SINGAPORE — The now-defunct Jurong Country Club will not need to pay almost S$417,000 in Central Provident Fund (CPF) arrears to a gym instructor, after the High Court overturned an earlier decision to convict the club on criminal charges of non-payment of CPF contributions.

This was because Mr Mohamed Yusoff Hashim worked for the club as an independent contractor, instead of a club employee, Justice See Kee Oon ruled in his written grounds of decision released on Wednesday (June 12).

The club was fined S$3,600 in June last year, after District Judge Jasbendar Kaur found that it had failed to pay Mr Yusoff CPF contributions for four separate months between 2003 and 2016.

CHRONOLOGY OF EVENTS

• 1991 to October 1998: The club treated Mr Yusoff as an employee and contributed to his CPF. The club then converted his status to an independent contractor, which meant his employee benefits, including paid annual leave and medical coverage, were revoked.

• November 1998 to 2016: He worked there as a gym instructor under a series of contracts, till the club closed for good to make way for the construction of the Singapore-Kuala Lumpur high-speed rail project.

• 2016: The CPF Board began investigating when Mr Yusoff approached it to ask whether he was entitled to CPF contributions. The club was then hauled to court where it contested the charges on the basis that Mr Yusoff was not an employee from 2003 to 2016, but an independent contractor instead.

• June 2018: District Judge Kaur ruled that he was in fact an employee within the meaning of the CPF Act, as evidence showed the club maintained an employment relationship with Mr Yusoff during the period in dispute. She thus convicted the club on four criminal charges and imposed the fine. The CPF Board then applied for an order under the CPF Act, in an effort to get the club to pay Mr Yusoff S$416,924 in CPF contributions (total sum plus interest) for the 85 months he worked there.

• December 2018: The district judge denied the application, saying it was inappropriate. The conviction only involved four separate months and did not cover the remaining 81, and the club was disputing its liability and the quantum of the sum, she noted. The club, represented by Senior Counsel Jimmy Yim and Ms Ang Si Yi, then appealed against its conviction. The prosecution appealed against the dismissal of the application.

• June 12, 2019: Justice See accepted the club’s appeal and ordered the S$3,600 fine to be returned to the club.

HOW TO DECIDE IF SOMEONE IS AN EMPLOYEE?

In clearing the club of the charges, Justice See laid out how to determine whether a person is an employee for the purposes of the CPF Act.

A “flexible approach” that can be adapted to different industries and working conditions should be taken, he said.

The courts should also look at the parties’ express intentions when they enter a contract, and consider if it reflects the reality of their working relationship.

“When the parties have either inadvertently or deliberately used a label (for example, of an independent contractor) that does not match the reality of their working relationship, the court should not hesitate to depart from the express wording of the contract,” he added.

In this matter, Justice See said that not only did the evidence show that the club did not consider Mr Yusoff an employee, but he himself did not either.

The judge noted that in its written submissions, the prosecution had suggested that this case “has wide implications on whether employers can, through contractual machinations, deprive employees of CPF contributions”.

However, it did not argue that the club engaged in such machinations, as the club has not deliberately acted to avoid its obligations under the CPF Act.

“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,” Justice See said.

It was “clear” that Mr Yusoff agreed to the contracts each time knowing he would have to make CPF contributions as a self-employed person, the judge added.

Mr Yusoff testified during the trial in the State Courts that he had been “shocked” when the club told him they would make him a full-time contractor in 1998, but he accepted the arrangement.

He also said he had not asked for his CPF contributions to be reinstated, but instead simply asked for a pay rise.

“The facts suggest that Yusoff did have some bargaining power, and it was not the prosecution’s case that he was a victim of exploitative conduct,” Justice See noted.

He found many factors that the district judge relied on, such as how Mr Yusoff used a punch card system to report his working hours, to be neutral factors that did not point towards Mr Yusoff being an independent contractor or an employee.

On the other hand, several factors pointed towards Mr Yusoff being an independent contractor.

For example, he was not on the club’s list of employees for budgeting purposes. He was not subject to its employee performance appraisal process, and was also not given medical benefits, hospitalisation leave or medical leave.