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Employment Contracts Should Be Structured Properly For Compliance With The Employment Act

Supporting employees to resolve employment contract related payment disputes.

Disclaimer: The case study is based on an actual case handled by TADM. The names and identifying details in this case have been changed to protect the privacy of individuals.

Learning Insights

  • Employers may only deduct employees’ salaries for specific reasons stated in the Employment Act.  
  • It is important to structure the employment contract clearly to avoid misunderstandings with employees. 

Background

During mediation, TADM’s mediators help both parties reach an agreement on how to resolve the dispute. However, this can be challenging when one or both parties hold very different views and are unwilling to compromise.

Mr Rama and his employee, Nancy, presented such a situation when they contacted TADM for help to resolve their dispute. 

Nancy had received a bonus of $1500 after serving the company for eight months and resigned after serving for a total of 12 months. Subsequently, Mr Rama deducted $1500 from her salary as he claimed that Nancy would be entitled to this bonus only if she had completed the full bond period of 16 months.

Nancy, however, pointed out that the employment contract did not state that the company had the right to recover this bonus, and was adamant that Mr Rama should not have deducted this amount from her salary.

Both parties were insistent on their interpretations of the employment contract, and were unable to reach a resolution between themselves during the e-Negotiation phase of online mediation.

How TADM helped

TADM’s mediator stepped in to review the arguments made by both parties. 

According to the Employment Act, employers may only deduct employees’ salaries for specific reasons stated in the Act (such as absence from work, damage or loss of money or goods,  amongst others). Recovery of the bonus in this situation was not supported by the Employment Act.

Outcome

With this information, Mr Rama acknowledged that he should not have deducted the bonus from Nancy’s salary and accepted the mediator’s advice to repay the bonus to Nancy as resolution of this dispute.

Employment Contracts TADM