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Restrictive Covenant Agreement
I need a restrictive covenant agreement that prevents a former employee from engaging in competitive activities within Singapore for a period of 12 months after leaving the company, and includes clauses on non-solicitation of clients and confidentiality of proprietary information.
What is a Restrictive Covenant Agreement?
A Restrictive Covenant Agreement protects businesses by legally limiting what employees can do after leaving their job. These contracts typically prevent former staff from competing directly, poaching clients, or sharing confidential information - common concerns for Singapore companies, especially in sectors like technology and financial services.
Under Singapore contract law, these agreements must be reasonable in scope, duration, and geographic limits to be enforceable. For example, a 12-month non-compete clause within Southeast Asia might be valid, while a global, multi-year restriction could be struck down in court. Companies often tailor these agreements to specific roles and business needs.
When should you use a Restrictive Covenant Agreement?
Use a Restrictive Covenant Agreement when hiring employees who will have access to sensitive business information or close client relationships. This is especially critical for senior executives, sales teams, and technical specialists in Singapore's competitive sectors like banking, technology, and professional services.
The agreement needs to be signed at the start of employment - trying to add restrictions later requires new consideration under Singapore law. Key moments to implement these agreements include hiring new leadership teams, expanding into new markets, or protecting newly developed intellectual property. Many companies also use them during mergers and acquisitions to safeguard valuable business assets.
What are the different types of Restrictive Covenant Agreement?
- Confidentiality And Restrictive Covenant Agreement: Combines non-disclosure provisions with competitive restrictions, commonly used for employees handling sensitive data and client relationships
- Restrictive Covenants Shareholders Agreement: Specifically designed for company shareholders, limiting their ability to compete or interfere with business relationships after selling their stakes
- Protective Covenant Agreement: A broader agreement focusing on protecting business interests through multiple restrictions, including non-solicitation and non-dealing clauses, often used in professional services firms
Who should typically use a Restrictive Covenant Agreement?
- Employers: Companies and business owners who need to protect their trade secrets, client relationships, and competitive advantage. Usually drafted by their legal teams or external counsel
- Senior Executives: C-suite officers, directors, and key management personnel who typically face the most comprehensive restrictions due to their access to strategic information
- Sales Teams: Staff with direct client relationships and market knowledge, especially in financial services and professional consulting
- Technical Specialists: Engineers, developers, and R&D staff who have access to proprietary technology or methodologies
- Employment Lawyers: Draft, review, and enforce these agreements, ensuring compliance with Singapore's employment laws and court precedents
How do you write a Restrictive Covenant Agreement?
- Business Scope: Define exact activities, markets, and geographic areas you need to protect
- Time Periods: Determine reasonable restriction durations based on industry standards and Singapore court precedents
- Employee Details: Gather role descriptions, access levels to confidential information, and client relationships
- Company Assets: List specific trade secrets, client lists, and proprietary information requiring protection
- Consideration: Document any additional benefits or compensation offered in exchange for restrictions
- Digital Protection: Our platform generates customized agreements that automatically include all required elements while ensuring enforceability under Singapore law
What should be included in a Restrictive Covenant Agreement?
- Identification Section: Full legal names of employer and employee, business registration details, and effective date
- Scope Definition: Clear description of restricted activities, geographic boundaries, and duration of restrictions
- Consideration Clause: Explicit statement of benefits or compensation provided in exchange for restrictions
- Confidentiality Terms: Detailed definition of confidential information and handling requirements
- Non-Compete Provisions: Specific competitive activities prohibited under Singapore competition laws
- Severability Clause: Ensures remaining provisions stay valid if any part is found unenforceable
- Execution Block: Signature spaces with witness provisions per Singapore requirements
What's the difference between a Restrictive Covenant Agreement and an Advisor Agreement?
A Restrictive Covenant Agreement differs significantly from an Advisor Agreement in several key aspects, though both are commonly used in professional relationships. While both protect business interests, they serve distinct purposes and operate differently under Singapore law.
- Scope of Restrictions: Restrictive Covenant Agreements primarily limit post-employment activities like competition and client solicitation, while Advisor Agreements focus on defining current service terms and deliverables
- Duration of Effect: Restrictive covenants typically activate after employment ends and last for a specified period, whereas Advisor Agreements govern ongoing professional relationships
- Legal Enforcement: Singapore courts scrutinize restrictive covenants more strictly, requiring reasonable limitations, while Advisor Agreements face fewer enforceability challenges
- Consideration Requirements: Restrictive covenants need specific consideration beyond normal employment terms, but Advisor Agreements usually don't require additional compensation beyond service fees
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