Ask a lawyer: How can HR tackle employee breach of contract?

In a recent high-profile case in Singapore, a cyber security company is seen suing a former employee for allegedly breaching his duties to the company and employment agreement.

According to Woon Wee Shuo’s contract with Hacking Team (HT), he is barred from working for a competitor while employed by HT and from joining a competitor within a year of leaving the company.

HT is accusing Woon of engaging with a competitor when he was still an employee with the firm, in addition to impersonating as the competitor’s co-founder.

HT also alleged that with the knowledge of confidential information, Woon helped the competing firm develop a product to counter HT’s range of security software.

Woon denied breaching 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 better market its products.

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

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

“While it ultimately depends on the type of breach… the employer may demand for the ex-employee to resign immediately from their new employer,” Choo said. “Due to the cost and administrative burden of such an approach, it may be more practical to take a softer approach.”

For instance, employers can either negotiate a settlement with the former staff or have the individual remedy the breach, he said.

Preparing ahead, is there anything HR can do to prevent such breaches?

“Pre-emptive action may be a preferred approach as it is more practical to deter an employee from breaching their employment terms than to seek a remedy once the breach occurs,” Choo said.

He added if an employer suspects that a staff member may potentially breach their contract after termination, HR can consider the following actions:

• Remind the employee of their post-termination obligations. This can take the form of a letter or be incorporated in the employee's termination notice letter.
• Request for the employee to formally undertake – for eg in writing – that he/she will not breach their post-termination obligations.
• Enter into a termination agreement with the employee which sets out additional post-termination restrictions. This may include an ex-gratia payment to be made to the employee and a waiver of claims from the employee.