Tripartite Guidelines on Restraint of Trade in Singapore: What Employers Must Do Before the Rules Land

Non-compete clauses have long existed in a legal grey zone in Singapore. Technically prima facie unenforceable, they are routinely included in employment contracts across industries — often without a genuine business case to support them. That is about to change. The Ministry of Manpower (MOM), together with the National Trades Union Congress (NTUC) and the Singapore National Employers Federation (SNEF), has confirmed it is developing Tripartite Guidelines on Restraint of Trade Clauses in Employment Contracts, expected to be released in H2 2026. For Singapore employers, the countdown has started.

Every Singapore employer who uses a restraint of trade clause — whether a post-employment non-compete, a non-solicitation covenant, or a gardening leave arrangement — needs to understand what the forthcoming guidelines are likely to say and, more importantly, act on that understanding before the rules land. This guide covers the current legal framework, what the guidelines are expected to address, and the concrete steps employers should take now.

What Are Restraint of Trade Clauses? Defining the Three Main Types

A restraint of trade clause is any contractual provision that restricts what an employee can do after leaving employment. In Singapore employment contracts, these clauses typically appear in one of three forms:

Non-Compete Clauses

A non-compete clause prohibits a former employee from joining a competing business or starting a competing enterprise for a defined period after leaving. For example: “You shall not, for 12 months after your last day of employment, be employed by or provide services to any entity that competes with the Company in Singapore.” These are the most commonly litigated type of restraint of trade clause in Singapore.

Non-Solicitation Clauses

A non-solicitation clause restricts the former employee from approaching the employer’s clients, customers, or colleagues for a defined period. These are generally regarded as less restrictive than non-competes and are more likely to be upheld by the courts, provided the scope is reasonable.

Gardening Leave

Gardening leave — where an employee serves out their notice period away from the office, often with full pay but barred from joining a competitor — is a separate mechanism that some employers use in lieu of, or alongside, a post-employment non-compete. The courts have treated gardening leave as distinct from a post-employment restraint, but the economic effect for the employee is similar. Employers relying on gardening leave to protect business interests should ensure their contracts clearly set out the terms.

The Current Legal Framework: How Singapore Courts Test Restraint of Trade Clauses

Under Singapore law, any restraint of trade clause is presumed unlawful and unenforceable unless the employer can satisfy a three-part test established by the courts:

1. Legitimate proprietary interest: The employer must show it has a genuine business interest worth protecting — typically confidential information, trade secrets, or established client relationships that the departing employee had meaningful access to.
2. Reasonableness between the parties: The restriction must be no wider than is reasonably necessary to protect that interest. Duration, geographic scope, and the range of activities prohibited must all be proportionate to the employee’s seniority and actual exposure to sensitive information.
3. Reasonableness vis-à-vis public interest: The clause must not unduly harm competition or the employee’s ability to earn a living.

Singapore courts have consistently held that duration matters. Non-compete periods of three to six months for most roles are far more likely to be upheld than restrictions running 12 months or longer. A 2024 High Court decision — in which Shopee sought to prevent a former executive from joining ByteDance — reinforced this: the court dismissed Shopee’s application on the basis that it had not adequately demonstrated a sufficiently strong proprietary interest to justify the restriction. The employee’s ability to earn a living was treated as a weighty countervailing factor.

Singapore employers who are relying on boilerplate non-compete language drafted years ago should not assume those clauses will be enforced if tested in court — or that they will survive the forthcoming tripartite guidelines. For a fuller picture of pass-related employment obligations, see our guide on the complete Singapore Employment Pass Guide 2026, which addresses employer compliance requirements at the point of hire.

What the Tripartite Guidelines on Restraint of Trade Are Expected to Address

In its March 2026 Committee of Supply statement, MOM confirmed that the tripartite partners were still consulting on the guidelines and that more details would be shared in due course. While the final content has not been published as at 3 July 2026, the publicly signalled direction points to several key areas:

Low-Wage Employees Will Likely Be Excluded

MOM has indicated clearly that employees in low-paying roles should generally not be subject to restraint of trade clauses. The rationale: lower-wage workers are less likely to have meaningful access to trade secrets or sensitive client relationships that warrant restriction. Applying non-competes to cleaners, security officers, or junior administrative staff is precisely the kind of clause the guidelines are aimed at eliminating.

Norms on Duration and Geographic Scope

The guidelines are expected to codify duration and geographic norms that align with what the courts have already signalled — likely capping reasonable non-compete periods at six to twelve months for senior roles and setting more aggressive limits for mid-level employees. Geographic restrictions will similarly need to be anchored to the actual geographic footprint of the employee’s role.

Retrenchment Scenarios

MOM has expressed particular concern about employers who retrench employees but then attempt to enforce non-compete clauses against those same workers. The guidelines are likely to establish that restraint of trade clauses should not be used to restrict employees who are retrenched through no fault of their own. Employers who use such clauses against retrenched workers risk findings of conduct unbecoming an employer, with potential consequences including restrictions on work pass privileges.

Non-Binding but Persuasive to Courts

Like other tripartite advisories and guidelines, the restraint of trade guidelines are expected to be legally non-binding. However, they will carry significant persuasive weight in court proceedings. A judge assessing whether a particular clause is reasonable between the parties is very likely to treat a violation of the guidelines as evidence that the employer’s position is unreasonable.

For context on how MOM and the tripartite partners approach HR compliance more broadly, see our Singapore HR MOM Compliance Calendar 2026, which maps out key employment law obligations by month.

The Workplace Fairness Act Connection

The guidelines on restraint of trade do not exist in isolation. The Workplace Fairness Act (WFA), which came into force in 2024, includes retaliation protections for employees who raise employment grievances. An employer who attempts to enforce a non-compete clause against an employee who has filed a WFA complaint could face additional scrutiny — the use of a restraint of trade clause in a retaliatory context is precisely the kind of employer conduct the WFA framework is designed to deter.

More broadly, TAFEP’s mandate — which covers fair employment practices — extends to the way employers treat departing employees. Employers with a track record of using restraint of trade clauses aggressively, particularly against lower-wage workers, may attract additional scrutiny when applying for Employment Passes or S Passes on behalf of their foreign hires.

Practical Steps for Singapore Employers Before H2 2026

The guidelines have not yet been published as at the date of this article, but the direction of travel is sufficiently clear that proactive employers should begin an audit now. Here is a practical checklist:

1. Map all current contracts with restraint of trade clauses. Identify every employee who currently has a non-compete, non-solicitation, or gardening leave provision in their employment contract. Note the duration, geographic scope, and the activities restricted.
2. Assess each clause against the three-part court test. For each clause, ask: (a) what is the legitimate proprietary interest being protected? (b) is the restriction no wider than necessary? (c) would a court likely regard it as reasonable? If you cannot answer (a) clearly, the clause is a candidate for removal.
3. Identify contracts covering low-wage employees. Any employment contract covering an employee earning below the Local Qualifying Salary threshold — which rose to SGD 1,800 per month from 1 July 2026 per Ministry of Manpower guidance — should be reviewed with particular urgency. Per the expected guidelines, non-compete restrictions for such employees are unlikely to withstand scrutiny.
4. Review retrenchment policy. Ensure that your retrenchment protocol includes a step to assess whether any restraint of trade clause will be enforced — and that enforcement will not be pursued against retrenched employees unless there is a compelling and documented proprietary interest at stake.
5. Consider a phased contract update programme. Where clauses are overreaching, work with employment counsel to redraft them before the guidelines are published. A proactive update is far less disruptive than having to respond to a complaint or court challenge.
6. Brief HR and legal on the interaction with the WFA. Ensure your HR team understands that aggressive use of non-compete clauses against employees who have raised grievances could trigger WFA retaliation scrutiny.

For a broader view of your employment contract obligations under Singapore law, our guide on Singapore employment contract clauses and their implications provides a comprehensive reference. For those hiring foreign professionals on Employment Passes, the cost of a compliance failure — including potential pass-privilege restrictions — is set out in our true cost of hiring a foreigner in Singapore analysis.

What Good Practice Looks Like Now

The forthcoming tripartite guidelines are not asking Singapore employers to abandon all post-employment protections — they are asking for proportionality. An appropriately scoped six-month non-compete for a senior sales director who manages major client accounts is a defensible clause. A 12-month non-compete for a junior analyst earning SGD 3,500 per month is not.

Employers who calibrate their restraint of trade clauses to actual business risk — and who can articulate the legitimate proprietary interest at stake — will be in a strong position both when the guidelines arrive and, if it comes to it, in court. Those who have been relying on boilerplate restrictions as a de facto deterrent against career mobility should use the H2 2026 window to correct course before enforcement becomes significantly harder.

The Employment Act (Singapore) sets out the foundational framework for Singapore employment obligations. The tripartite guidelines, when published, will sit alongside this framework and provide operational guidance that courts will treat as an important benchmark.

If your business needs support reviewing employment contracts, managing work pass compliance, or onboarding foreign talent in Singapore, Singapore Employment Agency — the consumer brand of Little Big Employment Agency (MOM Licence 19C9790) — can help. For incorporation, accounting, and broader corporate services, Raffles Corporate Services provides end-to-end support for businesses operating in Singapore.

— The Editorial Team, Little Big Employment Agency