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CPF Board fails in bid to claim alleged arrears from country club

CPF Board fails in bid to claim alleged arrears from country club

Source: Straits Times
Date Published: 13 Jun 2019
Author: Selina Lum

The High Court rejected a bid by the CPF Board to recover nearly $417,000 in alleged arrears of CPF contributions for a gym instructor who worked at the now-defunct Jurong Country Club.

The High Court rejected a bid by the Central Provident Fund 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 JCC of four criminal charges of non-payment of CPF contributions, overturning a district court decision last year to convict the club.

Mr Yusoff started off as an employee of the club in 1991. In November 1998, JCC 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 JCC under contracts that were negotiated on an annual or biennial basis.

In 2016, when he found out that JCC would be closing down, he asked the board whether he was entitled to employer's CPF contributions. The board decided that he was so entitled, leading to the prosecution raising charges against JCC for alleged non-payment for four months between 2003 and 2016.

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. JCC 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.

JCC 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 that JCC did not consider Mr Yusoff an employee, and neither 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 that 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 that Mr Yusoff did have some bargaining power and the prosecution has not made the case that he was a victim of exploitative conduct.

Justice See also set out the legal test for determining whether a particular person is an employee for the purposes of the CPF Act.

He said the court should first look at the parties' intentions when entering into a contract, and then consider whether what is stated in the contract reflects the reality of the working relationship. If someone is labelled as an independent contractor but the reality of the working relationship does not match up, the court should not hesitate to look behind the label, he said.

In Mr Yusoff's case, Justice See listed various factors that pointed to an independent contractor relationship. This included how Mr Yusoff was not part of JCC's head count and not subject to employee performance appraisal.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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