Shopee, MoneySmart, and the question of non-competes

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Hello reader,

I took a media law class in my final year of polytechnic. It was a compulsory module, and it covered some of the basics that we’d encounter in our work, like contract law and defamation law.

It was pretty painful, because trying to understand legalese is so hard. Plus, all the exams were closed-book – how am I supposed to remember what Carlill v Carbolic Smoke Ball Co is all about, nevermind the more Singapore-specific cases we covered in class? Real lawyers get to have notes, don’t they?

Anyway, I passed and graduated, and that’s what matters now.

I don’t recall very much from the class, but I retained enough to be curious whenever a debate over a clause in a contract pops onto my radar. It’s especially interesting in Singapore, because we use case law – and every judgment sets a precedent.

Today’s premium story looks at a recent employment lawsuit in the country that might have set a new precedent. Whether you’re an employer or employee, it’s an interesting read.

Today we look at:

• How a recent MoneySmart ruling could change the way employers in Singapore think about their restraint-of-trade clauses
• A South Korean digital wallet that’s raised funds from Lightspeed
• Other newsy highlights such as SoftBank founder Masayoshi Son’s plans for the firm and Lazada denying rumors that it’s pulling out of Thailand

Premium summary

Non-competition’s not enforceable, in this case

Image credit: Timmy Loen

The question of non-competition clauses has received a lot of attention in Singapore. This is due to a recent case where a local judge dismissed a lawsuit that ecommerce firm Shopee had brought against a former senior employee for allegedly violating the restraint-of-trade clause in said employee’s employment contract.

However, while that case received a lot of publicity, it wasn’t as groundbreaking as the lawsuit filed by financial comparison platform MoneySmart against a former staff member.

• The MoneySmart matter: This lawsuit caused a stir among Singapore employment lawyers, as it was the first time a Singapore High Court judge said “cascading clauses” should not be enforceable. These cascading clauses are contractual mechanisms used by employment lawyers to get around the existing legal rules, and typically lists different time periods (or even geographical locations) in which a restraint of trade provision – which aims to prevent departing employees from competing with the business for a period of time after they leave – is to operate.
• A question of cascading clauses: The High Court decided the non-compete clause in the MoneySmart lawsuit was not reasonable because it allowed the employer to have “multiple bites of the cherry” and would be unfair to the defendant. Such cascading clauses are quite prevalent in Singapore employment contracts, and the upshot of this case is that these provisions are at risk of being unenforceable and struck out entirely.
• New ways of doing things: Both the Shopee and MoneySmart cases highlight how employers need to rethink how they approach restraint-of-trade clauses. It is clear that employers cannot use the same clauses across the entire organization, regardless of the seniority and job scope of their staff. If they do so, they risk such clauses being rendered unenforceable.

Forex in the pocket

You asked; we listened. We’re headed to Kuala Lumpur!

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