Restrictive covenants are enforceable in Singapore, but only so far as they are reasonable. A covenant that goes further than the interest it protects fails entirely — the court will not rewrite it into something acceptable. The commercial instinct to draft widely and hope is precisely wrong here: breadth is what destroys enforceability.
Restrictive Covenant Agreement
Post-employment restrictions — [COMPANY NAME] and [EMPLOYEE NAME]
Restrictive covenants are enforceable in Singapore, but only so far as they are reasonable. A covenant that goes further than the interest it protects fails entirely — the court will not rewrite it into something acceptable. The commercial instinct to draft widely and hope is precisely wrong here: breadth is what destroys enforceability.
THIS AGREEMENT is made on [DATE]
BETWEEN:
(1)[COMPANY NAME], a company incorporated in Singapore with UEN [UEN], having its registered office at [ADDRESS] (the "Company"); and
(2)[EMPLOYEE NAME], holding [NRIC / FIN] number [NUMBER] (the "Employee").
Recitals
A.The Employee is employed by the Company as [JOB TITLE] under a contract of employment dated [DATE].
B.In that role the Employee has or will have access to the confidential information, customer connections and workforce described in Schedule 1, which the Company regards as legitimate proprietary interests requiring protection.
C.The parties have agreed the restrictions in this Agreement, having regard to the seniority of the role, the nature of the interests to be protected, and the period reasonably required to protect them.
IT IS AGREED as follows:
1. Definitions
1.1In this Agreement:
"Restricted Period" means the period of [NUMBER] months beginning on the Termination Date, reduced by any period of garden leave served by the Employee immediately before the Termination Date.
"Restricted Business" means [DESCRIBE THE SPECIFIC BUSINESS ACTIVITY IN WHICH THE EMPLOYEE WAS ENGAGED — not the whole industry, and not the whole of the Company’s business].
"Restricted Area" means [DEFINE PRECISELY — e.g. Singapore; or Singapore and Malaysia; matching where the Company actually trades and where the Employee actually operated].
"Restricted Customer" means any person who was a customer or client of the Company, or in active negotiation to become one, and with whom the Employee had material dealings in the [12] months before the Termination Date.
"Restricted Employee" means any person who was employed or engaged by the Company in a [senior, managerial, technical or sales] capacity, and with whom the Employee worked in the [12] months before the Termination Date.
"Termination Date" means the date the Employee’s employment with the Company ends, however arising.
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These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
A post-employment restraint is prima facie void as a restraint of trade. It becomes enforceable only if the employer shows that it protects a legitimate proprietary interest, and that it is reasonable both between the parties and in the public interest. The burden of proof is on the employer throughout. Competition as such is not a protectable interest — the interest must be confidential information, trade connection, or maintaining a stable and trained workforce.
Singapore courts do not rewrite restraints to make them work, and will generally not enforce a narrower version than the one drafted where the employer is effectively asking the court to choose among the countries or activities it covers. Drafting widely in the hope that a court will read it down is the single most costly mistake in this area — the employer ends up with nothing rather than something.
A covenant reasonable for a sales director is unreasonable for an administrator. Uniform covenants across a workforce are the pattern most often struck down, and they weaken the position for the senior roles where the restraint actually matters. Schedule 2 question 10 exists for this reason.
A non-dealing covenant protects the customer connection directly and is far more likely to survive than a blanket non-compete. Clause 4.2 explains why non-dealing is included alongside non-solicitation: proving who approached whom is difficult in practice, and a non-solicitation covenant alone is often unenforceable in substance even where valid in form. For most roles, Clauses 2 to 5 are the whole answer and Clause 6 should be deleted.
The most common drafting failure is defining the restricted business as everything the Company does, or as the industry. It should be the specific activity the employee was engaged in. An employee who sold one product line should not be restrained from the Company’s other lines, still less from the sector.
A global restraint on an employee who worked in one market is unreasonable. So is a restraint with no stated area. Match the area to the Company’s actual trading footprint and the employee’s actual operating territory.
Restricting the employee from dealing with customers they never met, or poaching colleagues they never worked with, is unreasonable and invites the whole clause to be struck down. The definitions of Restricted Customer and Restricted Employee both carry a material-dealings and a worked-with qualifier for that reason.
Where the employee has been kept out of the market on garden leave, a court assesses the cumulative period. Clause 1.1 deducts garden leave from the Restricted Period, which is both fairer and materially strengthens the reasonableness case. Employers who stack a long garden leave onto a long restraint frequently lose both.
There is no requirement in Singapore to pay for a post-employment restraint, and most are unpaid. But a paid restraint is easier to defend as reasonable, gives the employer a clean lever to release the employee by ceasing payment, and reduces the hardship argument. Clause 6.3 is drafted so the restraint falls away if payment stops. Worth considering for genuinely senior roles.
A covenant first seen on day one, after the candidate has resigned elsewhere, is more vulnerable to argument about whether it was fairly agreed. Summarise the covenants in the offer letter and give the candidate the chance to take advice. This costs nothing and improves the position materially.
A covenant signed when the employee was junior may not cover the interests they later access; one drafted for a senior role may be unreasonable if the employee moves to a narrower one. Refresh the covenant on material change of role, with fresh consideration, rather than relying on a document signed years earlier against a different job.
The Ministry of Manpower has been developing tripartite guidelines on restrictive covenants since early 2024, with particular attention to lower-wage workers and restraints unconnected to a genuine business interest. As at the time of writing they have not been published. They will not be legally binding but are expected to be persuasive in court, and the Ministry may review the employment practices of employers who disregard them. Review covenants when they are issued.
The reverse risk matters too. Where a candidate is subject to an enforceable covenant, an employer that hires knowing of it may face a claim for inducing breach of contract. Ask candidates in writing about existing restraints, and take the answer seriously rather than treating it as a formality.
Where covenants are introduced during employment rather than at hire, there should be fresh consideration — a promotion, a salary increase, a bonus, or a payment referable to the covenant. A covenant imposed mid-employment for nothing is open to challenge on that ground alone, quite apart from reasonableness.
Reflects Singapore law current as of {{DATE OF USE}}. The law here is judge-made and develops case by case, and tripartite guidelines are expected — have any covenant intended to be relied on reviewed by an employment lawyer, and take advice before enforcing one.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.