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Practice Areas

Employment Law

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The Dilemma of Employment Restrictions in Singapore

  • Due to the shifting trends of the modern-day economy, it is now unsurprising for employees to change jobs frequently in search for other opportunities/higher pay. Rightly so, an employee should be granted his/her freedom to trade and engage in whatever employment he/she wishes to be in.
  • Yet, at the same time, there is also a need to ensure that companies are able to retain their rights to its intellectual property and confidential information so that they can develop and drive economical growth.
  • How then does the law juggle between what seems like equally valid considerations?
Criminal Law

Restraint of Trade Clauses

  • Traditionally, employers have sought to restrict former employees in 2 principal ways:
    1. First, on the basis that the employee breached clauses in the Employment Contract which prohibit the commencement of employment with any of the employer’s competitors;
    2. Second, on the basis that the employee had breached clauses in the Employment Contract which prohibit the unauthorised acquisition and/or disclosure of the employer’s confidential information.
  • The enforceability of the aforesaid clauses depend on several factors including but not limited to:
    • The nature of employment;
    • Whether the employer has a legitimate interest to protect;
    • The nature of information in dispute; and
    • The reasonableness of the restrictive covenants.
  • As every employment contract is different, the enforceability of such restrictive covenants often includes a fact-sensitive enquiry that depends on the specific circumstances of each case.
  • If you are faced with an employment dispute with a former employer, or you are an employer who wishes to seek legal advice on whether a former employee is in breach of his/her employment obligations, please feel free to approach us and we will endeavour to ensure that your matter is resolved in the most cost-efficient and amicable manner possible.
  • If you have just been terminated from your job, you might be wondering whether the termination was legally permitted.
  • As a starting point, all employees working under a contract of service (cf. to a contract for service) are protected by the Employment Act 1968 unless expressly excluded otherwise by the provisions of the Act.

Retrenchment

  • Unlike several countries, Singapore does not mandate payment of retrenchment benefits if employers choose to retrench their employees.
  • However, the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment have issued guidelines on the provision of retrenchment benefits
  • Unionised Employees may also be entitled to certain retrenchment benefits
  • As such, if you have been retrenched and wish to negotiate for retrenchment benefits, our team of dedicated employment law experts will be able to assist to negotiate on your behalf

Termination

  • There are two legally-permissible forms of termination in Singapore:
    1. With notice
      1. Under the Employment Act, there are stipulated minimum notice periods set out in section 10(3) of the Act.
      2. Alternatively, the notice periods may be contractually agreed by parties.
      3. Whilst serving your notice period, you are entitled to wages and other benefits included in your employment contract (subject to certain qualifications).
    2. Without notice
      1. An employer may terminate an employee without notice:
        1. If there is a wilful breach of a condition precedent of the contract; OR
        2. If due inquiry is made on grounds of misconduct inconsistent with the express or implied conditions of the contract of service (subject to certain qualifications).
      2. Due to the admittedly loose and generic terms ‘due inquiry’ as well as ‘wilful breach’, there have been many disputes brought to the Courts to interpret the aforesaid terms.
      3. Consequently, whether or not an employee was legally terminated without notice is a fact-centric exercise that requires a proper examination of the facts at hand.
  • Due to the fact-specific nature of such disputes, if you wish to seek advice on whether your employer/employee is in breach of any employment obligations, please do not hesitate to contact our employment law department.
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