Singapore High Court Rules that Forfeiture-for-Competition Clauses are Not Restraints of Trade

23 Nov 2011

This update discusses a recent decision by the Singapore High Court in Mano Vikrant Singh v Cargill TSF Asia Pte Ltd [2011] SGHC 241 which held that a clause in an employee incentive bonus plan which requires the employee to forgo deferred incentive payments if he resigns and joins a competitor, also referred to as a forfeiture-for-competition clause, is not a restraint of trade. There is therefore no need for the employer to show that such a clause is reasonable before the court will enforce it.

In this landmark decision, the High Court held that forfeiture-for-competition clauses are not restraints of trade as they do not prohibit an employee from competing with his employer. Instead, they operate only as a “financial disincentive” for the employee to compete.

To read the update, please click here.