Why you must act in good faith after signing work contracts

You do not give up your personal rights when you sign an employment contract but doing so binds you to always act in good faith so long as you are still an employee.

This is probably why most bosses make it compulsory for all employees to sign such contracts, which usually come with terms that safeguard corporate interests, such as prohibiting conduct that brings disrepute to the firm.

That said, employers have to hold up their end of the bargain and it is not open to them to cry foul if they fail to act professionally, such as mistreating employees or not paying their salaries.

Similarly, they cannot find fault with their employees for carrying out routine work that has been approved by their bosses.

Here are four rules of engagement that have been highlighted in recent employment disputes in the High Court.

Wrongdoing must be proven 

An education centre repeatedly failed to pay one of its tutors on time and the shoddy treatment drove the freelance teacher to cancel a few of his classes.

The centre then sued the teacher for breaching his duty over the cancellations and other alleged misdeeds.

But the High Court dismissed the claim because the centre had pushed the tutor “over the edge” by not paying his salary and “it would be a travesty of justice” if he were further penalised.

The centre claimed that the tutor was also guilty of misconduct, by being in phone or social media contact with the students without its permission.

But the court ruled that the tutor had done no wrong because some students voluntarily got in touch with him by phone, and their contact numbers could not be deemed as confidential corporate information.

Taking business data illegally

If you are planning to join a competitor, the last thing you should do is start copying files that would help you in your new job.

The law will deem you a “taker”, or a worker who takes business information illegally, meaning you can be sued and asked to compensate your former employer.

Similarly, it is a no-no to copy proprietary software for use in your own business.

In one case, the former employees copied their employer’s software and used it as a reference to create their own product.

The court found that they had used the employer’s materials as “a springboard” to create their own product without having to put in more money and effort to do so from scratch.

This means that you can be sued for breach of confidence by taking and referencing confidential materials alone.

Duty not to betray trust

While many people usually look for new jobs while still being employed, they should do so professionally without disclosing business data to competitors.

So sending your resume containing your general work history and experience is fine but bolstering this with sensitive business data to impress your prospective employer could land you in trouble.

In one case, a senior executive who was planning to jump ship sent a detailed plan that contained various figures and projections relating to a proposed business to his new employer. As it turned out, the proposal was not made up but contained his then company’s client base, incomes and expenditure.

The court found that disclosing company secrets to a competitor in this way breached the man’s employment contract and left him liable to compensate his ex-employer.

Duty not to poach

If you are planning to resign, it is fine to tell your colleagues to stay in touch or even to look for you should they need a job.  

But it is a different story if you start to conspire and cajole your colleagues into also joining the competitor while you are still employed, because this puts you in conflict with the duty of good faith to your company.

For instance, a senior executive disclosed the salaries and work achievements of certain top performers so that they could be more easily enticed to jump ship.

When such poaching is exposed, companies usually go after the instigators and even the new employers, because the sudden departure of key staff members could result in the loss of business.

So even if you are unhappy at work and have a plan to move on, you should never act unprofessionally while still employed and earn yourself a bad reputation that can affect your career.

Tan Ooi Boon is the Invest Editor of The Straits Times

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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