1 The claimant, Poten & Partners Pte Ltd (“Poten”), is a company incorporated in Singapore. ¹ The defendant, Lee Won Sang (“Mr Lee”), was formerly employed by Poten as a Senior Liquefied Petroleum Gas (“SLPG”) Broker. ² Poten is claiming more than S$1.7m from Mr Lee for failure to make payment in lieu of notice (“PILON”) of resignation or alternatively, common law damages of about S$3.7m to S$4.1m for wrongful termination of his employment contract.

2 It is not disputed that Mr Lee had terminated the employment contract with Poten. Under the employment contract, both parties contractually agreed that Mr Lee’s employment was for an initial period from 16 November 2024 up to and including 15 May 2029 (“Initial Period”), ie, a period of four years and six months. It is not disputed that Mr Lee had tendered his resignation to Poten on 4 April 2025. Poten is claiming, among others, for damages computed based on the remainder of the Initial Period, ie, four years, one month and 12 days.

3 Poten is an affiliated company of BGC Partners (Singapore) Limited (“BGC”). ³ Poten provides brokerage services to the energy and ocean transportation industries. ⁴

4 Mr Lee was employed as a SLPG Broker in Poten since 2 November 2017 until he tendered his resignation on 4 April 2025. ⁵

5 On 4 April 2025, Mr Lee sent an e-mail to Hiroaki Kakeya (“Mr Kakeya”), his immediate superior. In the e-mail, Mr Lee stated, among other things, that he would resign from Poten with effect from 4 April 2025. ⁶ Mr Lee also stated that he understood that his garden leave period of six months would last until 3 October 2025. ⁷

6 After 4 April 2025, Mr Lee did not return to Poten’s office to perform his duties under his contract of employment. ⁸

7 On 9 April 2025, Chan Yee Man (“Ms Chan”), the Human Resource Manager of BGC, sent an e-mail to Mr Lee. In the e-mail, Ms Chan directed Mr Lee to return to Poten’s office to continue to perform his duties under his employment contract until the expiry of his notice period, which she stated as 15 May 2029. ⁹ Mr Lee did not do so.

8 On 15 April 2025, Ms Chan sent another e-mail to Mr Lee. Ms Chan stated that if Mr Lee did not intend to serve the remainder of his notice period, Mr Lee was required to pay PILON of S$1,735,814.56 to Poten. ¹⁰

9 Mr Lee replied to Ms Chan’s e-mail on 17 April 2025, stating that he did not see any reason to pay monies to Poten. ¹¹

10 On 16 May 2025, BGC wrote a letter of demand to Mr Lee. ¹² BGC demanded that Mr Lee pay S$1,748,807.66 to Poten. This sum included: (a) PILON of S$1,737,433.79 which Mr Lee was allegedly required to pay, and (b) a further sum of S$11,373.87 which BGC alleged was overpaid salary for the month of April 2025. ¹³

11 On 30 May 2025, Poten’s solicitors, Allen & Gledhill LLP (“A&G”), issued a further letter to Mr Lee’s solicitors, I.R.B. Law LLP (“IRB Law”). A&G informed IRB Law that Poten accepted Mr Lee’s repudiation of his employment contract, and Poten terminated the employment contract and/or treated the employment contract as being discharged. ¹⁴

12 Prior to 30 May 2025, Poten paid Mr Lee his monthly salary for April 2025 and May 2025, despite Mr Lee’s resignation on 4 April 2025. ¹⁵

13 Poten subsequently commenced HC/OC 663/2025 (“OC 663”) against Mr Lee on 21 August 2025. ¹⁶ Based on Poten’s Statement of Claim filed in OC 663, Poten seeks, among other reliefs: ¹⁷

14 As this action concerns the construction of Mr Lee’s employment contract, I shall set out the background relating to the relevant provisions of Mr Lee’s contract below.

15 Mr Lee first entered into a contract of employment with Poten on 16 April 2014, when Mr Lee was employed as a SLPG Broker. ¹⁸ Mr Lee ended his employment with Poten around December 2015. ¹⁹ Mr Lee did not work for Poten from December 2015 to 1 November 2017. Mr Lee returned to work for Poten in November 2017 and entered into an employment contract dated 2 November 2017, when he was employed as a SLPG Broker (“2017 Employment Contract”). ²⁰

16 Mr Lee entered into another similar contract of employment with Poten on 16 November 2018, under which Mr Lee was also employed as a SLPG Broker (“2018 Employment Contract”). ²¹ The 2018 Employment Contract stated that “[Mr Lee’s] employment with [Poten] under the terms of this Contract will start on 16 November 2018” [emphasis added]. ²² The 2018 Employment Contract contained different terms from and superseded the 2017 Employment Contract.

17 The 2018 Employment Contract was amended by a letter dated 16 November 2021 (“2021 Amendment Letter”). ²³ The 2018 Employment Contract, as amended by the 2021 Amendment Letter, was further amended by a letter dated 11 February 2025 (“2025 Amendment Letter”). ²⁴ I refer to the 2018 Employment Contract, as amended by the 2021 and 2025 Amendment Letters, as the “Employment Contract”.

18 The relevant provisions of the Employment Contract are set out below: ²⁵

19 The issues to be determined are as follows:

(a) Is Poten entitled to recover from Mr Lee the PILON that Mr Lee allegedly failed to pay upon his resignation, and if so, what is the appropriate quantum Poten is entitled to (“PILON Claim”)?

(b) Is Poten entitled to recover from Mr Lee damages based on an alleged breach of contract, and if so, what is the appropriate quantum Poten is entitled to (“Damages Claim”)?

(c) Is Poten entitled to recover the two months’ salary from 4 April 2025 to 30 May 2025 that it had earlier paid to Mr Lee, on the basis that Mr Lee was unjustly enriched by such salary payments as Mr Lee did not work for Poten after 4 April 2025 (“Unjust Enrichment Claim”)?

20 First, Poten claims a sum of S$1,737,433.79 from Mr Lee for PILON. ²⁶

21 Poten avers that under s 11(1) of the Employment Act 1968 (2020 Rev Ed) (“EA”), Mr Lee had two options to terminate the Employment Contract: (a) work until the end of the notice period; or (b) pay PILON. ²⁷ Poten pleads that Mr Lee had elected to pay PILON by refusing to work after 4 April 2025. ²⁸

22 Poten pleads that Mr Lee’s notice period for his resignation was 4 April 2025 to 15 May 2029, ²⁹ such that the length of notice was not six months but four years, one month and 12 days. ³⁰ Poten argues that Mr Lee has to pay PILON for the sum of S$1,737,433.79 as this sum represents the pay due to Mr Lee during the balance of the Initial Period, ie, four years, one month and 12 days. ³¹

23 Poten argues that cl 1.2 of the Employment Contract provides an Initial Period, which cannot be shortened by giving notice of resignation that would expire prior to the last day of the Initial Period. ³² Thus, any termination clause in the agreement must be read in the context of the Initial Period. ³³ Poten argues that cll 1.2 and 10.1 provide for a notice period for resignation, and this notice period runs from the date of termination to the last day of the Initial Period, ie, 15 May 2029. ³⁴ I refer to Poten’s interpretation of Mr Lee’s notice period (being four years, one month and 12 days) as “Poten’s Notice Interpretation”.

24 Poten argues that Ei-Nets Ltd v Yeo Nai Meng [2004] 1 SLR(R) 153 (“Yeo Nai Meng”) supports Poten’s argument that Poten’s Notice Interpretation is the correct interpretation of cl 10.1 of the Employment Contract. The termination clause in Yeo Nai Meng reads as follows (Yeo Nai Meng at [54]):

25 In Yeo Nai Meng, the employer terminated the employee, a director, prior to the last day of the “initial term”, but claimed that it was entitled to do so by giving the employee six months’ notice of termination in writing. However, the appellate court held that the employer could not have terminated the employee’s services earlier than the expiry of the three-year period. The appellate court explained that if it were possible to terminate before the three years in that case, there would have been no need to mention a period of three years in the termination clause (Yeo Nai Meng at [59]).

26 Poten refers to the words “such notice not to expire prior to the last day of the Initial Period” [emphasis in original omitted] found in cl 10.1 of the Employment Contract. ³⁵ Poten argues that the reasoning in Yeo Nai Meng is “reflected” in the words of cl 10.1. ³⁶ Poten asserts that based on the holding in Yeo Nai Meng that the notice period could not expire earlier than the end of the initial term, the notice period of the Employment Contract does not expire prior to the end of the Initial Period. ³⁷

27 Mr Lee’s pleaded defence is that he did not elect to pay PILON. Rather, he resigned with six months’ notice and sought garden leave. ³⁸ Mr Lee denies any liability to Poten, including any liability to pay PILON, in his Defence. ³⁹

28 Mr Lee argues that cl 10.1 of the Employment Contract is a six-month notice clause and not one with a notice period which only expires on 15 May 2029. ⁴⁰ Mr Lee argues that Poten’s Notice Interpretation makes the requirement for a six-month notice period otiose, since resignation tendered at any time before the last six months of the Initial Period would create a notice period extending beyond six months. ⁴¹

29 Mr Lee’s alternative pleaded defence is that if the court accepts that Poten’s Notice Interpretation is the correct interpretation of cl 10.1, such an interpretation would render cl 10.1 an unreasonable restraint of trade ⁴² and a penalty. ⁴³

30 Mr Lee submits that cl 10.1, if interpreted under Poten’s Notice Interpretation, would operate in substance as a restraint on Mr Lee’s freedom to leave employment and pursue his livelihood. ⁴⁴ He argues that a cornerstone of a healthy economy is flexibility for workers to move from one job to another, rather than for employers to tie down employees for years. ⁴⁵

31 Mr Lee also argues that Poten’s Notice Interpretation makes cl 10.1 a penalty and analogises the present case to Kelington Engineering (S) Pte Ltd v Gan Cheng Chuan [2022] 5 SLR 614 (“Kelington”).

32 In Kelington, a prospective employee signed a letter of appointment with a company, which contained a clause (ie, cl 1.5) stating that if either party terminated the contract of employment prior to the expiry of the three-year term, they would compensate the other party the amount equivalent to the employee’s salary for the balance of the three years (Kelington at [25]). The prospective employee never commenced employment with the company after signing the contract of employment and the company sued the prospective employee for a sum equivalent to three years of his salary under the letter of appointment, pursuant to cl 1.5. The court held that cl 1.5 was an unreasonable penalty, as the requirement for the prospective employee to pay the company three years of salary did not provide a genuine pre-estimate of the likely damage that would have been caused by the prospective employee’s breach (Kelington at [96]). ⁴⁶

33 Mr Lee similarly argues that Poten has not shown that the sum of S$1,737,433.79, which is the PILON, is a genuine pre-estimate of likely loss suffered by Poten by Mr Lee’s termination of the contract. ⁴⁷ Thus, Mr Lee submits that if the court construes cl 10.1 based on Poten’s Notice Interpretation, the clause should be struck down for being “penal in substance”. ⁴⁸

34 The facts of the case are largely not disputed. Mr Lee admitted that he had tendered his resignation via e-mail on 4 April 2025, soon after he signed his fifth employment contract on 24 February 2025 with Poten (ie, the Employment Contract). It is also undisputed that Mr Lee did not pay PILON and did not serve out any notice period, even though Mr Lee thought that the notice period was for six months. Mr Lee was also not put on garden leave by Poten. Clearly, the undisputed facts are that Mr Lee had failed to comply with the terms of the Employment Contract. The legal consequences of such failure, including the quantum of sums due to Poten, remain to be determined.

35 To determine whether Mr Lee is liable to pay PILON, the court has to look at the Employment Contract as well as the EA. I shall now refer to the relevant provisions of the EA. Section 11(1) of the EA reads as follows:

36 Section 11(1) of the EA is engaged when either party wishes to terminate the employment contract. Two choices are available to the party wishing to terminate the employment contract after providing notice of resignation:

(a) First, the party who wishes to terminate the contract (“Terminating Party”) may wait for the notice period to expire, ie, for the employee to work throughout the notice period, or any other suitable contractual arrangement, such as placing the employee on garden leave.

(b) Second, the Terminating Party may pay to the other party a sum equivalent to the amount of salary which would have accrued to the employee during the notice period, otherwise referred to as PILON.

37 It is undisputed that Mr Lee intended to terminate the Employment Contract, as evinced in his e-mail dated 4 April 2025 (see [5] above). Having done so, Mr Lee is obliged, under s 11(1) of the EA, to engage in one of the actions listed in [36] above, namely, to continue to work until the notice period expires or to pay PILON. Mr Lee acknowledges that he did neither. ⁴⁹ Poten has now claimed PILON from Mr Lee.

38 I turn to consider the quantum of PILON Mr Lee owes to Poten. This, in turn, is dependent on the length of the notice period, which is heavily contested in this case.

39 The EA dictates the length of a notice period in an employment contract. Specifically, s 10(2) states:

40 I shall now turn to the Employment Contract to ascertain the presence of any provision made for notice which can determine the length of the notice.

41 There are two clauses of the Employment Contract that are relevant in this regard. These are as follows:

42 The general principles of contract law, including rules of construction, apply to employment contracts (Ravi Chandran, Employment Law in Singapore (LexisNexis, 6th Ed, 2019) at para 3.5). In the interpretation of contractual provisions, it is important to ascertain the substance and effects of the contract over its form. In Standard Chartered Bank v Neocorp International Ltd [2005] 2 SLR(R) 345 (“Neocorp”), V K Rajah J (as he then was) laid down the following principles, which were later cited in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 (“Zurich Insurance”) at [92]:

43 Additionally, the case of Travista Development Pte Ltd v Tan Kim Swee Augustine [2008] 2 SLR(R) 474 provides at [20]:

44 The Court of Appeal, in its later decision of Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193, further explained the approach to contractual interpretation (at [27]–[28]):

45  I shall now refer to the Employment Contract to ascertain the length of the notice period that Mr Lee had to serve after he had tendered his resignation on 4 April 2025.

46 Throughout the course of the proceedings, Poten has relied heavily on the case of Yeo Nai Meng to support Poten’s Notice Interpretation. However, in my view, while Yeo Nai Meng contains a similarly-worded termination clause, Yeo Nai Meng does not assist Poten’s PILON Claim. In Yeo Nai Meng, the appellate court found that the employee, a director, was wrongfully dismissed and damages had to be awarded to the employee, since the employment contract had a fixed tenure of three years. The appellate court upheld the trial judge’s decision to award the employee damages of S$308,000 for his wrongful dismissal. Thus, the relevant cause of action in Yeo Nai Meng was damages for wrongful termination by the employer, and the appellate court did not adjudicate on whether the employer was liable to pay PILON as it found that the employment contract did not have a notice period for resignation during the three years’ employment. Therefore, the appellate court in Yeo Nai Meng did not consider whether the length of notice for resignation could be determined by a provision made for notice in the employment contract, as required under s 10(2) of the EA.

47 Ultimately, the most compelling point, in my view, is one which I had raised to Poten during the trial. Clause 10.1 of the Employment Contract states: “either party must give at least six months’ notice to the other in writing, such notice not to expire prior to the last day of the Initial Period”. This statement reinforces the Initial Period in cl 1.2. This means that the six months’ notice period set out in cl 10.1 is inoperative for almost the entire Initial Period as the notice period cannot expire prior to the last day of the Initial Period. For the notice period to be six months, the start of the six months’ notice has to be on or after 15 November 2028.

48 Clause 10.1 of the Employment Contract is supposed to determine the length of notice for either party to terminate the Employment Contract. But in substance, the notice period does not apply to the Initial Period. ⁵⁰ The Employment Contract does not contain a provision which determines the length of notice should a party wish to terminate the Employment Contract more than six months before the end of the Initial Period. ⁵¹ As I explained to counsel for Poten, based on Poten’s Notice Interpretation, if the period of notice is not six months, the stipulated six months’ notice period in the Employment Contract is rendered otiose for termination during the Initial Period. ⁵²

49 In response, counsel for Poten argued that the notice period could extend beyond six months because the phrase “at least” precedes the words “six months’ notice”. ⁵³ However, as I explained at the trial, if a defaulting party breaches the Employment Contract by resigning prior to the end of four years, the other party can sue the defaulting party separately for expectation loss incurred during the balance period. ⁵⁴ In fact, Poten did so. Poten has raised the Damages Claim, which I have addressed at [77]–[113] below.

50 In contractual interpretation, substance takes precedence over form (Neocorp at [36]; Zurich Insurance at [92]). In substance, Mr Lee cannot resign during the Initial Period of four years and six months. Clause 10.1 does not provide a notice for resignation during the substantial portion of the Initial Period. Clause 10.1 reinforces cl 1.2 which states that the Employment Contract is for an Initial Period of about four years and six months till 15 May 2029. The six months’ notice for resignation in cl 10.1 is only applicable during the last six months of the Initial Period and after the Initial Period as cl 10.1 allows the contracting parties to continue in employment indefinitely after having served the Initial Period.

51 However, Poten alleges that there is a notice period during the Initial Period, which is the balance of the Initial Period from the date of resignation (ie, 4 April 2025) till 15 May 2029. I disagree. In fact, there is no operative notice period for resignation in the Employment Contract until six months before the end of the Initial Period as Poten wanted Mr Lee to remain in its employment till 15 May 2029. Therefore, I conclude that there has been an absence of a provision that determines the length of the notice period in the Employment Contract prior to six months before the end of the Initial Period.

52 Although it appears that cl 10.1 of the Employment Contract is a protocol to allow parties to terminate the Employment Contract, in reality, Poten does not provide a notice period to allow Mr Lee to resign prior to six months before the end of the Initial Period. Rather, an employee is required to work until the end of the Initial Period or at least six months before the expiry of the Initial Period before he can tender his resignation. This seems consistent with cl 1.2 which stipulates the Initial Period. If Mr Lee chose to do so, like in this case, he has to pay the colossal sum of about S$1.7m as argued by Poten. Poten’s Notice Interpretation clearly penalises Mr Lee financially for resigning during the Initial Period. This shackled Mr Lee to the Initial Period. Poten does not deny that Mr Lee wished to terminate his Employment Contract during the Initial Period. Poten requires Mr Lee to serve out the balance of the Initial Period, ie, four years, one month and 12 days, otherwise, he may have to pay several years’ worth of salary to Poten.

53 It is not disputed that Poten drafted the Employment Contract. Poten is in a dominant situation as far as the Employment Contract is concerned. Therefore, the contra proferentem rule stipulates that any ambiguity will be interpreted against Poten, applies. In this case, there is ambiguity in cl 10.1 as to whether there is a notice period during the Initial Period. Poten asserts that there is a notice period which is the balance of the Initial Period. I am of the view that in this case,, there is no notice period prior to six months before the end of the Initial Period.

54 I have explained at [50]–[52] above that there is actually no notice period for resignation in the Employment Contract prior to six months before the end of the Initial Period. Therefore, it is necessary to seek assistance from the EA on how Mr Lee could resign during the Initial Period. Section 10(2) of the EA states that in the absence of a notice provision, the length of notice must be in accordance with s 10(3) of the EA. Section 10(3) of the EA is as follows:

55 In the present case, Mr Lee commenced his current period of employment with Poten on 2 November 2017, and Mr Lee indicated his intention to terminate his employment on 4 April 2025 (see [4] and [5] above). Thus, Mr Lee would have been employed by Poten for about eight years, ie, more than five years. This duration excludes the period when he was in Poten’s employment from 2014 to 2015. Therefore, the applicable notice period for Mr Lee will be four weeks, as stipulated in s 10(3)(d) of the EA.

56 Under s 11(1) of the EA, the amount due as PILON is a sum equal to the amount of salary at the gross rate of pay which would have accrued to the employee during the period of the notice. Mr Lee’s notice period for resignation is four weeks, in accordance with s 10(3)(d) of the EA. I shall now ascertain the amount of PILON owed to Poten.

57 “Gross rate of pay” is defined as follows (s 2 of the EA):

58 Based on cl 5.1 of the Employment Contract, Mr Lee’s base salary was “S$421,000 per annum”, with Mr Lee being “paid monthly in arrears”. ⁵⁵ I note that Mr Lee does not have a contractually-stipulated allowance. Rather, he is reimbursed for special expenses incurred by him in the course of his employment, ⁵⁶ which is excluded from the statutory definition of “gross rate of pay”.

59 Given that Mr Lee’s annual gross rate of pay is S$421,000, the amount of salary at the gross rate of pay which would have accrued to Mr Lee during the period of notice is S$421,000 divided by 52 (weeks in a year) multiplied by four (weeks of notice period) = S$32,384.62.

60 Therefore, Mr Lee owes Poten a sum of S$32,384.62 as PILON.

61 However, Mr Lee, in his defence, argues that Poten’s Notice Interpretation made cl 10.1 an unreasonable restraint of trade and that it is a penalty clause. Given that I have not accepted Poten’s Notice Interpretation as the proper interpretation of cl 10.1, my comments on Mr Lee’s arguments, strictly speaking, are obiter dicta. Nevertheless, I consider them for completeness.

62 First, Mr Lee pleads that Poten’s Notice Interpretation, which “purports to preclude resignation for years … is clearly an unreasonable restraint of trade”. ⁵⁷ Mr Lee argues that Poten’s Notice Interpretation operates in substance as a restraint on Mr Lee’s freedom to leave employment and pursue his livelihood. ⁵⁸ Mr Lee further argues that “the doctrine [of restraint of trade] is not avoided merely because the restraint operates through a financial mechanism rather than an express post-employment prohibition”. ⁵⁹

63 A traditional restraint of trade clause is an outright prohibition imposed on the employee against competing with his employer (Mano Vikrant Singh v Cargill TSF Asia Pte Ltd [2012] 4 SLR 371 (“Mano Vikrant”) at [27]). In Mano Vikrant, the court referred to the English decision of Peninsula Business Services Limited v Sweeney [2004] IRLR 49 (“Sweeney”), where an employee argued that a clause which imposed a financial penalty on him amounted to a restraint of trade clause. The tribunal in Sweeney disagreed with this conclusion, holding that a clause imposing a financial penalty upon an employee who resigns does not amount to an unlawful restraint of trade. The court further noted that the employment contract did not impose any restraint on who the employee may work for or what work the employee may do after resigning from the former employer (Sweeney at [42]). The court in Mano Vikrant agreed with the proposition in Sweeney that a financial disincentive alone is insufficient to justify placing a clause within the doctrine of restraint of trade (Mano Vikrant at [75]).

64 Poten’s Notice Interpretation does appear to impose a financial penalty on an employee who wishes to terminate his employment prior to the end of the Initial Period. However, cl 10.1, when construed with Poten’s Notice Interpretation, does not restrain Mr Lee’s employment or ability to trade after leaving his employment. Rather, the constraint (if any) placed relates to him staying in his current role. Therefore, even if this court had adopted Poten’s Notice Interpretation, the restraint of trade doctrine would not be engaged.

65 Mr Lee also pleads that Poten’s Notice Interpretation, which would require Mr Lee to pay S$1,737,433.79 should he wish to terminate his Employment Contract with a balance of four years, one month and 12 days before the end of the Initial Period on 15 May 2029, “clearly ha[d] the effect of a penalty – instead of a genuine pre-estimate of loss”. ⁶⁰ Mr Lee argues that “the clause [ie, cl 10.1] should be held unenforceable”. ⁶¹

66 Mr Lee first argues that the obligation to pay S$1,737,433.79 is a secondary obligation triggered by a breach of the Employment Contract; namely, Mr Lee’s alleged failure to serve or attend at Poten’s office until 15 May 2029. ⁶² Mr Lee contends that the sum is extravagant and unconscionable compared to the greatest loss that could conceivably be proved by Poten for two reasons: ⁶³

(a) First, the sum payable is calculated with reference to Mr Lee’s salary, rather than Poten’s net loss.

(b) Second, the sum ignores replacement, mitigation, saved costs, market risks, customer choices, and actual performance.

67 In Kelington, which Mr Lee heavily relied on, the court decided that cl 1.5 was a penalty clause as it required the prospective employee to compensate the prospective employer an amount equivalent to his salary for the three years and it did not provide a genuine pre-estimate of the likely damage that would be caused by the employee’s breach (Kelington at [96]). The court considered the time it would take to replace the employee, the disruption caused by the employee’s breach to the employer, and the impact of the employee’s absence on the employer’s target profits (Kelington at [96]).

68 The penalty rule applies to secondary obligations; in particular, an obligation imposed on a defaulting party to pay damages upon a breach of contract (Denka Advantech Pte Ltd v Seraya Energy Pte Ltd [2021] 1 SLR 631 (“Denka”) at [235]). Whether a clause imposes a primary or secondary obligation is a matter of substance rather than form (Ethoz Capital Ltd v Im8ex Pte Ltd [2023] 1 SLR 922 (“Ethoz Capital”) at [53], citing Denka at [95]). When assessing whether a clause engages the penalty rule, the court considers the overall context in which the bargain was struck, the reasons for the provision, and whether the clause was intended to secure some independent commercial purpose or instead to secure compliance with another primary obligation (Ethoz Capital at [52], citing Denka at [242]). The court is therefore not confined to the form in which the parties have chosen to express an obligation.

69 Applying that approach, Poten’s Notice Interpretation gives rise, in substance, to a secondary obligation. I accept that cl 10.1 does not, by itself, expressly state that Mr Lee must pay S$1,737,433.79 upon early termination of the Employment Contract. However, that is not the end of the consideration, because the court must consider the substantive operation of cll 1.2 and 10.2 based on Poten’s Notice Interpretation.

70 Applying Poten’s Notice Interpretation, if Mr Lee wished to terminate his employment on 4 April 2025, his notice period would run until 15 May 2029. If Mr Lee did not wish to work until the end of his notice period, Mr Lee would be liable to pay S$1,737,433.79 as PILON.

71 Poten’s Notice Interpretation stipulates that Mr Lee’s notice period extends for four years, one month and 12 days. In my view, to characterise cl 10.1 as imposing only a primary obligation because it does not itself contain the words “pay” or “damages” would elevate form over substance.

72 Viewed in this manner, there is no material distinction between the substantive operation of Poten’s Notice Interpretation and cl 1.5 in Kelington. In Kelington, an employee, who entered into an employment contract for a term of three years, eventually decided not to honour the contract and decided not to start work for the employer. Accordingly, the employer sought compensation from the employee on his cumulative salary for a period of three years. The court held that cl 1.5 was a penalty and disallowed the employer’s claim. Applying Poten’s Notice Interpretation, Mr Lee’s departure before 15 May 2029 would similarly result in liability calculated by reference to his salary for the balance of the notice period which Poten alleges he was obliged to serve.

73 In Kelington and this case, the financial consequence on the defaulting party is triggered by the employee’s failure to perform for a stipulated period and quantified by reference to the remuneration which would have accrued over the remaining notice period. While there is a difference in drafting and mechanism in the two cases, this does not, in my view, justify a different conclusion in substance.

74 I am also satisfied that the sum which Mr Lee may have been liable to pay, ie, S$1,737,433.79, does not represent a genuine pre-estimate of Poten’s likely loss. In Kelington, the court concluded that approximately three years’ salary was extravagant when compared with the greatest loss which could conceivably have flowed from the breach, having regard in particular to replacement, disruption and lost profits (Kelington at [93]–[96]).

75 The same concern arises here. The sum of S$1,737,433.79 claimed by Poten is determined by Mr Lee’s salary and the period remaining until 15 May 2029. This calculation does not account for the time reasonably required to replace Mr Lee, Poten’s ability to mitigate its loss, and fluctuations in the LPG market. There is no sufficient relationship between the sum of S$1,737,433.79 payable under Poten’s Notice Interpretation and the loss which Poten could reasonably have expected to suffer from Mr Lee’s premature departure.

76 Therefore, even if I had found that Poten’s Notice Interpretation was correct, cl 10.1 would operate as an unenforceable penalty.

77 Next, Poten claims, further and/or alternatively, damages to be assessed from Mr Lee. ⁶⁴ Poten claims damages pursuant to Mr Lee’s alleged breach of the Employment Contract by being absent from work from 4 April 2025 to 30 May 2025. ⁶⁵ I note that Poten has identified two causes of action to ground Mr Lee’s breach of contract: (a) a deemed breach under s 13(2) of the EA; and (b) a breach under common law. ⁶⁶

78 Poten claims that Mr Lee was absent from work without reasonable excuse from 4 April 2025 to 30 May 2025. ⁶⁷

79 Poten pleads that pursuant to s 13(2) of the EA, Mr Lee is deemed to have broken the Employment Contract by being absent without reasonable excuse for more than two days. ⁶⁸ Poten pleads that under s 16 read with s 11 of the EA, Mr Lee is liable to pay a sum equivalent to the amount he would have been liable to pay as PILON, ie, S$1,737,433.79. ⁶⁹

80 Poten pleads, as a further and/or alternative basis, that under common law, Mr Lee’s absence from work amounts to a repudiation of the Employment Contract, citing the case of Uday Mehra v L Capital Asia Advisors [2022] 5 SLR 113 (“Uday Mehra”) at [187]–[193].

81 Poten’s pleaded quantum of common law damages is S$7,414,950.05. ⁷⁰ Poten derived this sum by first calculating the average annual profits earned by Mr Lee from the years 2018–2024 to arrive at a sum of S$1,696,838.10. ⁷¹ Poten then added: (a) S$1,696,838.10 multiplied by four years = S$6,787,352.40 (representing its alleged lost profits for the four calendar years of 2025–2028); and (b) S$1,696,838.10 divided by 365 days multiplied by 135 days = S$627,597.65 (representing its alleged lost profits for the period from 1 January 2029 to 15 May 2029) to arrive at the sum of S$7,414,950.05 (ie, S$6,787,352.40 + S$627,597.65). ⁷²

82 Poten cites McGregor on Damages (James Edelman ed) (Sweet & Maxwell, 22nd Ed, 2024) at para 34–037 for the proposition that where an employee leaves, the employer may claim, as consequential loss, the value of the work lost by reason of the employee’s defection less the amount that would have been paid to the employee under the contract. ⁷³

83 Poten also adduced evidence of its mitigation, namely, hiring two replacement brokers: Mr Yuichiro Sada (“Mr Sada”) and Ms Chloe Park (“Ms Park”). ⁷⁴ However, Poten claims that even after hiring the two replacement brokers, the cargo broking revenues at Poten remained significantly lower compared to when Mr Lee was working at Poten. ⁷⁵

84 Poten clarified in its closing submissions that the loss of profits caused by Mr Lee’s breach is quantified by taking Mr Lee’s projected profits from 4 April 2025 to 15 May 2029 and deducting the profits made by Mr Sada and Ms Park. ⁷⁶ Thus, in Poten’s closing submissions, Poten prays for judgment for its Damages Claim of around S$3,697,019.67 or S$4,094,648.44. ⁷⁷

85 Mr Lee pleads that he did not breach the Employment Contract. ⁷⁸ He avers that he was not absent from work without reasonable excuse and hence did not repudiate the Employment Contract. ⁷⁹

86 Mr Lee submits that in any event, Poten’s calculation of lost profits are “speculative and disregard[s] market and economic fluctuations”. ⁸⁰

87 I shall first consider whether Mr Lee breached the Employment Contract. For this issue, I shall refer to both the EA and the common law.

88  Section 13(2) of the EA states:

89 At common law, it is also well established that an employee who absents himself from his place of work commits a prima facie breach of contract (Uday Mehra at [189]).

90 On the facts, it is undisputed that Mr Lee did not return to Poten’s office after 4 April 2025, despite multiple requests from representatives of Poten to ask him to return to work (see [5] above). There was no contractual basis for Mr Lee to remain away from work. His continual refusal to return to work despite Poten’s directions makes it clear that Mr Lee breached the Employment Contract under both s 13(2) of the EA and the common law.

91 The next question is how the damages flowing from this breach of Employment Contract should be quantified. I shall first consider how damages should be quantified under the common law.

92 The general aim of damages for breach of contract is to compensate the innocent party, and damages are generally assessed by reference to the plaintiff’s pecuniary loss (Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2018] 2 SLR 655 at [123]). Damages seek to place the plaintiff in the same position as if the contract had been performed (Robinson v Harman (1848) 1 Exch 850 at 855).

93 A plaintiff claiming damages must first prove both the fact of damage and its amount (Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623 (“Robertson Quay”) at [27]). Thus, in this case, the burden of proving loss and the quantum of loss lies on Poten.

94 With that said, the court does not demand that a plaintiff prove the exact amount of damage he has suffered and adopts a flexible approach regarding proof of damage (Robertson Quay at [28] and [30]). The general rule is that where precise evidence is obtainable, the court naturally expects to have it; where it is not, the court must do the best it can (Raffles Town Club Pte Ltd v Tan Chin Seng [2005] 4 SLR(R) 351 at [17], citing Biggin and Co Ltd v Permanite Ltd [1950] 2 All ER 859 at 870).

95 Poten quantifies its claim for common law damages with reference to projected profits that would have been generated by Mr Lee from 4 April 2025 to 15 May 2029. ⁸¹ These calculations were prepared by Evtimov Stanislav (“Mr Stanislav”), who was called as a witness in this trial. Mr Stanislav is a Director at Poten. ⁸² Mr Stanislav has a degree in accounting and first joined Poten as an accountant. ⁸³

96 Mr Stanislav calculated Mr Lee’s projected profits by taking the average of Mr Lee’s profits earned in the years of 2018 to 2024. He then extrapolated these profits from 4 April 2025 to 15 May 2029. ⁸⁴ Mr Stanislav deducted Poten’s expenditure on travel and entertainment expenses and benefits incurred by Mr Lee. ⁸⁵

97 Poten has characterised Mr Lee as a high-performing broker at the trial. In fact, at one point, Mr Stanislav called Mr Lee “one of the highest performers throughout the group globally”. ⁸⁶ I note that in assessing the loss suffered by Poten, Mr Stanislav’s calculation rests on the assumption that Mr Lee would have been able to sustain the historic level of revenue for four years (that made him an exceptional performer). I am unconvinced that this assumption is made out on the evidence for two reasons.

98 First, as Mr Stanislav acknowledged at the trial, he calculated the projections of Mr Lee’s profits ⁸⁷ without addressing geopolitical events that may impact the price of Liquefied Petroleum Gas (“LPG”), and consequently, Mr Lee’s profits. ⁸⁸ Mr Stanislav explained that he could not factor in such world events because he “[could not] predict … where and how the market will go” ⁸⁹ and acknowledged that geopolitical events may affect Poten’s LPG business. ⁹⁰ In cross-examination, Mr Stanislav maintained that it was reasonable for him to rely on historical profits to calculate Mr Lee’s projected profits, as there were “world events [that] have been in place for years … and they’ve already been accounted for in prior years”. ⁹¹ In my view, that explanation is unsatisfactory. Given the potential fluctuations in the LPG business, and consequently, Mr Lee’s profits, associated with geopolitical events, it is not accurate for Poten to rely on the historical data of Mr Lee’s profits as a measure of his future profits. This is especially since Mr Stanislav acknowledged that geopolitical events can impact Poten’s business. While certain geopolitical events took place during Mr Lee’s employment, it is incorrect to assume that future geopolitical events will affect the price of LPG in the same way that present events have.

99 Second, while Mr Kakeya notes in his affidavit of evidence-in-chief that Mr Lee has key customers who are supportive and loyal to him, ⁹² Poten did not show any evidence that such customers would not have continued to work with Poten after Mr Lee left Poten. There is no evidence that Mr Lee would have continued to bring significant revenue for Poten, as he had historically done.

100 For a court to assess damages, a claimant must produce sufficient materials to form the evidential basis on which the court could arrive at a reasoned estimate (Crescendas Bionics Pte Ltd v Jurong Primewide Pte Ltd [2023] 1 SLR 536 at [171]). On the facts, while Poten has provided historical evidence of Mr Lee’s profits, that, without more, is insufficient to show that Poten has, or will, suffer loss by Mr Lee’s departure. It is clear that Poten is unable to show actual losses from 4 April 2025 to 15 May 2029, especially after the action was commenced in August 2025 against Mr Lee, as a significant period of the evaluation is into the future. In light of the uncertainty inherent in the industry, which Poten has accepted, there is insufficient evidence to support Poten’s claim. Thus, it is not possible to estimate with accuracy whether Poten will suffer losses or make profits from LPG trading in the future till 15 May 2029 upon the departure of Mr Lee. The extrapolation exercise by Poten from the historical data of Mr Lee’s past revenue is not satisfactory and is not representative of actual losses suffered by Poten.

101 Even if Poten were able to show losses it had suffered from the date of Mr Lee’s resignation to the date of filing the present action, ie, 21 August 2025, Poten had not adequately mitigated its losses.

102 An innocent party must take all reasonable steps to mitigate the loss consequent on the defaulting party’s breach and cannot recover damages for any loss which it could have avoided but failed to avoid due to its own unreasonable action or inaction. The evaluation of the innocent party’s conduct in mitigation starts from the date of the defaulting party’s breach, and the burden of proving that the innocent party has failed to fulfil its duty to mitigate falls on the defaulting party (The “Asia Star” [2010] 2 SLR 1154 (“Asia Star”) at [24]). Therefore, in this case, the burden falls on Mr Lee to show that Poten had failed to adequately mitigate its losses.

103 The inquiry as to whether the innocent party had reasonably mitigated its loss is factual in nature (Asia Star at [34]). Here, I turn to consider whether Poten’s conduct was reasonable.

104 I find that Poten had failed to reasonably mitigate its losses for two main reasons.

105 First, Poten did not ask Mr Lee to hand over his list of customers to either of his successors, nor did Poten appear to take any steps to retain Mr Lee’s clients. ⁹³ Mr Kakeya’s evidence is that successful brokers have strong relationships with traders which are built over time. ⁹⁴ However, Mr Kakeya did not even attempt to get Mr Lee to hand over any list of customers to Poten after Mr Lee intimated his intention to resign. In re-examination, Mr Kakeya stated that he did not ask for Mr Lee to provide such information because he thought that it would have been pointless, given that Mr Lee was due to join a new company. ⁹⁵ This explanation is, in my view, unsatisfactory. Even if Mr Kakeya did not expect Mr Lee to comply with Mr Kakeya’s request, it was still incumbent on Mr Kakeya to make the effort to minimise the losses caused by Mr Lee’s departure. In my view, obtaining the list of customers from Mr Lee would be a crucial step in doing so.

106 Second, Poten did not make reasonable efforts to hire a like-for-like replacement for Mr Lee. Mr Kakeya admitted in cross-examination that he did not carry out research into who high-performing brokers in Southeast Asia were and ultimately hired Ms Park and Mr Sada from introductions by friends. ⁹⁶ Mr Kakeya and Mr Stanislav both admitted that Poten hired Ms Park and Mr Sada knowing that they did not have experience in cargo broking specifically. ⁹⁷ This stands in sharp contrast to Mr Lee, who had at least seven years of experience as a SLPG Broker. The broader issue is that Poten simply hired replacements without necessarily carrying out market research on high-performing brokers with similar experience to Mr Lee. ⁹⁸

107 I find that Poten has failed to establish loss under the common law. It is unfortunate that Poten did not call an expert from the LPG brokering industry to assist the court regarding the alleged losses arising from Mr Lee’s resignation. Even if Poten had established loss, it had failed to adequately mitigate this loss.

108 However, Poten’s failure to prove common law damages does not dispose of the statutory claim Poten has made under s 16 of the EA.

109 Section 16 of the EA reads as follows:

110 Once the conditions of s 16 are satisfied, the EA prescribes the sum payable, ie, a sum equal to the amount the defaulting party would have been liable to pay under s 11 had the defaulting party terminated the contract of service without notice or with insufficient notice. Poten need not establish that it in fact suffered lost profits for Mr Lee to be liable for such sum under s 16.

111 Essentially, s 16 of the EA sets out a statutorily-prescribed quantum of damages for breach of an employment contract. Section 16 is qualified by the phrase “[s]ubject to anything in the contract of service to the contrary”. However, I do not find anything in the Employment Contract that prescribes any quantum of damages payable upon breach of the contract, namely, to report to work.

112 I have earlier found at [90] above that Mr Lee is deemed under s 13(2) of the EA to have broken the Employment Contract. Hence, s 16 is engaged. The remaining question is the sum which Mr Lee would have been liable to pay under s 11 had he terminated the Employment Contract without notice or with insufficient notice.

113 As I have earlier found at [55] above, the applicable notice period is four weeks. Thus, the amount payable under s 16 is S$32,384.62. I thus award Poten S$32,384.62 under s 16 of the EA for breach of the Employment Contract.

114 Finally, Poten claims that Mr Lee has been unjustly enriched through its payment of Mr Lee’s salary from 4 April 2025 to 30 May 2025, notwithstanding Mr Lee’s absence from work. ⁹⁹ Poten claims a sum of S$30,299.24 paid for the month of April 2025 and a sum of S$36,676.79 paid for the month of May 2025. ¹⁰⁰ I shall refer to these two sums collectively as the “Alleged Salary Overpayment”.

115 Poten states that the sum of S$30,299.24 represents the overpayment of Mr Lee’s “pro-rated salary from 4 April 2025 to 30 April 2025”. ¹⁰¹ Poten also states that the sum of S$36,676.79 represents the overpayment of Mr Lee’s “(i) basic salary and (ii) Central Provident Fund (“CPF”) shortfall contributions for May 2025 less accrued but unused annual leave and BGC Dividend payment”. ¹⁰²

116 Poten argues that Mr Lee has been unjustly enriched as there has been a total failure of consideration in relation to the Alleged Salary Overpayment ¹⁰³ in so far as Mr Lee failed to attend at the office and do any work from 4 April 2025 to 30 May 2025. ¹⁰⁴

117 Poten refers to s 2(1) of the EA, which defines salary as “remuneration … in respect of work done” [emphasis added in italics]. ¹⁰⁵ Poten also refers to Lord Templeman’s pronouncement that “wages are remuneration which must be earned; in a claim for wages under a contract of employment, the worker must assert that he worked or was willing to work” (Miles v Wakefield Metropolitan District Council [1987] 2 WLR 795 at 810E). ¹⁰⁶

118 Poten further argues that there are no available defences to the claim, such as illegality or public policy objections. ¹⁰⁷

119 Mr Lee admits that he has refused to pay the Alleged Salary Overpayments. ¹⁰⁸ Mr Lee denies that he has been unjustly enriched by such payments. ¹⁰⁹ Mr Lee avers that he was on garden leave during the period that the Alleged Salary Overpayments were made and remained an employee of Poten at the material time. ¹¹⁰ Mr Lee points to cl 10.3 of the Employment Contract, which states that salary and benefits continue to be paid during garden leave. ¹¹¹

120 Further, Mr Lee argues that Poten itself treated the contract as subsisting until 30 May 2025 and continued to pay salary for that period. ¹¹² Mr Lee also argues that Poten made the Alleged Salary Overpayment after issuing its letters of demand and maintained that Mr Lee remained employed and should return to work. ¹¹³ Therefore, Mr Lee argues that it is untrue that there was a total failure of basis.

121 To make out a claim for unjust enrichment, three requirements must be satisfied: (a) enrichment of the defendant; (b) at the expense of the plaintiff; and (c) circumstances which make the enrichment unjust (ie, the presence of an “unjust factor”). The defendant may then attempt to raise defences to defeat the claim in whole or to reduce the quantum of the claim (Benzline Auto Pte Ltd v Supercars Lorinser Pte Ltd [2018] 1 SLR 239 (“Benzline Auto”) at [45]).

122 In this case, the first and second requirements are not in dispute. Rather, the parties’ dispute centres on the third requirement.

123 Failure of consideration is a recognised unjust factor. To determine whether there has been a failure of consideration, there is a two-step inquiry. First, determine what the basis for the transfer in respect of which restitution is sought was. Second, whether that basis failed (Benzline Auto at [46]).

124 Under the first step of this inquiry, the basis of a transfer must be objectively determined based on what is communicated between the parties. The parties’ uncommunicated subjective thoughts are irrelevant (Benzline Auto at [51]).

125 On the second step of the inquiry, the failure of basis must be total, not partial (Benzline Auto at [53]).

126 I shall first determine what the basis for the Alleged Salary Overpayment was. In my view, the basis for payment of salary in this case would be the work done by the employee. This is supported by s 2(1) of the EA, as raised by Poten.

127 An exception to this would be if the employee was placed on garden leave. As set out in cl 10.3 of the Employment Contract, if Poten exercised its rights under cl 10.2 (ie, to place the employee on garden leave), the employee would continue to be paid his normal contractual salary and benefits so long as he complied with his obligations under the Employment Contract. Based on an objective determination of the Employment Contract, one of the bases of salary payment to an employee placed on garden leave is not necessarily the performance of work, but the continued compliance with the employee’s obligations under the Employment Contract.

128 Mr Lee’s pleaded defence was that he was not unjustly enriched as he was on garden leave. However, I find that this defence is completely erroneous. At the trial, Mr Lee’s counsel acknowledged that his client was not on garden leave. ¹¹⁴

129 Nevertheless, for completeness, I explain why Mr Lee was not placed on garden leave. To start, there is no automatic entitlement to garden leave, whether in the EA or elsewhere. Garden leave is a contractually-stipulated provision, which in the Employment Contract is provided for in cll 10.2–10.3. ¹¹⁵ More importantly, based on the text of the Employment Contract, whether an employee has been placed on garden leave is within the control of the company. This is because cl 10.3 provides that: “[i]f the Company exercises its rights under clause 10.2 above, you will continue to be paid your normal contractual salary and benefits…” [emphasis added]. Therefore, to determine whether Mr Lee was indeed on garden leave, one needs to consider whether Poten (through one of its representatives) “exercise[d] its rights under clause 10.2” and put Mr Lee on garden leave.

130 Based on the evidence of Mr Kakeya (Mr Lee’s immediate supervisor) and Mr Stanislav (a Director of Poten), Poten did not exercise any rights pursuant to cl 10.2 of the Employment Contract. Hence, Mr Lee was not put on garden leave. ¹¹⁶ At one stage of the trial, Mr Lee tried to explain that he was unaware that he was not on garden leave after tendering his resignation. ¹¹⁷ Mr Lee was not truthful on this issue as he eventually admitted at the trial that he was not on garden leave. ¹¹⁸

131 The next step of the inquiry is to ascertain whether there has been a total failure of the consideration on the part of Mr Lee. In this regard, it is an agreed fact that Mr Lee did not attend at Poten’s office or perform his contractual duties after 4 April 2025 (see [6] above). ¹¹⁹

132 I see no force in Mr Lee’s argument that there was no failure of consideration in so far as Poten made the Alleged Salary Overpayment with full knowledge of the dispute. I acknowledge that from April to May 2025, Poten was trying to entice Mr Lee to return to work at Poten. ¹²⁰ However, the fact remains that Mr Lee never actually returned to work. At the trial, Mr Lee was asked why he did not return the Alleged Salary Overpayment. He gave an incredible answer that he did not know how to return them. ¹²¹ In these circumstances, I find that there has been a total failure of consideration. Therefore, I find that Poten has made out its claim for unjust enrichment for the Alleged Salary Overpayment.

133 Under the Unjust Enrichment Claim, Mr Lee is liable to pay Poten a sum of S$66,976.03.

134 In summary, Poten has succeeded on all three claims brought against Mr Lee, though the actual sums Mr Lee is liable to pay Poten are far less than the quantum claimed by Poten.

135 I find that Mr Lee is liable to pay Poten a total sum of S$131,745.27, consisting of the following sums:

(a) S$32,384.62 under the PILON Claim.

(b) S$32,384.62 under the Damages Claim.

(c) S$66,976.03 under the Unjust Enrichment Claim.

136  I shall now hear parties on the issue of costs.