Singapore outlines guidelines on non-compete clauses

In a move to safeguard the interests of retrenched employees and foster fair employment practices, the Singapore government, alongside unions and employers, is developing guidelines on the reasonable use of clauses in employment contracts that restrict employees from seeking new job opportunities. The announcement came from Manpower Minister Dr Tan See Leng during parliamentary discussions on retrenchment practices and the use of non-compete clauses and restricted stock units.

These forthcoming guidelines, slated for release in H2’2024, aim to complement existing frameworks such as the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, as well as the Tripartite Guidelines on Mandatory Retrenchment Notifications. Dr Tan emphasised that overly restrictive employment contracts can disadvantage retrenched employees and hinder their ability to secure employment.

The Ministry of Manpower (MOM) and its tripartite partners are working to finalise these guidelines, with a focus on educating employers and shaping norms to prevent exploitative employment practices. Dr Tan reiterated MOM’s commitment to ensuring fair employment practices, stating, “MOM will not, will never, and does not condone any exploitative employment contracts.”

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The discussion also touched upon the legality of non-compete clauses, with Dr Tan highlighting established principles in civil courts regarding their enforceability. He underscored Singapore’s balanced approach to fair employment practices, aimed at protecting employees while providing organisations with flexibility to adapt to market conditions.

Furthermore, Dr Tan emphasised the effectiveness of existing frameworks such as the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, which guides employers, particularly unionised organisations, in notifying unions early about impending retrenchments, reported The Straits Times. He noted the collaborative efforts between employers, unions, and MOM in facilitating discussions and resolving disputes, citing the recent case involving e-commerce company Lazada as an example.