Introduction
Singapore is one of the upcoming business hubs in the Asian market and continues to grow and expand in equal measures. The country is located on the southern part of the Malay Peninsula in Asia. The country has instituted various laws that seek to expand the business and protect its industry from other external markets and economies (CCH Asia Limited, 1971). The restraint of trade in Singapore has affected its local and international business organizations. Some trade laws restraint employees from joining competitors where they affect employment contracts signed by the employee for the duration of time he/she works at an organizations (Genzberger, 1994).
There exist restrictive agreements between employer and employee which are meant to safeguard the well-being of the organization with regards to its employees. Most employees seek new challenges that offer better employment terms and better package (Hong Kong, 1995). Competitors in business and trade are always on the lookout of new talent and this brings a lot of unnecessary struggle to maintain their employees. The law in Singapore concerning employment and restraint of trade exists as case law rather than legislation law (IP Asia, 1988). There exist different trade clauses that affect business contracts and employment contracts in Singapore.
Restraint of law employees from joining competitor in Singapore
Below are some of the cases that have brought about the issue of restraint to trade in Singapore and they have set a precedent for future cases in the country. There has been an ongoing debate whether to implement the restraint of trade law or do away with it. Different cases regarding employees poaching and restraint of trade law has been determined by the appeal court in a move to solve some of the issues raised by various law experts in the country.
Buckman Laboratories (Asia) V Lee Wei Hoong (1999) is one of the case laws in Singapore that have shaped the law on restraint of trade in the country. The court decision over the case was seen to contravene the rights of the employer after signing up for the employment contract with the employee. The court decision was that there was reasonable interest by the employer to protect by ensuring his employees did not work for a business competitor for a given period of time. The contract terms were thus very applicable as decided by the court and the employee had to honor the time given by the employer before he could engage in any business that would be viewed as a competition against his former employer.
Employment contracts are very useful in safeguarding the interests of both the employer and the employee. They help set up a common agreement upon which the contract document is signed to dictate the terms of the contract in regard to performance and time frame of the contract (Phelan, 2009). A contract can cease to exist if one party to the contact fails to honor the terms of the agreement and he/she may be forced to revoke the contract hence by ending of the contract agreement.
In the case of Chua Chian Ya v Music & Movements (S) Pte Ltd (formerly trading as M & M Music Publishing) the appellant sought a declaration to the affect that all rights in all the songs that she composed during her first and the principal agreement with Music & Movements in 2002 as extended by another agreement with Music & Movement in 2005 had reverted to her. In this appeal, the appellate judge dismissed the application holding that the extension agreement survived the annulment of the contractual relationship between the two parties. This is because the wording of the agreement did not show any cause to believe that there would be any inconsistency and absurdity if the words of the agreement if they were interpreted in their ordinary and grammatical meaning (Chua Chian Ya v Music & Movements (S) Pte Ltd (formerly trading as M & M Music Publishing) 2009)
Restraint of trade in employment contracts has been influenced by several cases that have been decided by the industrial court in Singapore and they affect how employees should perform their duties. In the case of Sandar Aung v Parkway Hospitals Singapore Pte Ltd (trading as Mount Elizabeth Hospital) and Another[2007] 2 SLR 891; (2007), the appellant sought to overturn the decision of the trial judge that allowed Parkways Hospital Singapore Pte Ltd to include Mount Elizabeth Medical Holdings as a co-plaintiff. The trial judge also awarded over 320 thousand dollars based on the agreement that the appellant signed. The appellate judge acknowledged that the formulation of contractual agreements takes place in different context and based on this allowed the appeal to stand. The issue of employment contracts has been a common case in most of the Singapore business organizations as they seek to prevent competitors from poaching employees form a given organization or business. The restraint of trade seeks to balance the organization operations with issues such as it work force and how they should perform and the kind of freedom they seek to enjoy during this term of their contracts (Singapore & Baalman, 1961).
An employment contract is a trade agreement signed by an employee bidding him/her to the terms of the employment as proposed by employer. It always gives a definite time frame for which the contract is deemed void and can be implemented in case of breach of the contract. In the case of Ng Boon and Claas Medical Centre the court decision was that the defendant did not have a right to infringe on the rights of the plaintiff and was supposed to execute the contract according to the terms of agreement. The court decision was that the employee was to honor the contract terms as the employer had reasonable interest to protect by executing the restraint of the employee from joining a competitor (CLAAS Medical Centre Pte Ltd v Ng Boon Ching (2010).
Employment contracts are confidential documents that require extreme understanding of the various clauses as stipulated in the document. Some organization operations are very confidential and any employee who has access to them should not use share them with business competitors (Mastel, 1996). There exist several cases in Singapore where one employee revealed the business operations to another business competitor. There have been several cases in Singapore that have involved restraint of trade concerning employment contracts in the country business areas. Some of these cases have set the precedent for current and future cases that involved restraint of trade in employment contracts.
Another court case that emphasized on the need for employee restraint in employment contracts in Singapore involved Heller Factoring versus Ng Tong Yang in 1998. The court decision sought to uphold the restraint in law concerning employment contracts as the company interest was deemed reasonable to for the two years signed by the employee. The seniority of the employee and the kind of information access he had in the company was deemed as a reasonable interest for the company to guarantee restraining the employee from joining a competitor of Heller Factoring. The employment contract signed between the employee and his employer was valid as it sought to safeguard the interest of the employer when the employee’s contract lapsed (Heller Factoring (Singapore) Ltd v Ng Tong Yang (1998). A restraint of a few months to a year is normally given by companies to their employees to help protect the business interest of the company from competitors who might poach the company or business employees.
The Law nowadays seeks to protect the rights of both parties to the contract. Depending on whether the claims of the employer are substantial in a court of law and what loss he or she is likely to suffer when an employee choses to work for a competitor. If the employer is likely to suffer loss in terms of intellectual property and business ideas then the court has a mandate to protect the interest of the employer. The restraint of law employees from joining competitors was again revealed by the court case which involved Mano Vikrant versus Cargill TSF Asia where the court found reasonable interest form the employer to enforce an employment contract with its employee from joining a business competitor. This case proved the applicability of restraint of trade in Singapore which enforces the employment contract where it finds the employer’s reasonable interest in the contract that needs to be protected (Mano Vikrant Singh v Cargill TSF Asia Pte Ltd, 2011). This case formed a precedent for more cases where the employment contract was enforceable until the expiration of the contract terms.
Several other cases regarding restraint of trade in Singapore has been placed in courts and decided by a team of well learned and experienced judges who rely on the evidence provided in the court to decide whether the contract is enforceable. The law of restrain in Singapore has had its fair share of controversies especially with international companies that operate in the country (Bradstreet's weekly, 1979). Competition in the market gives an organization a closer edge to information and employee work force. Employees form a basic asset in an organization and thus they are treasured by the organization as they help the organization in meeting its objectives and goals and remain competitive in the market (Lee, 1990). The restraint of competitors from poaching employees from other companies has brought about many issues that have led to signing of employment contracts that guide the employee of the terms of his/her employment in a given organization. The law is enforceable in Singapore as it operates as case law rather than legislation. In enforcing a contract agreement the court must find a reasonable argument from the employer to guarantee a restraint on its employees from joining competitors. In the case of Man Financial Limited versus Wong Bark the court found that the employer has reasonable interest to safeguard and thus Wong Bark had to execute the terms of the employment agreement in the contract (Man Financial (S) Pte Ltd v Wong Bark Chuan David, 2008).
Conclusion
The restraint of trade clauses in Singapore has been on the public limelight for quite a while and a couple of cases has been decided which seeks to enforce the restraint of law employees from joining competitors. The following cases have revealed a trend in the economy of Singapore which permits restraint of law on employees from joining competitors. These cases include; Buckman Laboratories (Asia) V Lee Wei Hoong (1999). CLAAS Medical Centre Pte Ltd v Ng Boon Ching (2010). Heller Factoring (Singapore) Ltd v Ng Tong Yang(1998). Man Financial (S) Pte Ltd v Wong Bark Chuan David (2008). Mano Vikrant Singh v Cargill TSF Asia Pte Ltd (2011). (Chua Chian Ya v Music & Movements (S) Pte Ltd (formerly trading as M & M Music Publishing) 2009) Sandar Aung v Parkway Hospitals Singapore Pte Ltd (trading as Mount Elizabeth Hospital) and Another[2007] 2 SLR 891; (2007), Smile Inc Dental Surgeons v Lui Andrew Stewart (2011).
The court cases sought to define the terms of agreement and safeguard the interest of both the employer and the employee. In the different cases brought in court, the court seeks to find out if the terms of the contact are legitimate and if there is need to restrict the employee from working for a competitor as stipulated in the contract. The law of restraint of trade applies in Singapore and has been enforced by various judicial structures in the country. The case law is enforceable if it’s deemed that the contract is legitimate and the company wishes to protect its business interests from competitors. The restraint of law employees from joining competitors in Singapore has been in force for some time now.
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