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Can my employer sue me?

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Porkie
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Can my employer sue me?

Postby Porkie » Wed, 05 Jan 2011 1:37 pm

I'm currently working in a consultant firm and attached to a contractor, however as the contractor appreciate my way of working and offered me a post in their company.
But there is a clause in my appointment letter with my consultant firm that we are not allowed to join their client's company for six upons termination of service, failing which the consultant firm will penalised us a six months' salary to be paid back to them.
Is such clause stated in the appointment letter valid in the eye of the law? If it is, then if my employer claims the all contractors in SG are directly and indirectly his clients doesnt it mean we have to change our profession just to avoid getting sued?
However as I have joined this cnsultant firm in 2003 and I have left the firm in 2005 for about one month beore i re-joined back, can I claim I am no longer having a contract with the firm since there are no re-appointment letter signed at that point of time?

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Postby sundaymorningstaple » Wed, 05 Jan 2011 1:50 pm

If you signed the contract with the consultant company, you are liable for the contents of same, including any non-compete clause. If you didn't bother to read the contract and fully understand it before you signed on the dotted line, then you screwed yourself and have nobody to blame but yourself. Greed always seems to have a way of obscuring common sense for some reason.

It means you cannot join the client's company for a period of 6 months (the client you were attached to is the only one that would be enforceable). Joining another company doing exactly the same thing but not a client of the consultancy is okay. Why didn't you find out these things BEFORE you signed the contract?

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Postby Porkie » Wed, 05 Jan 2011 1:58 pm

True but since I have resigned from the firm in 2005 for a month before I rejoined back doesnt it mean there is no appointment for me at all? Cause recently the consultant firm then handed me a new appointment letter backdating to 2005. There are also other staffs whom doesnt have appointment letters from the day they began working till now. So I presumed its a norm to work without being appointed then?

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Re: Can my employer sue me?

Postby x9200 » Wed, 05 Jan 2011 2:35 pm

Porkie wrote:I'm currently working in a consultant firm and attached to a contractor, however as the contractor appreciate my way of working and offered me a post in their company.
But there is a clause in my appointment letter with my consultant firm that we are not allowed to join their client's company for six upons termination of service, failing which the consultant firm will penalised us a six months' salary to be paid back to them.

Six what? Months? It is valid. Six years probably not.

Is such clause stated in the appointment letter valid in the eye of the law? If it is, then if my employer claims the all contractors in SG are directly and indirectly his clients doesnt it mean we have to change our profession just to avoid getting sued?

Indirectly normally is not enough IMHO.
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Last edited by x9200 on Wed, 05 Jan 2011 2:38 pm, edited 1 time in total.

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Postby sundaymorningstaple » Wed, 05 Jan 2011 2:38 pm

Porkie, you have a PM. You can answer my questions with simple yes or no answers in the thread as you have no PM send function until you have 5 posts.

x9200, if my hunch is correct, I may know the company and how they do business. I'm also pretty sure that Porkie is a local and has signed on as an independent contractor. (thereby avoiding CPF payment and a lot of other employers costs on their part - like insurances). And unfortunately, if they sign the contract, then yes it can be valid as they are not employees but independent contractors.

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Postby Porkie » Wed, 05 Jan 2011 2:54 pm

SMS, huh.. didnt realised i PMed u till u send me this msg? sorry, First time n day on this forum thingy. Btw, u mentioned avoiding cpf, insurance n etc... nope my current consultant firm didnt avoid any of these...

x9200 - IMHO refers to? IMO is understandable but wad does H stands for? not used to such abbrevs in my daily life..

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Postby x9200 » Wed, 05 Jan 2011 3:15 pm

Porkie: http://lmgtfy.com/?q=IMHO

SMS, but I said it is valid. It would be also valid under a normal employment terms but it would not be valid if the restriction period is unreasonably long.

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Postby sundaymorningstaple » Wed, 05 Jan 2011 4:17 pm

x9200,

If the client is having a project running and the consultancy (labour supplier) is furnishing technical personnel (I used to be in that business) to short term projects, this is their bread & butter. The personnel are paid good rates normally, but the agency/consultancy is charging the client a figure a good bit higher as this is how them make their money. As these types of projects are only for a couple of years normally (think rig builder Keppel Fels for example building a semisubmersible) if they bring in a piping designer or autocad specialist as a contract staff to work on that project in the client's office then the agency has bid based on the supply running until a projected completion date. Quite often, the client company finds some of these guys very good and would like to pick them up themselves. There goes the agency's bread & butter. So, it's normal to put a stiff non-compete clause which prevents going to work for the client. They can go to work for somebody else, but just not the client. There are work around occasionally and it sounds like there is one in this case as the agency is trying to get the guys to sign backdated contracts as they have probably gotten wind of a completion date and want to protect themselves as it's usually near a contract completion when the owners approach agency staff after working with them for a long period of time.

Can't really blame them. However, the employee has a bartering tool if they want to exercise it, in as much as the agency as not "timely" given them a contract, therefore if the employee is willing to persue it with legal help, they can beat it but at what cost in the end? They are damned if they do and damned if they don't.

My daughter almost got screwed up that way, (they waited 18 months to give her a contract and then tried to withhold her pay until she signed the contract! But in the end, (with a little help) she did an end run and is now working for the client. Of course the agency also knows very well who her father is! :wink:

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Postby sundaymorningstaple » Wed, 05 Jan 2011 4:21 pm

Porkie wrote:SMS, huh.. didnt realised i PMed u till u send me this msg? sorry, First time n day on this forum thingy. Btw, u mentioned avoiding cpf, insurance n etc... nope my current consultant firm didnt avoid any of these...


You didn't send me a PM. I sent you one asking some questions. I know you cannot send me one, that why I asked you to just answer yes or no to the questions I asked in my PM here on the board.

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Postby Porkie » Wed, 05 Jan 2011 4:38 pm

X9200... okie understood - IMHO... :)

SMS - no it is not.. its a local

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Postby Porkie » Thu, 06 Jan 2011 8:37 am

SMS,

nope its not the same company... ours is in construction line

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Postby sundaymorningstaple » Thu, 06 Jan 2011 8:55 am

Sounds like the practice is becoming endemic though. I guess it will remain until a couple of people take 'em to civil court to test it. Will probably get reduced to 3 months if/when it does, but nobody seems willing to go the distance.

Anyway, Porkie, you now have 5 posts so your PM function works so you can now send as well as received PM's

sms

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Postby curiousgeorge » Thu, 06 Jan 2011 10:34 am

Clauses in employment contracts that seek to dictate what you can/can't do when you leave an employer are known as "restrictive covenants".

It is long established in Singapore that no employment contract can seek to prevent someone from making a living doing his trade/profession.

However, restrictive covenants can be valid is they are "reasonable" and that reasonableness is defined in one of two ways - that it seeks to protect proprietary information (trade secrets, client lists) of the original employer, or it is designed to protect the interests of the public (i.e. working on secret government projects). Simply losing employees to a competitor because the competitor offers better conditions or salary is not considered reasonable, and is a restriction of trade.

Firstly, is sounds to me like your current employment started in 2005, and that you have signed no contract with a restrictive covenant for *this* employment, unless you signed a contract with them that establishes this contract as a continuation of your 2003 contract (i.e. was CPF paid throughout that period you were absent?) If this is the case, you have no problem.

If you are in possession of confidential information of your current employer that could benefit you working for new employer, the ground is more sticky. However, the company would need to prove their proprietary interest and that the clause is minimum necessary to protect that interest and goes no further in restricting your trade.

At the end of the day, it doesn't matter whether you can or can't, the question is can you afford to fight the legal battle if they should seek to sue you? First step should be talking to an employment lawyer, as advice on this forum is worth only what you pay for it i.e. free/worthless.

FOr more information on restrictive covenants, see the following links:

http://www.lawgazette.com.sg/2008-10/feature2.htm
http://www.drewnapier.com/publications/Dnpub-2.pdf
http://www.singaporelaw.sg/content/ContractLaw.html

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Postby Porkie » Thu, 06 Jan 2011 11:41 am

SMS,

okie noted. :)


Curious,

ya did ask around discussed with my other others whom also received a new contract of appointment as the company just susperseded the old one without any mutual agreement and in this new contract which they want us to sign has this clause that indicates we cant join his clients directly or indirectly so each of us has a different view n nobody can confirm if its okay for the boss to include this in his new contract. In the old contract he only states that we cant join his client for a period of six months upon termination with the company now he increased to one year. So our concern is if we were to sign this new contract doesnt it mean we will be restricted to join any of his clients or company whichever he claimed he has business with (as he mentioned indirectly) for ONE year which is so unfair.

However in my case is rather not that straightforward as i had ever left the company to join another consultancy for a period of three weeks and was paid salary n CPF contribution by that company so with this job hopping thingy actually it took me one month's time to be really back the the first employer and upon re-joining back to the first employer, there wasnt any contractual documentation to be signed or wadever, they just gave a letter to state my designation n salary n transport reimbursement. Any other benefits which we agreed on were just verbally done over the phone. Therefore why is it that this NEW contract given to me was backdated to year 2005 at the last page where i have to sign and the comical thing is the first page of the contract wrote this contract shall suspersede the contract dated in 2003 and while the date of this contract being effective (i.e. drafted out) shows dec 2010.

Imagine a contract doc having 3 different years indicated, seems so weird..

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Postby sundaymorningstaple » Thu, 06 Jan 2011 12:56 pm

Frankly, I wouldn't sign it. But then again, I'm willing to go the distance if need be just to prove a point. Most aren't, and who can blame them. However, in your instance I think it would be worth it to go ahead and sign it because they want to backdate the contract, and if the client hires you, go ahead and join them (and tell your new employer what your consultancy has done) and let the consultancy do what it wants. If they take you to court, just explain to your lawyer that if you win you want compensation PLUS costs for frivolous actions on the employer's part.

Usually, when confronted, these consultancies generally will back down as they normally depend on the employees being afraid of "legal contracts" and general the ignorance of employment contracts and what is or isn't allowable.

Oh, if you do sign the employment contract, make sure you date it with the current day where you sign it. I would also delete the restrictive clause and sign where you have deleted it and date it as well. If you try to do this you will probably have to do it BEFORE you sign the last page of the contract - they will probably try to only give you the last page so you can sign it but I, personally would refuse unless I was given the entire contract and then I would sign the bottom of each and every page of the contract so that in the event of a case later, you could always point out the fact that they "inserted" something else into the contract as the page wouldn't be signed.

In fact, I have signature/abbreviation lines on each and every page of my contracts here so the employee has to acknowledge that they have read that page. Most of the times they still don't read it, but, this way my company is protected as well.

But at the end of the day, I agree with Curiousgeorge, see an employment lawyer for advice before doing anything (especially signing the contract).


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