Singapore court orders employee to pay S$14,683 for moonlighting with rival firm

A corporate secretary in Singapore has been ordered to pay her former employer S$14,683.33 after the District Court found that she breached her employment contract by providing services to a competing firm while still employed.

District Judge Teo Guan Kee ruled that Wong Suet Mei Michelle breached her employment agreement with Korporatio Sing Pte. by working for rival corporate secretarial firm Xion AI Pte. without her employer’s knowledge or written consent. Her dismissal without notice on October 16, 2023, was also upheld as lawful.

Wong joined Korporatio Sing in January 2022 under a written contract to provide corporate secretarial services to clients, including acting as a local director and company secretary.

However, from June 2022, she began providing services to Xion AI, which she acknowledged operated in the same category as Korporatio Sing.

According to the court, Wong used her Singpass credentials to carry out 811 transactions through Singapore’s Accounting and Corporate Regulatory Authority (ACRA) filing system on behalf of Xion. She was also appointed director or company secretary for 86 companies that were not clients of Korporatio Sing.

Between June 2022 and April 2023, she issued 18 invoices to Xion, charging between S$400 and S$3,500 for services including providing a named qualified individual and nominee directorships.

Wong claimed she had initially not intended to charge Xion for her services, but the company asked her to do so because “they did not want to take any free lunch.”

The court rejected this explanation as “incredible and unsubstantiated”, finding that the work amounted to professional services provided to a business competing with Korporatio Sing.

Teo found that Wong had breached clauses 15 and 16 of her employment agreement, which prohibited conflicts of interest and providing professional services to competing businesses without written approval. The court also found that she had breached her implied duty of good faith and fidelity to her employer.

Her argument that she had provided only “internal operational guidance” on ACRA procedures, rather than substantive corporate secretarial services, was also rejected.

The court further dismissed arguments that Korporatio Sing had consented to her work for Xion and that the contractual restrictions amounted to unenforceable restraints of trade.

However, the court rejected most of Korporatio Sing’s damages claims, which exceeded S$208,000.

The company had sought to recover as much as 82% of Wong’s salary for the period in which she worked for Xion, based on estimates of the amount of working time allegedly diverted to the rival firm. The court found that the calculations relied on unsupported assumptions and lacked evidence showing that Wong had failed to perform her duties for Korporatio Sing. It awarded only S$100 in nominal damages under this claim.

Other claims, including S$112,750 for lost partnership opportunities with Xion, S$22,700.25 for reputational loss and an account of profits, were also dismissed because of insufficient evidence or lack of legal basis.

Korporatio Sing was ultimately awarded S$14,583.33 in advance fees paid to Wong for director and company secretary appointments that she did not complete following her termination, along with S$100 in nominal damages for loss of productivity.

The court also ordered Korporatio Sing to pay Wong S$3,200 in outstanding salary for the first half of October 2023.

The ruling highlights the potential employment risks of moonlighting, particularly where an employee takes on paid work for 

a direct competitor and contractual obligations expressly restrict conflicts of interest or outside professional services.