Non-competition agreement

[Doris yeo]

I have signed an employment contract. The employer has listed a "Non-competition agreement" for not allowing the employee to work in the same industry for two years, but no compensation is given. May I know this is legal or not?

[Strong Eagle]

What line of work? Basically such non competition agreements are unenforceable because they restrict your ability to earn a living. Unless you happen to be carrying the secret of cold fusion with you, it's not operative.

[gravida]

Most likely it is not, but I am not a lawyer. Couple of years ago I've been in the similar situation and visited the lawyer. I've been told that unless such agreement has a clear time frame (2 years is quite long, the lawyer mentioned max. 1 year, depending on the industry) AND the compensation is given, it is not valid.

[nakatago]

Such clauses are common in IT R&D though I'm not sure even if it's strictly enforced. Engineers jump ship all the time and I haven't heard anyone I know personally who's been prevented from joining another company.

[Saint]

Here's a previous thread that discussed this issue

http://forum.singaporeexpats.com/ftopic65135.html

[Addadude]

For what it's worth I've went through the same experience in my first job in Singapore (many years ago). In my case there was a 1-year clause.

When I discovered that I had been completely misled in regards to both living costs and the typical remuneration for my position in my industry, AND when I received a much better offer by another employer (2 years into my 3-year contract), I went to see a Singapore lawyer. (My lawyer in Ireland who had initially reviewed the contract had told me that it was unenforceable - according to EU laws... That obviously doesn't apply in Singapore!)

She told me that the contract, while open to dispute, could possibly stand and it would cost me a lot of money to fight it in court. (The argument being that the company 'gone to considerable expense to recruit me all the way to Singapore.)

All things been told, you would be wise to carefully consider EVERY contract you sign in Singapore. It is very much an employers' market here.

[Strong Eagle]

For what it's worth I've went through the same experience in my first job in Singapore (many years ago). In my case there was a 1-year clause.

When I discovered that I had been completely misled in regards to both living costs and the typical remuneration for my position in my industry, AND when I received a much better offer by another employer (2 years into my 3-year contract), I went to see a Singapore lawyer. (My lawyer in Ireland who had initially reviewed the contract had told me that it was unenforceable - according to EU laws... That obviously doesn't apply in Singapore!)

She told me that the contract, while open to dispute, could possibly stand and it would cost me a lot of money to fight it in court. (The argument being that the company 'gone to considerable expense to recruit me all the way to Singapore.)

All things been told, you would be wise to carefully consider EVERY contract you sign in Singapore. It is very much an employers' market here.

So... the only thing you left out... did you change jobs?

[wcs]

I raised this as a concern to a friend who was signing a contract last week. My thinking was much as Strong Eagle's. You cannot take away a rice bowl from someone unless you give them the equivalent salary they would normally earn over that time.

However when it was raised with the lawyer here, his interpretation was slightly different. He said it is likely to get thrown out. The reason being that Singapore is all about competition. Any contracts encouraging anti-competitive behaviours are frowned upon and are likely to be ignored by the courts, at least the relevant clauses!

I guess the government feels that anti-competitive behaviour threatens the efficiency that Singapore likes to pride itself on?!

Please note I am not a lawyer, these are comments from my own experiences and here for the purposes of discussion. People should seek legal advice from a qualified lawyer before entering any contracts!

[sundaymorningstaple]

wcs,

very well put!

[Addadude]

So... the only thing you left out... did you change jobs?

Nope. My boss at the time had a well-earned reputation for suing former employees for breaches of contract. Although, yes, I might have won the legal battle, it was not one I could have afforded to fight. Companies generally have deeper pockets for legal fees than individuals and that was certainly the case with me. I finished my contract and moved onto my next job a somewhat sadder but definitely wiser man.

[Mad Scientist]

I have signed an employment contract. The employer has listed a "Non-competition agreement" for not allowing the employee to work in the same industry for two years, but no compensation is given. May I know this is legal or not?

If you were to go to www.app.mti.gov.sg, you will see even the MInistry of Trade and Industry has setup Competition Act

These are some of the extract that you can read and realise it is illegal to have non-competition agreement under your employment act

What are the prohibited activities under the Competition Act?

* The section 34 prohibition: This section prohibits agreements, decisions and practices which prevent, restrict or distort competition in Singapore. These include agreements between competing firms to fix prices, reduce the quantity of goods and services sold, or share markets. The provision(s) of any agreement or any decision that infringes this prohibition will be rendered void on or after the date the section 34 prohibition comes into force to the extent of the infringement.

However, section 36 of the Competition Act empowers the Minister to make an order, following the recommendation of the Competition Commission, to exempt certain categories of agreements from the section 34 prohibition. This is provided that they improve production or distribution, or promote technical or economic progress, without imposing undue restrictions or substantially eliminating competition.

* The section 47 prohibition: This section prohibits firms from abusing market power in ways that are anti-competitive and which work against longer-term economic efficiency, for example, predatory behaviour towards competitors.

* The section 54 prohibition: This section prohibits mergers and acquisitions which substantially lessen competition and have no offsetting efficiencies.