An worker resigned and began working for a competitor. His former employer sought an interim injunction to forestall him from doing so, and from soliciting purchasers and staff, based mostly on sure post-employment restraints entered into between the worker and the previous employer. The Common Division of the Singapore Excessive Courtroom in Shopee Singapore Pte Ltd v Lim Teck Yong [2024] SGHC 29 rejected the injunction utility, discovering that there was no severe case to be tried that the restraints have been enforceable.

Background

Put up employment restraints

The defendant worker had entered into post-employment restraints with the plaintiff employer (Former Employer), which supplied that the worker wouldn’t, for a interval of 12 months within the “Restricted Territories” after his termination date:

• “search or settle for employment with or engagement by or in any other case carry out companies for or interact in enterprise as or be in any manner excited by or linked with a Competitor“;
• “search, solicit, or endeavour to entice away from [the Former Employer] all or a part of the account of any enterprise of any Shopper“;
• “solicit or procure the companies of or endeavour to entice away from [the Former Employer] or employment or help in or procure the employment by one other of any officer, worker or advisor of [the Former Employer] the place that particular person is somebody with whom he/she has had materials dealings or contact through the twelve (12) months instantly previous the Termination Date …“.

The time period “Restricted Territories” is outlined as “Singapore and such different nations inside which [the Former Employer] or any Group Firm thereof operates on the Termination Date and in relation to such nation, through the twelve (12) months instantly previous the Termination Date, the Worker:

(a) undertook duties for [the Former Employer] or any Group Firm thereof with respect to the enterprise of [the Former Employer] or any Group Firm;

(b) had a level of administration duty for the enterprise of [the Former Employer] or any Group Firm or a cloth half thereof; and/or

(c) was aware of Confidential Info relating to the enterprise of [the Former Employer] or any Group Firm“.

Confidentiality agreements

Along with the above restraints, the worker had additionally entered right into a confidentiality settlement the place the worker agreed to “always, each throughout his/her employment by [the Former Employer] and after his/her termination, (a) maintain within the strictest confidence and won’t disclose any Proprietary Info …“.

The worker resigned and began working for a competitor. The Former Employer claimed that the worker breached his post-employment restraints and sought interim injunctions to restrain the worker from accepting employment with the competitor, and to restrain him from soliciting the Former Employer’s purchasers and staff. Within the various, the Former Employer sought a springboard injunction to restrain the worker from accepting employment with any of the Former Employer’s rivals.

Findings

The court docket utilized the ideas set out in American Cyanamid Co v Ethicon Ltd [1975] AC 396 in assessing whether or not the interlocutory injunction utility must be granted. Particularly, the Former Employer should present that:

• (a) there was a severe query to be tried that the restraints have been enforceable (ie that there was a reliable proprietary curiosity and that the restraints went no additional than was moderately essential to guard that curiosity);
• (b) there was a severe query to be tried that the restraints had been breached; and
• (c) if (a) and (b) have been happy, that the steadiness of comfort lay in favour of granting the interim injunction.

The court docket answered (a) within the unfavourable and dismissed the interim injunction utility.

On reliable proprietary curiosity, the Former Employer claimed that the restraints sought to guard confidential info. Nonetheless, the court docket discovered that confidential info was already protected by the confidentiality settlement, and there have been severe doubts that the restraints sought to guard any reliable proprietary curiosity.

On reasonableness, the court docket questioned the geographical scope of the restraints, which basically coated all nations the place the Former Employer operated through the 12 months previous to the final day of employment and for which the worker had confidential info.

The confidential info, in line with the Former Employer, involved generic classes of knowledge which the worker acquired by collaborating in common regional operations conferences resembling development and enterprise plans, vendor and itemizing administration, pricing and advertising methods and statistics on orders. No particular confidential info was pleaded. The generality of this info virtually meant that the worker can be excluded from being employed in all of the markets the place the Former Employer was working, although these have been markets he was not working in or had no tasks for, or had no particular details about, within the 12 months previous the termination. The court docket had severe doubts that this is able to be thought to be affordable.

Key Takeaways

The case highlights the significance of cautious drafting of post-employment restraints. Employers should determine the precise curiosity they’re attempting to guard, and the restraint should be affordable and essential to guard that curiosity. A normal want to guard ‘confidential info’ will not be adequate, particularly if the worker has entered into separate confidentiality agreements. Employers ought to repeatedly assessment their post-employment restraints to make sure they proceed to supply the very best safety.

Key Contacts