In Singapore, employment agreements are typically categorized into two main types: Permanent Employment Contracts and Fixed-Term Employment Contracts. Each type has its own unique features and is used under different circumstances.

Permanent Employment Contracts

Permanent employment contracts are the most prevalent type of employment agreement in Singapore. They provide a long-term employment relationship and do not have a predefined end date. The employment continues until either the employer or the employee decides to terminate the contract.

Key characteristics of permanent employment contracts include:

• Indefinite term: The contract remains in effect until terminated by either the employer or the employee.
• Following the Employment Act: Permanent employment contracts adhere to the regulations outlined in the Employment Act, which safeguards fundamental employee rights and terms of employment.

Fixed-Term Employment Contracts

Fixed-term employment contracts define a specific period of employment, lasting for a set number of months or years. These contracts are commonly used for project-based work, seasonal employment, and hiring temporary staff.

Key aspects to consider with fixed-term employment contracts include:

• Specified term: The contract has a predetermined end date, and employment automatically terminates upon reaching that date unless renewed by both parties.
• Termination: Terminating a fixed-term contract before the expiry date might be more challenging compared to a permanent contract.

Employment agreements in Singapore are crucial documents that establish the rights and obligations of both employers and employees. These agreements should adhere to the Employment Act, Singapore's primary labour legislation, which outlines minimum employment terms and conditions. To ensure a clear and comprehensive contract, several essential clauses should be included.

Parties to the Agreement

• Clearly identify the employer and employee by name and contact information.
• Specify any subsidiaries or affiliated companies involved, if applicable.

Commencement Date and Duration

• Define the start date of employment.
• For fixed-term contracts, specify the end date.

Job Description and Duties

• Outline the employee's job title, role, and responsibilities.
• Mention whom the employee will report to within the organization.

Remuneration and Benefits

• Clearly state the employee's salary, including details on:
  • Base pay
  • Allowances (if applicable)
  • Bonus structure (if applicable)
• Detail employee benefits such as:
  • Central Provident Fund (CPF) contributions (mandatory)
  • Health insurance
  • Annual leave entitlement
  • Sick leave entitlement
  • Maternity leave entitlement (if applicable)

Working Hours

• Define the standard working hours per week.
• Specify rest days and any overtime arrangements, adhering to Singapore's labour laws.

Termination Clause

• Outline the notice period required for termination by both the employer and employee.
• Specify any conditions related to termination, such as misconduct or redundancy.

Confidentiality Clause

• If applicable, mention any confidentiality obligations regarding the employer's trade secrets or sensitive information.

Intellectual Property Clause

• Clarify ownership rights over any intellectual property created by the employee during their employment.

While these clauses form the core of an employment agreement, other considerations may be relevant depending on the specific role and industry. It's advisable to seek legal advice when drafting or reviewing an employment agreement in Singapore to ensure compliance with labour laws and to protect the interests of both parties.

The probationary period is a standard feature in Singapore's employment agreements. It acts as a trial phase for both the employer and the employee to evaluate their suitability for the role and the company culture.

Evaluation and Assessment

The probation period allows employers to assess an employee's skills, performance, and cultural fit for the position. Simultaneously, employees can evaluate the work environment, company culture, and whether the role aligns with their expectations.

Probation Duration

The Employment Act does not specify a particular probation period. However, probation periods typically range from 3 to 6 months, although they can be shorter or longer depending on the employer's discretion and the nature of the job.

Probation Terms and Conditions

Probationary terms should be included in the Key Employment Terms (KETs) provided to new employees. The notice period for termination during probation is generally shorter than after confirmation. Employers may not be required to provide a reason for termination during probation.

Confirmation Post-Probation

Upon successful completion of probation, the employee is usually confirmed as a permanent employee, and the terms of the employment contract take full effect. It is good practice for employers to issue a confirmation letter outlining the employee's permanent status.

Probation Extension

The probation period can be extended with the mutual consent of both the employer and the employee.

Even during probation, employees still have certain basic employment rights under the Employment Act, such as the right to minimum wage and workplace safety.

Employment agreements in Singapore often include confidentiality and non-compete clauses to safeguard the employer's legitimate business interests. However, the legal framework in Singapore balances these interests with the employee's right to work and earn a living.

Confidentiality Clauses

Confidentiality clauses are designed to protect an employer's trade secrets or other confidential information from unauthorized disclosure by employees. These clauses are particularly important for businesses with sensitive information, such as customer lists, product formulas, or marketing strategies.

• Reasonable Scope: For a confidentiality clause to be enforceable, it must be reasonably scoped. It should only aim to protect the employer's legitimate confidential information and should not restrict the employee's ability to use general knowledge and skills acquired during employment.

Non-Compete Clauses (Restraint of Trade)

Non-compete clauses, also known as restraint of trade clauses, limit an employee's ability to work for a competitor after leaving the company.

• Enforceability: Unlike some jurisdictions, Singapore adopts a stricter approach towards non-compete clauses. These clauses are generally presumed unenforceable unless the employer can demonstrate that the clause is reasonable to protect a legitimate proprietary interest and does not unduly restrict the employee's ability to work.

• Factors for Enforceability: Courts consider several factors when assessing the enforceability of a non-compete clause, including:

  • Legitimate interest: Does the clause protect a valid interest of the employer, such as trade secrets or client relationships?
  • Reasonableness: Is the duration, geographical scope, and restricted activities of the clause reasonable in the context of the employee's role?
  • Public interest: Does the clause unduly restrict competition or prevent the employee from earning a living?

Recent Developments: Singapore's Ministry of Manpower (MOM) is developing guidelines to provide more clarity on non-compete clauses. These guidelines are expected to be released in the second half of 2024 and may further shape the enforceability of such clauses.