Singapore Court upholds six-month notice period and clarifies employers’ right to recover salary in lieu

This is Part 1 of a three-part client alert series examining recent Singapore employment law decisions of practical relevance to employers and in-house HR/legal teams.
 
This Part focuses on the enforceability of contractual notice period clauses and the financial consequences for an employee who departs without serving the required notice.

Background

In Aerospace Solutions Enterprises Pte Ltd v. Low Eng Wah (Liu Ronghua) [2026] SGMC 89, the Magistrate's Court considered whether the employer, Aerospace Solutions Enterprises Pte Ltd (ASEPL) was entitled to recover salary in lieu of an unserved contractual notice period. The defendant, Low Eng Wah was employed from 2023 as a quality, environment, health and safety manager on a monthly salary of S$9,000. His contract required six months’ written notice of termination or payment of salary in lieu of any unserved notice.

On 1 April 2025, Mr. Low resigned but gave only two months’ notice, leaving on 31 May 2025 instead of serving the full six months. ASEPL claimed S$36,000, being four months’ salary in lieu of the unserved notice.

Mr. Low raised three defences: (1) an oral agreement had shortened the notice period; (2) the six-month clause was unreasonably long and unenforceable; and (3) ASEPL suffered no loss, as he had completed a satisfactory handover.

Outcome: The court rejected all three defences and ordered Mr. Low to pay ASEPL S$36,000 plus interest at 5.33% per annum, with costs to be assessed separately.

Court’s key findings

1. No evidence of an agreement to shorten the notice period

On the evidence, the court found that Mr. Low failed to prove any agreement to shorten the notice period, and ASEPL made no clear representation that it would waive its rights. A promissory estoppel defence would not have succeeded even if properly pleaded.
 
2. A six-month notice period is not unreasonably long

Mr. Low argued that the six-month notice period was invalid because it was unreasonably long. The court rejected this argument on the basis that it applied equally to both employer and employee and either party could shorten notice by paying salary in lieu. This is unlike a post-employment restraint of trade clause, where the employer would need to show that the clause was reasonable.
 
3. Employer entitled to salary in lieu of notice as debt, not damages

Mr. Low’s third argument was that ASEPL suffered no loss since he completed a satisfactory handover of his duties prior to his last working day, and ASEPL was therefore not entitled to damages. Once again, the court disagreed with this argument on the basis that a claim for salary in lieu of notice is not a claim for damages but for a contractual debt, and therefore ASEPL did not need to prove that it had suffered any loss as a result of Mr. Low’s breach.

The court also noted that section 16 of the Employment Act 1968 imposes equivalent liability on an employee who fails to serve the required notice.

Conclusion

This case confirms that a clear, reciprocal notice clause with a salary-in-lieu mechanism is enforceable at face value, regardless of actual loss. Employers should:

• Rely on well-drafted notice clauses, even lengthy ones, unless they amount to an unlawful restraint of trade.
• Draft reciprocal notice clauses allowing either party to pay salary in lieu to reinforce enforceability.
• Document any agreed variation to a notice period in writing, since oral agreements are difficult to prove.

Look out for Part 2 of this series, which examines the standard expected of employers when managing and terminating probationary employees for poor performance.

Client Alert 26-166