iloverice » Wed, 06 Feb 2013 6:46 pm

I wonder how the OP doing now.

samSG2012 wrote:Dear All,

I'm a qualified professional employed with a Singapore based software company. I joined in Feb 2012 with EP at a salary of S$5000. My EP would expire on 28th Feb 2013.

Compensation from employees for terminating a contract :
As per the clause in my 2 years employment contract, I may be asked to pay back a value equivalent to 3 months of salary (in addition to 3months notice period), if I leave before 12 months of my employment. Kindly note that, company has not incurred any additional expenses on me in the form of training, etc.

When I checked this with MoM, I got a response as below :
"The terms pertaining to monetary compensation for premature termination of the contract is a private contractual agreement and not governed by the Employment Act. The Civil Court will have jurisdiction in deciding such disputes. You may wish to consult a lawyer on this matter. "

As you all are aware, consulting a lawyer in SG is expensive affair.

1. Pls suggest if the compensation amount has to be paid, even if my EP expires.

2. Am I still bound under contractual obligation after EP expiry.
you mean, if your EP renewal rejected or ?

3. Since my EP expires on 28th Feb 2013, can I have the right to refuse extension/renewal of my EP. Would this cause any impact when any other company applies for my Singapore EP at a later stage.

Your contract is for 2 yr, so normally the company will renew your EP and from an employer's point of view (this is from my experience with my prev 2 bosses), if you refuse to be renew is a sign for a resignation and they have a right to enforce the contract, because renewal will be done before 28Feb == it mean you need to resign before 28Feb.

4. Assuming that if I submit my resignation on 30th Jan 2013, would my notice period become ineffective as on 1st March 2013. Am I required to serve this notice period after 28th Feb 2013.
yes, you could always resign, and it mean your EP has been renew, and will you take a risk with new EP application, assume that you got a new job immediately upon your resignation? You aware of the condition related to work pass approval in SG right?

Appreciate any response on the above points.


Thank you.
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Postby lalitpct » Fri, 13 Dec 2013 3:26 pm

sundaymorningstaple wrote:If you earn over $2000/month you are not covered under the employment act. Therefore, if you signed the contract, then you are bound by it. Take it to court if you want to waste even more money. You are bound by the terms of the contract you signed. Full Stop.

That's why you should always read ALL of your contract and not just the part that says how much you earn and how much leave you can take.


Does it mean if you are earning less than 2k , you can get away with the contract???

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Postby sundaymorningstaple » Fri, 13 Dec 2013 4:20 pm

No, it means your are covered under the Employment Act. It doesn't mean you have no obligations, it just means MOM will represent you. Otherwise, you have to pay for your own lawyer.

The Employment Act

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Postby lalitpct » Wed, 19 Feb 2014 1:44 pm

sundaymorningstaple wrote:No, it means your are covered under the Employment Act. It doesn't mean you have no obligations, it just means MOM will represent you. Otherwise, you have to pay for your own lawyer.

The Employment Act


I have a case similar to this , My wife is on a DP and she got a Job in xxxx.There unfortunately while giving offer letter they made her to sign a contract which has weird clauses.

As per the contract my wife wont be able to leave the company for 3 years.
Penalty described as below.
1)If she leaves in first year - 10,000 sgd
2)If she leaves in second year - 7500 sgd
3)If she leaves in third year - 5000 sgd
Salary at that time they gave was 800 sgd , now its 1000sgd after 3 months.

Now constantly they pressurize wife to work beyond workinig hours meaning from morning 9am to 9pm without Over time pay .
They pressurize so that my wife leaves and pay the penalty amount which is beyond our reach.

I know we made a mistake by signing a weird contract but my wife was a fresher and holding a DP , so I was under impression that she wont get a job so easily and may be the company will spend heavely on some training .
But there was no training and now she cant even resign as its already 8 months.

Also note there are other DP holders who left the company because of too much of stress and pressure as well.

Is there some way out in this ?
Last edited by lalitpct on Fri, 28 Feb 2014 12:04 am, edited 1 time in total.

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Postby Sergei82 » Wed, 19 Feb 2014 1:58 pm

lalitpct wrote:
sundaymorningstaple wrote:No, it means your are covered under the Employment Act. It doesn't mean you have no obligations, it just means MOM will represent you. Otherwise, you have to pay for your own lawyer.

The Employment Act


I have a case similar to this , My wife is on a DP and she got a Job in NITYO INFOTECH (a.k.a BHAWYAM ) .There unfortunately while giving offer letter they made her to sign a contract which has weird clauses.

As per the contract my wife wont be able to leave the company for 3 years.
Penalty described as below.
1)If she leaves in first year - 10,000 sgd
2)If she leaves in second year - 7500 sgd
3)If she leaves in third year - 5000 sgd
Salary at that time they gave was 800 sgd , now its 1000sgd after 3 months.

Now constantly they pressurize wife to work beyond workinig hours meaning from morning 9am to 9pm without Over time pay .
They pressurize so that my wife leaves and pay the penalty amount which is beyond our reach.

I know we made a mistake by signing a weird contract but my wife was a fresher and holding a DP , so I was under impression that she wont get a job so easily and may be the company will spend heavely on some training .
But there was no training and now she cant even resign as its already 8 months.

Also note there are other DP holders who left the company because of too much of stress and pressure as well.

Is there some way out in this ?

Yes. If they fire her, she does not have to pay. So she may simply stop working without resignation. Or she may stand up and leave at 6 pm, all else is their problem. They can't impose fine on her in case they lay her off themselves.

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Contract issue

Postby lalitpct » Thu, 27 Feb 2014 10:08 pm

"You agree to serve a minimum fo 36 months of continuous service with the company. In the event that you resign or are terminated (for any reason) within 36 month after the effective date of your employment here under , you will be liable to pay as per the below table in addition of giving three months of notice while you are commitment period , as a reasonable amount of invested on you as a part of our elaborate and strategic training program.
less than 1 year 10.0 k
less than 2 year 7.5 k
less than 3 year 5.0 k

In such an event, any relocation and hiring expenses and advances paid on your behalf or reimbursed to you by the company shall forthwith be refundable to the company and you agree that the company shall be entitled to seek such refund from you.



Above is the description in the contract , as per that we need to pay who ever terminates :( , Can you please advice what will happen in case we break the contract and what is worst think that can happen to us.

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Postby beppi » Thu, 27 Feb 2014 11:11 pm

It may be invalid for a termination by the company, if she falls within the Employment Act (in this case she should contact MoM for advice), but if she herself resigns (or the Employment Act does not apply), it is probably valid and she has to pay, unjust as it may seem.
It was probably a bad idea to agree to this clause by signing the contract.

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bad idea to sign a contract

Postby lalitpct » Fri, 28 Feb 2014 12:01 am

I know but damage is done and we learnt lesson for life.

What is the maximum punishment/worst think that We can get (she is paid only 1k) and I am on EP.

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Re: Contract issue

Postby beppi » Fri, 28 Feb 2014 12:28 am

The answer is in the contract:
lalitpct wrote:less than 1 year 10.0 k
less than 2 year 7.5 k
less than 3 year 5.0 k


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