Guidelines on restrictive clauses in employment contracts set for 2024 release

Tripartite partners vows to ensure unreasonable clauses not the norm in employee contracts

Guidelines on restrictive clauses in employment contracts set for 2024 release

The government is set to release guidelines on the inclusion of restrictive clauses in employment contracts, according to Singaporean Minister for Manpower Tan See Leng.

Tan unveiled the timeline last week in an answer to a parliamentary question over the incorporation of non-compete clauses in employment contracts.

"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," the minister for manpower said.

"These guidelines are currently being finalised and are targeted for release in the second half of this year."

Position on restrictive clauses

According to the minister, the tripartite partners are committed in ensuring that unreasonable clauses do not become a norm in employment contracts.

"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," Tan said.

"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."

He made the remarks over recent cases at e-commerce firms that involved such clauses in employment contracts.

Shopee Singapore recently attempted to sue a former senior executive after he joined ByteDance, the parent company of TikTok.

Retrenched employees of Lazada Singapore also criticised their former employer's non-compete clause in his employment contract after they faced redundancy early this year, according to a report from Channel News Asia.

Tan said employees who believe they are subject to unreasonable employment clauses can reach out to their unions, the ministry, or the Tripartite Alliance for Fair and Progressive Employment Practices.

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