Prashant Mudgal v SAP Asia Pte. Ltd.

Facts

Mr Prashant Mudgal, Head of Services Sales for SAP's Ariba business in the Asia Pacific and Japan region, sued his former employer SAP Asia Pte Ltd in Originating Claim No 83 of 2023. His employment, which could be ended on one month's notice, was terminated by notice served on 21 November 2019, with his last day on 31 December 2019.

Tension had built between him and Ms Raman, head of the services delivery team. In July and October 2018 he sent e-mails criticising her and her team, the second copied to senior colleagues. His superior, Ms Seabury, told him to apologise in writing; he refused. On 20 November 2018 she wrote to HR that he could not continue in his role and that there was "full alignment on removing" him. He was placed on a 45-day performance improvement plan (PIP) on 21 March 2019. During it, Ms Seabury acknowledged he was following the plan and being professional, yet on 24 April 2019 asked HR how to remove him as soon as possible. The PIP was never formally closed out and he believed he had passed it. In October 2019 she asked for his employment to be terminated.

Mr Mudgal alleged that five senior staff conspired to remove him and that SAP breached implied terms of his contract. He claimed $4,961,767.05, mainly lost earnings, plus damages for major depressive disorder and loss of dignity.

Issues

1. Whether the claims in unlawful and lawful means conspiracy were made out.
2. Whether an implied term not to terminate arbitrarily or in bad faith, and an implied term of mutual trust and confidence, exist in employment contracts under Singapore law.
3. Whether SAP breached the implied term of mutual trust and confidence.
4. What damages, if any, were recoverable.

Holding

The High Court allowed the claim in part. It held that SAP breached the implied term of mutual trust and confidence by putting Mr Mudgal through a PIP whose outcome was pre-ordained, but dismissed the conspiracy claims and the claim on the implied term against arbitrary termination. As none of the losses claimed was proved to flow from the breach, it awarded nominal damages of $1,000, with costs to be heard separately.

Reasoning

The termination itself was lawful under the contract. There could be no conspiracy between SAP and its own employees acting for it, there being only one legal actor, and no intention to injure him was shown.

Following Dong Wei v Shell Eastern Trading (Pte) Ltd [2022] 1 SLR 1318, no term limits an employer's contractual right to terminate. But the court held that the implied term of mutual trust and confidence exists. Cheah Peng Hock v Luzhou Bio-Chem Technology Ltd [2013] 2 SLR 577 had implied it in law and has not been overruled, appellate courts have left the question open, and fairness and policy support it given the employee's dependence on and vulnerability within the relationship. Its threshold is high and objective, it yields to express terms and reasonable and proper cause, and it does not govern the act of dismissal.

On the facts, managers had settled on removing him before the PIP, HR's own e-mail said leadership had no appetite for long-term correction, and the doubts about his improvement rested on Ms Raman's view and claims others did not support. The plan was poorly documented and never closed out. Leading him on with a false offer of a genuine chance to improve was intolerable conduct without reasonable and proper cause. Complaints about an unfair investigation failed, as he had been told of the accusations and had full chances to answer them.

Lost earnings were not caused by the breach: his applications never turned on how he left, and he himself pointed to the difficult pandemic job market. His depression arose before he could have known of the hidden conduct and was too remote, as SAP knew of no vulnerability. The court said he was, to a large extent, the author of his own misfortunes.

From the judgment