Breach of employment contracts: Restraints of trade and the importance of proving damages

23 May 2019

In HT SRL v Wee Shuo Woon [2019] SGHC 96, the Singapore High Court held that an ex-employee had breached his employment agreement and his implied duty of good faith and fidelity by engaging in the business of a competitor during his employment. However, the Court only awarded the company nominal damages, because the company failed to prove that it had suffered loss, and that this loss had been caused by the ex-employee.
 
The High Court further held that the non-compete clause in the employment contract did not protect a legitimate proprietary interest and was therefore void as an illegal restraint on trade. The Court also held that the terms of the restraint of trade (in the employment contract) were unreasonably wide.
 
This decision is a useful reminder that covenants in restraint of trade are prima facie void and unenforceable, and also that parties who are considering claims against their former employees should carefully consider and seek legal advice on whether the losses they have suffered can be causally linked to the former employee’s wrongdoing.
 
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