CNA Explains: Are Agoda's severance clauses that bar contact with authorities legally enforceable?

SINGAPORE: When online travel firm Agoda laid off around 50 people here as part of a retrenchment exercise, the terms of its severance agreements raised eyebrows.

Employees were told not to make reports to any government agencies, statutory boards or trade unions, and to refrain from initiating any mediation requests, claims or proceedings against the company. If they did so, they would lose their severance payments.

The Ministry of Manpower (MOM) said it would look into those provisions, while unions have publicly opposed Agoda's "alleged unfair and irresponsible retrenchment practices".

Responding to CNA's queries on the backlash against its severance terms, an Agoda spokesperson said on Friday (Sep 19): "This was not our intention. The agreement was intended to resolve any remaining issues with impacted employees."

A few hours later on the same day, the company, MOM and unions released new statements revealing that the parties had held meetings. Agoda has since acknowledged that the provisions were inappropriate, and apologised for them as well as for the negative impact on employees.

Are such clauses kosher?

Clauses that try to prevent a worker from using statutory dispute channels are not legal and enforceable, as they are overtaken by national legislation, legal experts told CNA.

Singapore's Employment Claims Act (ECA) voids any agreement term that "excludes or limits" Employment Claims Tribunals' (ECT) jurisdiction, or that "prevents a person from submitting a mediation request or making a claim, application or an appeal" under the Act.

This means a severance clause is void if it penalises someone for going to the Tripartite Alliance for Dispute Management (TADM) or the ECT, said Singapore University of Social Sciences (SUSS) law lecturer Ben Chester Cheong.

As for approaching MOM, there is no freestanding statute that says "a clause barring contact with MOM is void", said Mr Cheong.

MOM has already called Agoda's clauses "inappropriate", and the legal regime makes them practically unenforceable as they would impede the governing legislation and policies, said Mr Cheong.

"Employers also cannot stop employees from joining or engaging with a trade union, per MOM's guidance referencing the Industrial Relations Act," he added.

Withers KhattarWong law firm partner Amarjit Kaur said the stipulation preventing employees from making reports to government agencies and quasi-government agencies, including MOM, TADM and the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP), was "oppressive on the face of it".

"Making reports is technically a distinct action from raising claims with these bodies, and it is therefore irregular for Agoda to demand that employees refrain from doing so, as it could arguably include more innocuous steps shy of raising a claim or complaint," said Ms Kaur, who specialises in commercial disputes and employment issues.

Mr Rajan Supramaniam, senior criminal lawyer at Regent Law, said that such clauses "infringe on the fundamental rights of workers".

"The employment tribunal would not be supportive of such practices. You would not want to open the floodgates regarding unfair contracts, because these workers are not represented by lawyers and may not know their rights," he said.

How common are such practices in Singapore?

Broad provisions preventing contact with the MOM or unions are atypical and attract scrutiny. But they still do happen here, according to experts.

"Standard confidentiality and non-disparagement terms in separation agreements are common in Singapore," said Mr Cheong.

"But they are typically drafted with carve-outs that expressly permit disclosures to regulators, courts or tribunals, law enforcement, and unions. That's mainstream practice among Singapore firms and counsel."

Ms Kaur explained that severance payment is offered as a goodwill gesture, as there is no statutory retrenchment benefit regime in Singapore.

Hence, the employee would agree to waive and release the employer from all claims, in exchange for the payment.

"This is a contractual agreement brokered between the employer and employee and is likely to be upheld as part of the commercial bargain struck," she said.

She noted that it was "fairly unusual" for the clauses to be framed in the way it was for the Agoda case.

Mr Supramaniam told CNA that in the past, he had clients go to him for advice on their severance agreements when the employers resorted to such tactics.

"They typically did not report to the unions or authorities, but went on to negotiate with the company's HR (human resources) on the matter and their grievances were resolved," he said.

Mr Supramaniam said such cases are uncommon - he sees about seven or eight a year, across small and large firms, sometimes even multinational corporations.

In such cases, employees are somewhat at the mercy of their employer, who may even threaten to report them to the authorities, he said. 

"This is especially when it comes to expatriates, because work pass holders are very vulnerable. If anything crops up, they could have their work passes cancelled and they get repatriated."

What rights do ex-staff have then?

In most cases where separation agreements are entered into, the consideration - usually in the form of a goodwill payment - is given in exchange for a waiver of all claims against the company, said Ms Kaur.

"Employees can still bring claims to TADM for mediation, and to the ECT, as these rights are statutorily protected," she noted.

"However, most employees who are required to sign waivers or clauses relinquishing their rights to make a claim may not be aware of this."

Mr Supramaniam similarly said that those employees are actually free to seek legal advice and find out more about employment legislation.

"Even if they sign the agreement with the unreasonable and unfair clauses, they should still have the right to report it to the relevant bodies," he said.

In some cases, employers who find out may then deprive them of the package, but this is based on each company's HR practice. "They usually go into mediation and find a compromise," said Mr Supramaniam.

To avoid arriving at such a situation in the first place, Mr Cheong said that employees should, in practice, ask for explicit carve-outs so a clause does not apply to the following: TADM or ECT, the courts, the police, MOM or TAFEP and other regulators; unions, including consultations in unionised settings; disclosures required by law; and whistleblowing and complaints under the forthcoming Workplace Fairness Act (WFA).

"These carve-outs are standard market practice and consistent with MOM and tripartite guidance on responsible retrenchment and grievance handling," he explained.

If an employer resists, the employee can point them to ECA and WFA statements and to MOM's position on union involvement and retrenchment processes, added Mr Cheong.

What can the authorities do?

When such cases come to light, MOM has to intervene, said Mr Supramaniam.

Companies are free to draft the terms in their contracts, but just because they are legally drafted does not mean they can be read as fair, he added.

"Ultimately, the courts will interpret the disputes, and make a decision based also on the livelihood of the worker," said Mr Supramaniam.

Mr Cheong noted that places like the United Kingdom, European Union, United States and Australia have laws protecting workers who whistleblow or make reports to the relevant authorities.

Singapore has no blanket regulation or legislation which makes it unlawful for employers to impose contractual obligations on employees, restraining them from making reports - including for retrenchments - to the relevant authorities, said Ms Kaur.

But a suite of measures exists to demonstrate MOM's commitment to ensuring employees can seek external recourse for employment-related issues and grievances.

The WFA, which will come into effect as early as next year, also states that employers are prohibited from engaging in a retaliatory act against any employee who submits a grievance, or who has brought proceedings or given evidence against them under the Act.

"As such, while it remains to be seen how the MOM will treat employers who seek to contractually curtail employees' rights to escalate employment concerns, we can expect them to adopt a similar approach ... which values transparency and accountability," said Ms Kaur.