A Quick Look at Non-Compete Clauses in Employment Contracts

By Jasmin Yek, Senior Associate and Franca Ciambella, Managing Director

Non-compete clauses are common in Singapore employment contracts.  However, all non-compete clauses are contrary to public policy and unenforceable unless they are reasonable in the interests of the parties to the employment contract and reasonable in the interest of the public. 

The clause must protect the employer’s legitimate proprietary interest (trade secrets, customers, employees e.t.c) to be enforceable.   

To be reasonable between the parties, the clause must not be wider than necessary in respect of scope, geographical area and the period of limitation. 

A non-compete clause that prevents an employee from working in the entire industry or other industries versus the work previously carried out by the employee would be too wide in scope, and unenforceable.

A non-compete clause with a worldwide geographical prohibition when the employee was working in one country would be considered too wide and unenforceable.

How long the employee can be restrained from similar work varies with the industry and circumstances.  If the period of limitation is unreasonably long, it will be unenforceable.

An example where a non-compete clause would not be enforced in the interest of the public is where the employer would have a monopoly.

Contact Info: Email:  fciambella@consiliumlaw.com.sg | Tel: +65 6235 2700
Website: www.consiliumlaw.com.sg