Written Answer to PQ on Regulating Non-Compete Clauses in Employment Contracts

NOTICE PAPER NO. 2541 OF 2024 FOR THE SITTING ON 05 FEBRUARY 2024
QUESTION NO. 5429 FOR WRITTEN ANSWER

MP: Mr Desmond Choo

To ask the Minister for Manpower (a) whether the Ministry regulates the inclusion of non-compete clauses in employment contracts; and (b) whether the Ministry will consider issuing guidelines to employers and employees on the incorporation of non-compete clauses in employment contracts.

Answer:

1.The tripartite partners’ position is that employers should only include restraint of trade clauses (also known as non-compete clauses) in their employees’ employment contracts if there is a genuine need for such clauses to protect legitimate business interests. Restraint of trade clauses must 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 to provide an unfair advantage. The Courts have established clear principles on when such clauses are unreasonable, unjustified, and unenforceable.

2.Employees who believe that they have been subject to unreasonable employment clauses may seek assistance from their unions, the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP), or the Ministry of Manpower (MOM).

3. The tripartite partners are committed to making sure that unreasonable employment contract clauses do not become a norm in our workplaces. We are working together to develop a set of tripartite guidelines to shape norms and provide employers with further guidance on the inclusion of restrictive clauses in employment contracts. These guidelines are currently being finalised and are targeted for release in the second half of this year.