Learn more about Employee Non-compete Agreement in Singapore
Employee non-compete agreements are very common in Employment Contract. It forbids an employee who wants to leave the company from forming or wanting to join a company whose activities compete with those of the company to which he is currently employed. The objective of this contract is self-evident: to protect the company’s interests. As a result, some employees have access to the confidential or delicate company information. By including a non-compete clause in the employment contract, the company ensures that his employee will not use this information for his own benefit or for the benefit of a third party if he leaves the company.
Non-compete agreements are Contracts signed by an employer and an employee at the outset of their Business Partnership. A non-compete agreement, in essence, forbids the employee from competing with the company directly or indirectly for a specified period of time after their job has finished.
While the contents of the Non-Compete Agreement may differ from one company to the next, they may attempt to prevent the employee from doing things like:
➤ Working for a competitive firm or individual
➤ Creating competitive goods or offering competing services
➤ Establishing a firm that provides similar goods or services
➤ Recruiting former coworkers to join their new venture, albeit this can also be accomplished through a non-solicitation agreement
However, just because a company wants to keep an employee from competing against them does not always make it so. In truth, the enforcement of non-compete agreements is governed by highly precise standards that vary by area.
Is Non-compete Agreement important in Singapore?
One of the most essential criteria courts consider when establishing the legality of a non-compete agreement is whether it protects the employer’s genuine business interests. If not, there is no reason to prevent the person from competing against a previous employer. Some examples of common legitimate business interests include, but are not restricted to:
➤ Trade secrets
➤ Confidential company or professional information
➤ Existing or future customer and client connections
➤ Specialized training
Why use an Employee Non-compete Agreement?
To safeguard your business from your employees, obtain an employee non-compete contract from Themis Partner. The following clauses are included in our word document:
Non-Competition: Specify the time period in which your employee will be prohibited from working for a competitor.
Non-Solicitation: Keep your organization safe by prohibiting your personnel from contacting your workers, customers, or business associates for a certain period of time.
Is a non-compete clause in Singapore enforceable?
In general, an employer in Singapore can prohibit employees from working for another organization while they are on the payroll. A non-compete agreement may not be enforced, however, unless:
1. Its objective is to protect the employer’s “legitimate proprietary interest”
2. The breadth of the non-compete agreement is appropriate.
Legitimate commercial interest
To meet this requirement, you must demonstrate that you have a legitimate property interest worth safeguarding. It might be your assets, benefits, customer ties, or trade secrets. It should be noted, however, that any abilities or experience provided to your employee throughout their stay do not qualify as a valid proprietary interest.
Be fair to the parties involved and the public
Company owners should ensure that the non-compete contract is appropriate – it should be just restrictive enough to safeguard the firm while not being so tight that it interferes with an employee’s ability to make a living. To make the non-compete agreement realistic, you should design it to include the following elements.
What are geographical area and time constraint?
A good non-compete agreement, as previously stated, should include a geographical region limitation. This basically implies that a former employee is not permitted to compete with the employer in that particular place. Some non-compete agreements, for example, will describe the geographic restriction as a circle around the company’s headquarters. Others may restrict the non-compete agreement to specified cities where the employer has a presence.
In general, the larger the geographical region, the less likely the non-compete will be enforced. For example, if a non-compete is confined to a local city rather than a whole state, an employer will have a far stronger case. That is not to say that the latter cannot be enforced in some instances, but it will be far more difficult for the employer to explain.
In terms of a non-compete time restriction, most companies consider six months to two years to be a suitable non-compete time frame, with one year being relatively frequent. However, the time range is determined by the industry and the individual’s professional path. However, the longer the non-compete term, the more likely it may be deemed unenforceable by a court.
What is included in the non-competition agreement?
Research your competition
Determine which sorts of firms are direct competitors to yours. Competitors are companies who provide similar goods or services to you, sometimes in the same geographic area. You must be aware of any possible conflicts of interest among your employees
Draft the agreement
You may draft your own agreement or use one of our non-compete agreement samples. In any case, your agreement should be tailored to the circumstances of your company
Have a legal professional evaluate your agreement
When creating legal papers, it is important to get the opinion of a lawyer or legal representative. Request that a lawyer review your contract for any potential omissions or faults
Give your employee the non-compete agreement
The employee should be given the chance to ask questions at this stage. The greatest thing you can do is go over the paper with them
Sign and date the agreement if everyone is happy
Both parties can sign the non-compete agreement if everyone believes the provisions are reasonable. You should preserve a copy for your records and provide your employee a copy for his or her records
What to do if employees breach non-compete?
If an employee chooses to break or violate a non-compete agreement, employers can pursue the following remedies:
1. Seek an injunction to prevent an employee from violating an enforceable non-compete provision.
2. Seek damages from the worker by suing.
Employees may also legally challenge an arbitrary, non-enforceable Non-Compete Clause or any non-payment of remuneration owing to him or her under the employer’s contractual responsibilities.
It is strongly advised that an employer or employee seek the advice of an employment Lawyer to evaluate if a non-compete clause in an employment contract is legally enforceable.
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