Definition and Types of Restrictive Covenants
Restrictive covenants are used by employers to protect their business interests, by restricting certain activities of an employee for a period of time after the employee’s employment with the employer has been terminated.
Types of Restrictive Covenants
Non-compete clauses
Under Singapore law, non-compete restrictions are generally prima facie unenforceable, unless they are reasonably required for the protection of the legitimate proprietary rights of the company. The restrictions must also be (1) reasonable in scope, geographical area and duration; and (2) not against public interest.
Generally, such clauses would have to be specifically tailored, taking into account, inter alia, the nature of the company’s business, the position/job scope/seniority of the employee and the extent of his access to and influence over customers, etc. in order to be considered reasonable. Whether the restraint sought is reasonable under the circumstances is a question of fact, and would depend on a case-by-case basis.
Non-solicitation of customers/employees
Similar to non-competition clauses, non-solicitation clauses are generally unenforceable, unless the employer is able to prove that it has a legitimate proprietary interest to be protected by the non-solicitation clause.
