Two significant court decisions in Singapore demonstrate closer scrutiny of disciplinary and performance management processes

At a glance

• In Prashant Mudgal v SAP Asia Pte Ltd, the General Division of the High Court (High Court) affirmed, for the first time in clear terms, that the implied term of mutual trust and confidence (Implied Term) forms part of Singapore employment contracts, and held that implementing a Performance Improvement Plan (PIP), after already reaching a decision to terminate an employee's employment, would be a breach of the Implied Term.
• In JGP v JGQ, the Employment Claims Tribunal (ECT) published its first written grounds of decision, setting out an analytical framework for wrongful dismissal claims under section 14(2) Employment Act 1968 (EA) and finding that an employer who overstated the basis for dismissal – alleging dishonesty when only negligence could be established – had dismissed the employee 'without just cause or excuse'.
• Both decisions signal that the Singapore courts and tribunals are increasingly scrutinising whether internal disciplinary and performance processes are conducted with genuine intent and procedural integrity, and that compliance with contractual notice provisions will not, by itself, shield an employer from liability.

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The implied term of mutual trust and confidence

In Prashant Mudgal v SAP Asia Pte Ltd [2026] SGHC 15, the High Court confirmed, in a landmark judgment, that under the Implied Term, employers are prohibited from acting, without reasonable and proper cause, in a manner likely to destroy or seriously damage the relationship of trust and confidence between employers and employees. The employee-claimant in this case was an employee whose working relationships had deteriorated and had been placed on a 45-day PIP that was presented as a structured opportunity to address behavioural and leadership concerns.

The High Court found that the employer in this case had breached the Implied Term because the PIP implemented was never intended to provide the employee with a genuine opportunity to improve.

Internal correspondence showed that management was already aligned on removing the employee and expediting his exit before the PIP had begun, demonstrating that the outcome of termination was pre-ordained. There was also a clear absence of weekly check-ins, progress assessments, or any formal documentation of the PIP process. Taken together, the High Court found that the employer's implementation of the PIP, on the false pretext of giving the employee an opportunity to improve, constituted a breach of the Implied Term.

Key takeaways

Employers should not assume that a structured PIP automatically shields them from liability. PIPs should be implemented with a genuine intention to support the employee's improvement rather than merely rubber-stamping a decision to terminate employment.

Employers should be careful not to undertake any conduct that may be seen as damaging or likely to damage the relationship of trust and confidence underpinning employment relationships.

As the categories of conduct that may breach the Implied Term remain open, employers should keep abreast of any subsequent case developments on this topic.

'Just cause or excuse' and proportionality in dismissals

In JGP v JGQ [2026] SGECT 1, the ECT took the opportunity to set out an analytical framework for determining whether a dismissal is made 'without just cause or excuse' under section 14(2) EA.

The case arose from an employer's group-wide review into staff medical benefit claims, following which around 40 employees were dismissed for allegedly intentional, wilful, and / or dishonest breaches of the employer's medical claims policy. The employee-claimant in this case argued that their dismissal was made without just cause or excuse within the meaning of the EA.

The ECT held that where misconduct is cited as the basis for dismissal, employers are required to conduct a 'due inquiry' even where termination is done with notice or salary in lieu.

The ECT also found that a two-step test of (1) truth and (2) sufficiency applies to assess whether an employee was dismissed without just cause or excuse.

The test asks whether there is 'truth' behind the employer's allegations, and, if so, whether the circumstances were 'sufficient' to justify a decision to dismiss the employee (or whether a lesser sanction, such as a warning or the reduction of bonus awards, would be more proportionate).

On the facts, the ECT found that the employer overstated the basis of the employee's dismissal – dishonesty – when only a lesser finding of negligence could be established.

Dismissal was not a proportionate response because, among other reasons, the employee was relatively junior and also other employees with comparable conduct were not dismissed. The ECT therefore found that the employer had dismissed the employee without just cause or excuse.

Key takeaways

Employers that cite misconduct as the basis of termination are still required to conduct a 'due inquiry' even if the employer chooses to dismiss an employee with contractual notice or salary in lieu.

In addition, employers must be careful not to overstate the basis of dismissal (eg dishonesty) when the evidence only supports a lesser form of misconduct (eg negligence or carelessness) as this may give rise to a finding that the dismissal was done without just cause or excuse.

Employers should also ensure consistency in disciplinary outcomes for employees with similar or comparable conduct and that like cases are treated alike.

Please click here for a full summary of the two decisions, along with practical checklists to help you adapt to these new developments.