Singapore's MOM shares update on enforceability of non-compete clauses in employment contracts

The ministry is in talks with the tripartite partners on how and when such clauses should be applied, in alignment with principles outlined by the Courts.

In March 2024, Singapore's Ministry of Manpower (MOM) clarified that the enforceability of non-compete clauses (or restraint of trade clauses) in employment contracts is determined by the Courts, based on the specific facts of each case.

MOM affirmed: "The Courts have held that restraint of trade clauses are enforceable only if there are legitimate business interests to protect. Restraint of trade clauses must also be reasonable in terms of scope, geographical area, and duration – they must balance employers’ needs to safeguard their businesses and employees’ ability to earn a living, and should not be used simply to stymie business competition or gain an unfair advantage."

Earlier this month, the ministry provided an update in response to a Parliamentary query, noting that discussions are ongoing with tripartite partners – the National Trades Union Congress and the Singapore National Employers Federation – about how and when such clauses should be applied, in alignment with principles outlined by the Courts.

A restraint of trade clause, also known as an anti-competition clause, is a provision in employment or business contracts that limits an individual's ability to work for competitors, start a competing business, or disclose sensitive information after leaving a job or business relationship. Its purpose is to protect the employer's legitimate business interests, but it must be reasonable to be enforceable.

MOM has indicated that more details will be shared in due course.

READ MORE: Guidelines on non-compete clauses in employment contracts expected in H2 2024: Singapore MOM