A Guide to Restrictive Covenants

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Post-termination restrictive covenants remain as topical as ever, particularly for employers operating internationally. The legal framework for restrictive covenants can vary significantly between jurisdictions and having an understanding of the general principles, alongside an insight into future developments, is vital for employers considering how best to protect their business, clients and contacts. We provide a high-level review of restrictive covenants in a range of jurisdictions below.

Germany: Restrictive Covenants
Employees in Germany are subject to statutory non-competition and non-solicitation obligations during an employment relationship. Similar statutory restrictions apply to directors and board members as long as they are appointed. In addition, there are basic protections against the illegal use of business and trade secrets. Post-termination non-competition covenants, on the other hand, are less common in German employment/service contracts, as they are only enforceable if a certain minimum compensation is promised and paid.
Hong Kong: Restrictive Covenants
Restrictive covenants with the sole aim of preventing competition will not be upheld by Hong Kong courts. In cases where there is a legitimate interest to be protected, restrictive covenants must be reasonable and not go beyond what is necessary to protect such interest.
Singapore: Restrictive Covenants
Restrictive covenants are a common feature in an employment context, especially for senior employees with special trade connections or who have access to trade secrets. However, in Singapore, restrictive covenants are prima facie void and unenforceable, except where an employer can establish that they: (i) protect a legitimate interest; and (ii) are reasonable in the interests of the parties and in the public interest.

RETURN TO INSIGHTS: EMPLOYMENT | BENEFITS | MOBILITY – Q2 2024

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