The short version: yes, a non-competition clause is usually not enforceable, but your employer can drag you through an expensive and nightmarish lawsuit anyway, just as a warning to other employees. So read this before you sign.
You’re excited about landing a new job. The salary looks great, the title’s impressive, and the office culture seems just what you were hoping for.
Then you glance through the fine print of the employment contract and there it is, the non-competition clause (NCC).
It’s just a paragraph or two, couched in legal language that’s easy to gloss over. But don’t be fooled. This little clause could derail your career, cost you thousands in legal fees, and even leave you unable to work in your field for months or years.
In January 2024, a real case in Singapore brought the implications of these clauses into the spotlight.
Shopee Singapore Private Limited took a former employee, Mr Lim, to court over an NCC he’d signed. Lim had left Shopee to join TikTok, and Shopee claimed his new role breached their agreement.
After a protracted legal battle, the High Court sided with Lim. Shopee’s case fell apart because the NCC was found to be unenforceable. It wasn’t reasonable in scope, duration, or geography.
This case is a timely reminder that while non-compete clauses might look like legal boilerplate, they’re anything but.
1. What Exactly Is A Non-Competition Clause?
A non-competition clause is a legal provision, essentially a promise you make to your employer. It says that if you leave the company, you won’t work for a competitor for a certain period of time, within a certain geographic area, and often in a specific role or business area.
It’s meant to protect the employer’s business: trade secrets, client lists, proprietary know-how, intellectual property. In theory this makes sense. No company wants a key employee leaving to join a competitor and immediately sharing inside knowledge.
But here’s the thing: just because it’s written into the contract doesn’t mean it’s fair, or enforceable.
2. Why Non-Competition Clauses Can Be Problematic
Singapore law recognises the right to work and earn a living as a fundamental right.
This means that while employers can include NCCs in contracts, courts will closely scrutinise them. If the clause is too broad, too long, or too vague, it’s likely to be struck down. For instance:
- Scope of activity: if you’re in sales, it might be reasonable to limit you from doing sales for a direct competitor. But if the clause says you can’t work in any capacity for a competitor, that’s a red flag.
- Duration: courts usually frown upon NCCs lasting more than 6 to 12 months. Anything longer raises questions about fairness.
- Geography: if your role is limited to Singapore, but the NCC bans you from working across the entire Asia-Pacific region or globally, that’s excessive.
The Shopee case highlighted these issues. Lim argued that his new role at TikTok didn’t overlap with his former Shopee role, particularly because his new responsibilities were in different countries. Shopee’s arguments fell apart because they couldn’t prove a legitimate proprietary interest or justify the geographic and functional scope of the clause.
3. Why Employers Use NCCs
Non-compete clauses aren’t always about protecting legitimate business interests. Sometimes they’re about control.
Companies may use them as a deterrent, to make employees think twice about leaving. Some employers use NCCs strategically, to create legal headaches for departing staff, knowing full well that the clause wouldn’t hold up in court.
Why? Because most employees are hesitant to fight back. They fear legal costs, reputational damage, or simply the stress of litigation.
But make no mistake, employers can and do sue. Even if their case is weak, they might pursue legal action just to set an example or intimidate others. And lawyers don’t come cheap.
4. What To Do If You’re Faced With One
a. Read The Fine Print
Don’t just skim through the contract. Employment agreements aren’t like those online “agree to terms” boxes we click without reading. Pay close attention to:
- Scope: what exactly does the clause prohibit? Is it limited to your current role or broadly defined to include “any capacity”?
- Duration: how long does the restriction last? More than 12 months is a red flag.
- Geography: does the clause limit you to a city, a country, or an entire region?
- Stacked clauses: look out for non-solicitation of clients or colleagues, non-disparagement clauses, or IP transfer clauses that claim ownership of things you’ve created.
b. Negotiate
If something feels off, speak up. Many employees assume contracts are non-negotiable, but that’s not always the case. Ask your employer to:
- Narrow the scope: specify exactly what constitutes a competitor
- Reduce the duration: from 12 months to 6, or even 3
- Clarify vague terms: what does “indirect competitor” mean? Get them to define it
- Exclude side projects: if you plan to invest in or advise other companies, make sure the clause doesn’t prohibit that
Keep all correspondence in writing. Emails are your friend. It’s not about creating friction, it’s about protecting your future.
c. Know The Company’s Track Record
If the company has a history of suing former employees, that’s a giant red flag. Some companies use lawsuits as a scare tactic. If you’re unsure, ask around or check public records.
If a company seems lawsuit-happy, you might want to reconsider joining them altogether.
d. Get Legal Advice
I can’t stress this enough. If you’re unsure about a clause, consult a lawyer. Yes, it’ll cost you, but the alternative, being tied up in a costly legal battle, could be far worse.
If budget’s tight, check out free legal clinics or community legal services.
e. Trust Your Gut
Sometimes it’s that uneasy feeling in your stomach that tells you something’s not right. If the contract feels overly restrictive or if the company seems aggressive, don’t ignore those instincts.
Walk away if you must. No job is worth jeopardising your future.
5. Already Signed An NCC? Here’s What You Can Do
If you’re bound by a non-competition clause and planning to resign, don’t panic.
Courts in Singapore are generally reluctant to enforce NCCs unless the employer can prove a strong case of legitimate proprietary interest and reasonable restrictions. For junior roles, the courts are especially sceptical.
However, if you’re leaving on bad terms or if the company has a reputation for litigiousness, it’s wise to consult a lawyer.
Sometimes choosing an adjacent role or moving to a different industry might mitigate risk. For example, if you’re in sales, consider moving into marketing or operations in a different sector.
Don’t Let An NCC Clip Your Wings
Non-competition clauses are more common than ever, but that doesn’t mean you should accept them without question. They can have real, lasting impacts on your career. While employers have a right to protect their interests, employees have a right to earn a living.
If you see an NCC in a contract, read it carefully, ask questions, negotiate, and if needed, seek legal advice.
Don’t let fear, or a flashy job offer, trap you into signing something you’ll regret later. Your career is your greatest asset. Protect it fiercely.
Disclaimer: I am not a lawyer and the advice given here does not constitute legal advice. Please consult a real lawyer, preferably one with experience in this area, if you are facing a similar situation.
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