How can HR tackle an employee's breach of contract?

In a recent high-profile case in Singapore, a cybersecurity company is seen that sues a former employee for alleged violation of his duties in the company and the employment contract.

According to Woon Wee Shuo's contract with Hacking Team (HT), he is not allowed to work for a competitor while he was employed by HT and to start working for a competitor within a year of his departure.

HT accused Woon of interfering with a competitor when he was still an employee of the company, and also imitated himself as the co-founder of the competitor.

HT also argued that with the knowledge of confidential information, Woon helped the competing company to develop a product to counter HT's range of security software.

Woon denied violating his contract with HT, arguing that his new employer is not a competitor. He also said that the co-founder title was given to allow him to market his products better.

He had claimed against HT for unpaid wages and CPF contributions during his employment in 2015.

If a similar case of breach of contract with employees has occurred, what can employers do to address the situation? We asked Thomas Choo, partner at Clyde & Co for his advice.

"Although it ultimately depends on the type of violation … the former employee's employer can demand that he resigns immediately from his new employer," Choo said. "Because of the cost and administrative burden of such an approach, it may be more practical to follow a softer approach."

For example, employers can either negotiate a settlement with the former staff or the person can remedy the violation, he said.

Preparing, is there something that HR can do to prevent such breaches?

"Preventive action can be a preferred approach because it is more practical to deter an employee from violating their employment conditions than to seek a cure if the infringement occurs," Choo said.

He added that if an employer suspects that a staff member might be able to violate his contract after termination, HR may consider the following actions:

  • Remind the employee of his obligations after the termination. This can take the form of a letter or be included in the employee's letter of cancellation.
  • Request for the employee to formally undertake – for example in writing – that he / she will not breach their obligations after termination.
  • Make a termination agreement with the employee that contains additional restrictions after termination. This can be an ex-gratia payment that must be made to the employee and a waiver of the employee's claims.

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