14 June, 2018
The Singapore High Court clarifies when an employee can be considered an "executive".
In the recent case of Hasan Shofiqul v China Civil (Singapore) Pte Ltd [2018] SGHC 128 (China Civil), the Singapore High Court (HC) provided useful guidance on the definition of an "executive" for the purposes of the Employment Act (Cap. 91) (Employment Act).
Background
China Civil concerned an appeal against the decision of the Assistant Commissioner for Labour not to award overtime pay to Mr Shofiqul, a site supervisor employed by the Singapore subsidiary of a Chinese construction company. Mr Shofiqul's claim was primarily for overtime pay which he alleged he was owed to him under Part IV of the Employment Act. His employer alleged that, as an "executive", Mr Shofiqul was excluded from Part IV coverage and therefore not entitled to overtime payments.
Employees who are employed as managers or executives are not covered by Part IV, and accordingly the HC needed to first decide whether Mr Shofiqul was in fact an executive before it could determine his claim for overtime pay.
Decision of the HC
The HC held that Mr Shofiqul was not employed as an executive, and therefore was covered under Part IV of the Employment Act. The reasoning of the HC was as follows:
- all the circumstances of the employment will be considered in order to determine whether an employee is in an executive position;
- the fact that Mr Shofiqul had a supervisory role was not sufficient by itself to lead to the conclusion that he was an executive. It is more important to consider the nature and level of supervisory powers given to him;
- Mr Shofiqul's supervision over his team of workers was of a "hands-on" nature and did not go beyond regular on-site routine administrative work such as applying for the daily permit to work on behalf of the team, making records of work, and conducting informal safety meetings;
- Mr Shofiqul did not have the power to make decisions on hiring, firing, promotion, transfer, reward, and/or discipline of the workers he supervised. At most, he could provide feedback and make recommendations to his superiors who had overall management and control over the workers, including Mr Shofiqul;
- Mr Shofiqul's lack of formal education (he did not have a diploma), specialised skills or training militated against finding that he was an executive.
The parties did not advance any arguments as to whether Mr Shofiqul was a manager. The HC noted this and mentioned in passing that Mr Shofiqul was most likely not a manager, much for the same reasons that he was not an executive.
Comments
China Civil represents a rare decision by the Singapore courts clarifying the issue of whether an employee is employed as an executive or manager for the purposes of the Employment Act. Such clarification is particularly important given that the lack of definitive authority on the issue. The Employment Act does not define the terms "executive" or "manager". As a result, employers are often left to be guided by the rough guidelines provided by the Ministry of Manpower (MOM Guidelines) which state that, in general, managers and executives are employees with executive and supervisory functions which include the authority to influence or make decisions on recruitment, discipline, termination, performance review and reward, strategy, and managing the business.
Based on the HC's reasoning in China Civil, the following points may be instructive for employers in determining the status of their employees under the Employment Act.
Titles are not conclusive
The courts will look beyond an employee's title and instead pay more attention to the nature of the employee's job function and the level of supervisory/managerial powers accorded to the employee.
Management structure
It appears possible that employees at the bottom of a company's management structure will not be considered executives or managers for the purposes of the Employment Act. This is particularly so if the employee, like the appellant in China Civil, does not have any administrative or management powers relating to hiring, firing, promotions, transfers, rewards and/or discipline.
Personal qualifications
The lack of tertiary education and/or specialised certifications obtained through formal training appears to be a relevant consideration.
Manager or executive?
The HC in China Civil appeared to consider that the concepts "manager" and "executive" are very closely related, if not interchangeable or the same. The HC considered it likely that the same considerations for determining whether an employee is an "executive" would apply in determining whether the employee is a "manager". This is in line with the MOM Guidelines which deal with the two concepts together and appears to also treat them as interchangeable.
Recommendations
Given the importance of determining whether an employee is a manager or executive for the purposes of an employer complying with its obligations under the Employment Act, it is crucial for employers to carefully consider all circumstances of the employment in coming to a landing on the issue. China Civil reinforces this point, in particular the need to look beyond job titles and analyse the substance of an employee's job function including the extent of his or her supervisory powers (if any).
For further information, please contact:
Dawn Tan, Partner, Ashurst
Dawn.Tan@ashurst-adtlaw.com
