Employee Breach of Contract in Singapore: What Employers Can Do

Employee Breach of Contract in Singapore: Employer’s Legal Guide

When an employee breaches their employment contract or duties in Singapore, it can lead to serious business risks—lost clients, confidential information leaks, or internal disruption to employers. As civil lawyers in Singapore, we understand the challenges businesses face when dealing with misconduct, confidentiality breaches, or unfair competition. This guide explains how employers can legally and strategically respond to employee misconduct, breaches of duties, non-compete violations, and unlawful poaching of clients or staff. In this article, we explain how to identify a breach of contract, issue a formal warning, and when summary dismissal may be justified.

What Is an Employee Breach of Contract?

When an employee breaches their employment contract, it can feel like a betrayal of trust. These breaches can take many forms—refusing to carry out their employment duties, misusing or abusing confidential information, or even working for a competitor behind your back. Sometimes, it’s more subtle, like poaching clients or encouraging colleagues to leave.

A breach of contract by an employee occurs when they fail to comply with the terms of their employment agreement. This can take many forms, including:

• Refusing to perform assigned duties
• Engaging in misconduct or insubordination
• Abusing or misusing of confidential information unlawfully
• Working or assisting a competitor (conflict of interest/ non- compete)
• Poaching clients or soliciting other employees or staff (non-solicitation breach)
• Violating non-compete agreements or engaging in unfair competition

Such unlawful breach of contract of duties can harm your business reputation, revenue, and result in disruption to operations. Employers must act promptly but lawfully within the scope of Singapore employment law.

Step-By-Step Guide to a Potential Breach of Contract

Step 1: Identify  and Document the Breach

Before taking any action, it’s crucial to conduct a thorough internal review. Here’s some steps that you should take in Identifying and Documenting the breach. This isn’t just about building a case; it’s about making sure your response is measured and defensible if challenged.

Employers should:

• Review the employment contract and relevant internal employment policies
• Identify the specific clause(s) breached in the employment contract (e.g., confidentiality, non-competition, non-solicitation clauses)
• Collect evidence such as emails, access logs, witness statements, or client complaints
• Maintain a detailed timeline of events

Proper documentation is essential for internal decision-making, strengthening your legal position for defending against potential legal claims.

Step 2: Decide on Appropriate Disciplinary Action

Not every breach calls for immediate termination.  Consider the nature and severity of your case:

• If it is a minor breach:
  
  • Issue a formal written warning
  • Clarify expectations and reinforce company policy
• If it is a serious breach (e.g., misconduct, poaching, moonlighting):
  
  • Conduct an internal inquiry or disciplinary hearing
  • Give the employee an opportunity to respond

If it’s a first-time offence or relatively minor, a formal warning might be enough. Be clear about what went wrong, why it matters, and what needs to change. On the other hand, if the breach is serious, you may need to launch an internal inquiry. This gives you a chance to hear all sides, gather more facts, and decide on the next steps with confidence. Having a structured internal process is essential for defending against wrongful dismissal claims.

Step 3: When Summary Dismissal Is Justified

Sometimes, the breach is so serious that continued employment just isn’t an option. Summary dismissal—terminating the employee without notice—is a last resort, but it’s justified in cases of gross misconduct. Examples include:

• Theft or fraud
• Harassment
• Misusing or abusing trade secrets or confidential data
• Breach of non-compete or trade restraint clauses during employment

Even in such cases, ensure compliance with the Employment Act and due process. Conduct a disciplinary hearing, document everything, and ensure the decision is fair and proportionate. Employers must ensure that the dismissal is proportionate, procedurally fair, and supported by clear evidence.

Step 4: Execute the Termination Legally

To avoid disputes or MOM (Ministry of Manpower) complaints, ensure termination is carried out professionally and lawfully, these are the steps you can take to protect the company’s interests and reduce the risk of post-termination disputes:

• Issue a written termination letter stating reason for dismissal
• Settle any outstanding salary, unused leave, and CPF contributions  in accordance with the Employment Act
• Recover company assets and revoke system access
• ‍Remind the employee of their ongoing obligations under non-competition and confidentiality clauses

Step 5: Enforcing Post-Employment Obligations

Many employers include clauses in their contracts to protect the business after an employee leaves. These might prevent the employee from joining a competitor for a certain period, or from soliciting your clients or staff. If these clauses are breached, you may have grounds to take legal action—whether that’s seeking an injunction or claiming damages. The key is to ensure these clauses are clearly and expressly written and legally enforceable from the start.

Many employment contracts include restrictive covenants to protect the business after an employee leaves. These may include:

• Non-competition clauses – preventing the employee from working for a competitor for a defined period
• Non-solicitation clauses – prohibiting the employee from approaching clients or colleagues
• Confidentiality clauses – requiring the employee to keep proprietary information private

If these clauses are breached, employers may seek legal remedies such as injunctions or damages in the Singapore Courts. It is important to ensure these clauses are well-drafted and enforceable under Singapore law. Our litigation lawyers can assist in bringing lawsuits to claim for any losses or damages suffered.

Step 6: Minimise Legal Risk & Seek Early Legal Advice

Handling employee breaches without expert guidance can lead to wrongful dismissal claims or reputational damage. To protect your business:

• Follow fair and transparent procedures
• Keep clear records of actions taken
• Consult an employment lawyer for guidance
• Consider mediation or settlement where appropriate‍

Early legal intervention helps you avoid drawn-out disputes and reputational harm.

To reduce the risk of wrongful dismissal claims or disputes:

• Follow fair procedures and document all actions taken
• Ensure the reason for termination is valid and supported by evidence
• Seek legal advice before taking action, especially in complex or high-stakes cases

Employers may also consider mediation or settlement discussions to resolve matters amicably and avoid litigation.

Why Employers Choose Triangle Legal

At Triangle Legal LLC, we are a law firm in Singapore that helps employers navigate employment disputes with clarity and confidence. Our services include:

• Drafting and reviewing employment contracts with enforceable non-competition and non-solicitation clauses
• Advising on disciplinary procedures and lawful termination
• Representing employers in disputes involving breach of contract, confidentiality, or unfair competition

If you're facing an employee breach of contract, contact us today to protect your business and move forward with confidence.

FAQ

1. When is summary dismissal allowed under Singapore employment law?

Answer: Employers may summarily dismiss an employee without notice for gross misconduct under Section 14 of the Employment Act or in accordance to their relevant contractual terms. This includes theft, insubordination, and serious breaches such as working for a competitor or misusing/abusing confidential information. Evidence and a fair inquiry are essential before a summary dismissal can be carried out (see Employment Act 1968 - Singapore Statutes Online).

2. How can an employer enforce a non-compete clause in Singapore?

Non-compete clauses must be reasonable in scope, duration, and geographic area to be enforceable under Singapore contract law. Courts may enforce them if they protect legitimate business interests, but overly broad clauses are often struck down.

3. How can employers avoid wrongful dismissal claims in Singapore?

Employers should follow these steps:

• Comply with Section 14 of the Employment Act
• Document all misconduct and warnings
• Conduct a fair disciplinary inquiry
  Seek legal advice before dismissal Wrongful dismissal can lead to reinstatement orders or compensation.

4. If I am an employee and I am wrongly dismissed, what should I do?

If you believe you have been wrongfully dismissed in Singapore, you have legal options to challenge the dismissal and seek remedies under Singapore employment law.

Wrongful dismissal occurs when an employer terminates your employment without just cause or due process—such as dismissing you for reasons related to age, pregnancy, whistleblowing, or exercising employment rights.

Steps to Take:

1. Request a Written Explanation
   Ask your employer to provide a written reason for your dismissal. They are required to respond within 7 working days under the Tripartite Guidelines on Wrongful Dismissal.
   
2. File a Claim with TADM
   Submit a claim to the Tripartite Alliance for Dispute Management (TADM) within 1 month from your last day of employment.
   
   • Claims are capped at S$20,000, or S$30,000 if you are a union member
3. ‍Escalate to the Employment Claims Tribunals (ECT)
   If mediation fails, you may refer your case to the Employment Claims Tribunals (ECT) for resolution.