Singapore

High Court rejects CPF Board’s bid for $417k in alleged arrears

The High Court rejected a bid by the Central Provident Fund (CPF) Board to recover nearly $417,000 in alleged arrears of CPF contributions over 85 months for a gym instructor who worked at the now defunct Jurong Country Club (JCC).

The decision yesterday hinged on the court's conclusion that Mr Mohamed Yusoff Hashim was not an employee of the club but was instead an independent contractor.

The court also cleared the club of four criminal charges of non-payment of CPF contributions, overturning a district court's decision last year.

Mr Yusoff started as an employee of the club in 1991.

In November 1998, it stopped contributing to his CPF after his status was converted to that of an independent contractor.

His employee benefits, such as paid annual leave, medical coverage and annual wage supplements, were also revoked.

He continued to work at the club under contracts negotiated on an annual or biennial basis.

In 2016, when he found out the club would be closing down, he asked the board whether he was entitled to employer's CPF contributions.

The board decided he was, leading to the club being prosecuted for alleged non-payment. The club, represented by Senior Counsel Jimmy Yim, fought the charges, contending that Mr Yusoff was not an employee at the time.

A district judge, however, concluded that Mr Yusoff was in fact an employee.

The club was fined $3,600 after it was convicted of the charges last year. The prosecution sought an order for the club to pay arrears in contributions plus interest amounting to $416,924, but this was denied by the district judge.

The club then appealed against the conviction, while the prosecution appealed against the dismissal of its application for payment of arrears.

In a 54-page judgment yesterday, Justice See Kee Oon said the evidence showed the club did not consider Mr Yusoff an employee and nor did Mr Yusoff himself.

"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," he said.

Mr Yusoff testified he was shocked in 1998 when told about the change in his status, but accepted the arrangement.

Justice See also addressed submissions by the prosecution that 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," he said.

The judge said the facts suggest Mr Yusoff did have some bargaining power and the prosecution has not made the case that he was a victim of exploitative conduct.

"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."

COURT & CRIME