Goh Guan Chong v AspenTech, Inc [2009] SGHC 73
Court: High Court
Coram: Andrew Ang J
FACTS
The defendant in the case is a company, AspenTech Inc. The plaintiff is Goh Guan Chong, a former employee of the defendant. The dispute arises out of a clause providing for a sign on bonus in the contract for employment.
The plaintiff’s case
The employment contract between the plaintiff and the defendant stated that the plaintiff would receive a sign-on bonus of US$200,000 upon signing the contract to compensate the plaintiff for the loss of his stock options as ATOS (his previous employment). It would be paid to him in twelve quarterly instalments starting March 2001 and ending December 2003. The contract stated that the sign on bonus would be paid in full if he did not leave the defendant voluntarily. If he did, he was liable to full repayment of the sign-on bonus. This was confirmed by the Human Resource Director of the defendant, Amy Lau. Upon such representations, the plaintiff signed the formal letter of employment and commenced employment with the defendant on 1 February 2001.
The plaintiff claimed that there was no dissatisfactory response about his conduct. However on 10 July 2001, the plaintiff attended a meeting with his immediate boss (John Ayala) and Amy where he was informed that the defendant would be terminating his employment contract. The plaintiff was asked to sign a letter of resignation and a payroll calculation which included a “Notice pay” of $80,010, but omitted the sign on bonus and the variable bonus. He highlighted his concerns and Amy offered to enquire about the matter. Subsequently, the sum in the payroll calculation was credited to the plaintiff without his knowledge.
The defendant’s case
The defendant’s case defers in the following aspects:
- (1) That the sign on bonus was to retain the plaintiff in his employment until the end of the employment period and not to compensate the loss of his ATOS stock options. Thus the sign on bonus payments accrued quarterly and not immediately upon entrance into employment.
- (2) That the plaintiff was not terminated, but resigned voluntarily.
- (3) That the plaintiff had agreed to the terms in the 2 documents presented to him after the meeting on 10 July 2001.
ISSUES
The court had to consider the following issues:
- (1) Whether $80,010 was paid in full and final settlement
- (2) Whether the plaintiff resigned from employment on 10 July 2001
- (3) Whether the plaintiff was entitled to the remaining of the sign on bonus payment of $290,000 if he had not resigned
- (4) Whether the $290,000 was payable on 10 July 2001
DECISION
Regarding issue 1, it was held that the $80,010 was not for the full and final settlement of all the issues between the parties. This was because the defendant had never referred to the sum as the full and final settlement, but rather, merely as details of the final pay calculations. Furthermore, the resignation and payroll calculations documents were not signed, indicating that the plaintiff did not agree to them. Upon cross-examination, Amy also conceded that the plaintiff had not agreed to accepting the S$108,989.62 as a full and final settlement and to not receiving the remainder of his sign-on bonus.
Regarding issue 2, it was held that the plaintiff had not resigned, but was terminated. According to the court, the defendant’s willingness to pay the plaintiff the 3 months notice pay of S$80,010 indicated that it was unlikely that the plaintiff resigned. If he did, there was no need to give the 3 month notice pay. The final indication that he had his employment terminated was in a letter from the defendants solicitors to the plaintiff dated 28th September 2006 that stated “As your client’s employment had been terminated, he is not entitled to further instalments of the sign-on bonus”.
Regarding issue 3, it was held that the plaintiff was entitled to the sign on bonus as soon as he entered into employment with the defendant. The meaning of the word ’sign-on’ means ‘to join’. Thus, full sign-on bonus was already entitled to him upon commencement of his employment. The quarterly instalments merely referred to the method of payment. It was also reasoned that the sign-on bonus was a crucial consideration behind the plaintiff signing the employment contract and that it would not have made sense in the plaintiff agreeing to the contract when the defendant could rob him of the bonus just by terminating his contract.
Regarding issue 4, it was held that the sign on bonus would be paid in accordance with what they agreed, i.e. in quarterly instalments with interest at 5.33% until full payment.
Accordingly, the court found in favour of the plaintiff.
COMMENTARY
The court will interpret the obligation to pay contractual bonuses strictly and a bonus does not mean a discretionary payment unless expressed to be so. Clauses awarding bonuses should therefore be carefully drafted.
