Non-Compete Clauses in Singapore

Understanding and Enforcing Non-Compete Clauses in Singapore: A Guide for HR Professionals

Non-compete clauses in Singapore are designed to restrict an employee from engaging in activities that compete with their former employer’s business after the employment relationship has ended. These clauses are also known as restrictive covenants or non-competition agreements.

While non-compete clauses can legally be included in employment contracts in Singapore, they must meet certain criteria to be enforceable. The key factors that a court will consider when assessing the enforceability of a non-compete clause include:

  1. Reasonableness: The clause must be reasonable in its geographical scope, duration, and the nature of the restricted activities. The restrictions should not be more extensive than necessary to protect legitimate business interests.
  2. Legitimate Business Interests: The employer must demonstrate that the non-compete clause is necessary to protect legitimate business interests, such as trade secrets, confidential information, and customer relationships.
  3. Public Policy: The clause must not be contrary to public policy. Courts will balance the interests of the employer against the employee’s right to earn a livelihood.

In practice, non-compete clauses that are too broad or excessively restrictive are unlikely to be enforced.

For example, a clause that restricts an employee from working in the same industry for an extended period across the entire country would likely be considered unreasonable.

To ensure that non-compete clauses are drafted effectively and are enforceable, it is advisable to seek professional guidance.

As an HR professional, you can benefit from HRSINGAPORE’s HR Certification Courses, HRLAW Seminars, and HR Consultancy Services to deepen your understanding of such clauses and other HR matters.

What is the primary factor your organisation considers when drafting non-compete clauses to ensure they are enforceable in Singapore?

Nature of the restricted activities: 14.29%

All of the above: 85.71%

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