Singapore’s Development as a Business Centre

Singapore has long held a well-deserved reputation for having employer-friendly laws. This was by design: the crippling strikes, often spurious discrimination and harassment lawsuits, and sheer difficulty of dismissing non-performing employees regularly seen in employee-friendly countries, would simply not have been conducive to foreign investment. In fact, it’s quite possible there would have been no SG50 celebrations at all if Singapore had been too employee-friendly in its nascent years.

Pro-Employee Policies – The Winds of Change?

However, a new movement has been gathering momentum, particularly over the last few years: Parliament has been tweaking Singapore laws to make them more pro-employee:

– The ambit of the Employment Act and the Industrial Relations Act have been broadened to extend protection for PMEs (professionals, managers and executives)
– Singapore now has a Personal Data Protection Act (PDPA)
– Anti-harassment laws have been introduced via the Protection from Harassment Act (POHA)
– Soon, employment tribunals will be set up to provide avenues for swifter and more economical resolution of employment disputes

As a measure of the significance of this area, Minister in the Prime Minister’s Office and Cabinet Minister, Chan Chun Sing, was this year appointed Secretary-General of the National Trades Union Congress (NTUC), while his predecessor Lim Swee Say in turn then stepped into the challenging role of Minister for Manpower.

The move towards employee protection can also be seen in recent Court cases. Just last month, an ex-employee of Hewlett-Packard won a S$627,000 payout from the IT giant for outstanding incentive compensation. Notably, the High Court ruled that employers must clearly state onerous financial terms in employment contracts and specifically bring them to their employees’ attention, or risk subsequently being unable to enforce them.

Still Scope for Employer Protection

However, not all the judgments handed down by the Singapore courts of late have been anti-employer.

In the area of non-compete restrictions (the most draconian form of restraint of trade), the Courts had in the past largely enforced a blanket ban on such restrictions altogether. Non-competes are the provisions in an employment contract that seek to stop employees from joining competitors after they’ve left the company. As they can curtail an individual’s future employment prospects, these clauses have generally been frowned upon for public policy reasons. This is notwithstanding that an employee may have freely agreed to the clause to begin with.

Till now, the value of non-compete clauses has therefore chiefly been for their deterrent effect. But this is changing. Two High Court Judges have spoken out against the current position in their judgments, and the Courts are now starting to grant non-compete injunctions against employees. TSMP successfully obtained a non-compete injunction for an electrical and engineering multinational against an ex-director who had jumped ship to its competitor in the highly specialised datacentre network power space, and defeated his subsequent attempt to set the injunction aside. In a converse case with rather different facts, TSMP also helped a corporate housing services director secure the dismissal of a non-compete injunction that had earlier been obtained against her (and her new employer) by an ex-employer.

Going even further, the Court has now suggested it could be willing to rely on the ‘Springboard doctrine’ to stop employees from joining competitors even where there are no non-compete clauses in their contracts.

Springboard injunctions

In a highly publicized non-compete case in August, global brokerage giant Jardine Lloyd Thompson (JLT) sought an injunction from the High Court to stop a group of former staff from joining rival Howden en-masse. In seeking its non-compete injunction, JLT had had to rely on the ‘springboard’ doctrine as its contracts lacked the relevant non-compete clauses. This doctrine is so named as it seeks to restrain individuals who have obtained their ex-employers’ confidential information from using it as a ‘springboard’ to gain an unfair advantage in competing against the ex-employers subsequently.

While declining to grant the springboard injunction in this case, the Court clearly implied it might allow it in the right circumstances (such as if there had been clear theft or misuse of confidential information), even in the absence of a non-compete clause.

The law has come a long way from the earlier position where employers had found themselves unable to obtain injunctions, even when they actually did have non-compete clauses. That said, the Courts still do not grant non-compete injunctions as a matter of course, and employer companies can go a long way towards protecting their positions by having the right clauses in their employment contracts that are reasonable in scope.

Why is the Law developing in seemingly opposite directions?

At a time when the majority of Singapore’s employment laws are becoming steadily more employee-friendly (and assuming this leftward shift continues apace, unaffected by the recent strong mandate given to the Government in the recent GE), we have the important area of non-competes and restraint of trade apparently moving in quite the opposite direction. Why is this so? One possible explanation is that non-competes primarily concern high level PMEs, while the law is more focused at the moment with improving the lot of lower level workers. It’s also possible it was felt that the law in this particular area was too much of an outlier in the other direction, and the changes seek to rein it back in line with the overall mean.

In any event, what’s clear is that as Singapore matures as a nation and a business centre, our legislature and courts are developing a more nuanced and layered approach to law-making. As a result, Singapore’s employment law landscape is rapidly becoming more involved and complex, at a time when global and regional headwinds make it more important than ever for employers to get a good handle on labour issues. Stay tuned.