What types of covenants can be recognized in Singapore?
Noncompete, nonsolicitation of employees and nonsolicitation of suppliers and businesses covenants are recognized in Singapore.
Can these covenants be enforced? How are they enforced?
Generally speaking, restrictive covenants are not enforceable “prima facie” (meaning, unless proven otherwise after the initial review).
The courts begin by seeing if the employer had a legitimate business interest that necessitated the restrictive covenant. Singapore courts have identified the following as legitimate business interests:
- Trade secrets;
- Trade connections; and
- Matters related to workforce stability.
Additionally, courts test for “reasonability,” which must meet the following criteria:
- The level of reasonability between the parties subject to the agreement (private interests); and
- The level of reasonability as it relates to the public (public interests).
Does my supported employee need to be compensated in return for restrictive covenants?
There is no obligation for employers in Singapore to provide compensation if an employee agrees to be subject to a restrictive covenant.