Singapore HC rules probation expiry does not remove notice pay obligation

Singapore’s High Court has ruled that the expiry of a probation period does not automatically bring an employment contract to an end, meaning employers may still be required to provide notice or salary in lieu of notice when deciding not to retain a probationer.

The ruling came in the case of Nanyang Law LLC v Ghui Meng Yang, in which the court dismissed an appeal by Nanyang Law against an Employment Claims Tribunal decision awarding its former employee payment in lieu of notice.

Ghui Meng Yang joined Nanyang Law as a Supporting Officer in April 2023 under a contract that provided for a three-month probation period ending on July 9, 2023. The contract stated that either party could terminate the contract during probation by giving one month’s written notice.

Two days before the probation period ended, Nanyang informed Ghui that it had decided not to continue his employment beyond the probation period. The firm argued that his employment would simply expire when the probation period ended and that no notice payment was required.

Ghui disagreed and claimed one month’s salary in lieu of notice. The Employment Claims Tribunal found in his favour, awarding him payment for the remaining 20 working days of the notice period. Nanyang subsequently appealed the decision to the High Court.

The High Court held that simply including a specified probation period in an employment contract does not make the contract a fixed-term contract under Section 9 (1) of Singapore’s Employment Act.

Justice Sushil Nair said the terms of the individual employment contract must be examined to determine whether employment was intended to end automatically when the probation period expired.

The court noted that a probation period is generally an initial period during which an employer and employee assess whether the employment relationship is suitable. Depending on the contractual language, a probation period can form part of a fixed-term arrangement, but it does not automatically do so.

In this case, the terms of Ghui’s employment indicated that the probation period was part of a broader employment contract rather than a separate three-month contract. 

The agreement included provisions covering annual salary reviews and increasing annual leave entitlements based on length of service, which would make little sense if the employment contract automatically ended after three months.

The court also found that the contract expressly provided for one month’s notice during the probation period but did not state that employment would automatically terminate at the end of probation without notice.

The High Court acknowledged Nanyang’s argument that requiring an employee who had already been deemed unsuitable to work through a notice period could be commercially impractical.

However, it said such concerns could be addressed through clear contractual drafting. The court concluded that employers could specify whether an employee who was not retained after probation would receive no notice, a shorter notice period or payment in lieu, subject to the requirements of the Employment Act.

Because Nanyang had not clearly drafted its contract to provide for automatic termination at the end of probation, the court found that Ghui was entitled to one month’s notice or salary in lieu.

As he had already been paid for July 7, he was awarded $2,857.14 for the remaining 20 working days of the notice period, along with $30 in disbursements. The High Court dismissed Nanyang’s appeal and ordered payment of $2,887.14 within one week of the judgment.

The ruling provides an important reminder for employers in Singapore that a probation clause should not be assumed to create a separate fixed-term employment contract.

For HR teams, the judgement places particular emphasis on the wording of employment contracts. Employers that intend employment to end automatically when probation expires should ensure that the contractual terms clearly establish that arrangement. 

Otherwise, simply issuing a letter of non-confirmation before the probation deadline may not be enough to avoid notice obligations.

The decision also reinforces the distinction between probation and fixed-term employment. A probation period can change certain employment conditions, but unless the contract clearly provides otherwise, it may remain part of an ongoing employment relationship that can only be terminated in accordance with the applicable notice provisions.