Singapore— On June 12, Wednesday, the High Court foiled a bid from the Central Provident Fund (CPF) Board to recover almost S$417,000 in alleged arrears of contributions over seven years for a gym instructor who had been employed at the Jurong Country Club (JCC), which has since closed down.
The vital point in the High Court’s decision to turn down the bid from the CPF Board is that it determined that the gym instructor, Mohamed Yusoff Hashim, was an independent contractor and had not been a regular worker at JCC.
A 2018 decision from a district court finding JCC guilty was also overturned, as the High Court exonerated the club from four criminal charges for non-payment of CPF contributions.
The gym instructor in question had been an employee of JCC from 1991 through October 1998, and the club contributed to his CPF at this time. When he became an independent contractor in November 1998, his CPF contributions ceased, along with other benefits such as paid annual leave, medical coverage, and annual wage supplements.
However, his work at JCC went on under contracts negotiated either yearly or twice a year. Upon learning that the club was shutting down in 2016, he inquired from the CPF board if he had the right to employer’s CPF contributions.
Since the CPF board said that he was entitled to these contributions, it filed a case against JCC, to which the club argued, using Mr Yusoff’s employment status for the disputed time that the CPF board said he was entitled to the employer contributions.
The district court decided in favour of the CPF board and Mr Yusoff and fined the country club S$3,600 in 2018 after the conviction.
This was when the prosecution sought an order for JCC to pay the arrears with additional interest, for a total of S$416,924.
The district judge denied this, however.
Appeals were filed by both parties — the prosecution against the dismissal of the application for payment of arrears, and JCC against the district court conviction.
However, Justice See Kee Oon said that the evidence that had been presented in the case showed that neither Mr Yusoff nor JCC considered the gym instructor to be an employee during the disputed time.
“It was clear that Yusoff entered into the contracts each time knowing that the result was that JCC would not make CPF contributions, but that he would have to do so as a self-employed person,” the judge wrote in his decision.
While the gym instructor had said he had been surprised to learn that his employment status changed in 1988, he still accepted this.
According to Justice See, the case “has wide implications on whether employers can, through contractual machinations, deprive employees of CPF contributions.
It is curious that Yusoff claimed only in 2016 that the clear terms of the contracts did not, in fact, reflect the true nature of their agreement, particularly in light of the substantive changes that had followed from the formal change in his status.”
Justice See also presented the process of determining whether a person is an employee under the CPF Act. He said that a “flexible approach” can be used in considering various industries and working conditions. He also urged courts to examine parties’ intentions in entering a contract, and determine whether it reflects their actual working relationship.
“When the parties have either inadvertently or deliberately used a label that does not match the reality of their working relationship, the court should not hesitate to depart from the express wording of the contract,” the judge said.
“The fact that (his) contracts were renegotiated on a near-yearly basis (every one to two years) suggested that the parties understood that Yusoff’s employment was not intended to be permanent or for an indefinite duration,” he added.
“I conclude that the reality of the parties’ working relationship was not at odds with the express intention for Yusoff to be an independent contractor. This was mutually understood and accepted between the parties. There was no subterfuge on JCC’s part.” / TISG