Restrictive covenants in employment contracts Singapore: What you need to know
Restrictive covenants are a common feature in employment contracts in Singapore. They are designed to protect an employer`s business interests by restricting a departing employee`s ability to compete with the employer, solicit the employer`s clients, or disclose the employer`s confidential information. These covenants are enforceable in Singapore, subject to certain conditions.
Types of restrictive covenants:
Non-compete clauses prohibit an employee from working for a competitor or starting a competing business for a specified period of time after leaving the employer`s business. The scope and duration of the non-compete clause must be reasonable and reflect the employer`s legitimate business interests. A non-compete clause can only be enforced if it meets the following conditions:
– Protects a legitimate business interest of the employer;
– Is no wider than is reasonably necessary to protect the business interest concerned;
– Is reasonable in terms of the time period and geographical area covered.
Non-solicitation clauses restrict an employee`s ability to solicit the employer`s clients, suppliers, or employees for a certain period after leaving the employer`s business. Non-solicitation clauses must meet the same criteria as non-compete clauses to be enforceable.
Confidentiality clauses prohibit an employee from disclosing or using confidential information belonging to the employer, even after the employee has left the employment. Confidentiality clauses must be carefully drafted to ensure they only cover truly confidential information and do not unreasonably restrict an employee`s freedom to work.
Enforcing restrictive covenants:
To enforce a restrictive covenant, the employer must show that the covenant is reasonable and necessary to protect its business interests. The court will consider factors such as the employee`s position in the company, the level of access to confidential information, and the scope and duration of the covenant. If the covenant is found to be unreasonable or goes beyond what is necessary to protect the employer`s legitimate business interests, it may be deemed unenforceable.
Restrictive covenants can be valuable tools for employers in Singapore to protect their business interests. However, employers must ensure that the covenants are reasonable and necessary, and do not unreasonably restrict an employee`s right to work. In addition, any restrictive covenant must be carefully drafted to ensure that it meets the specific legal requirements in Singapore. Consult with an experienced employment lawyer to draft and enforce your restrictive covenants.