MoneySmart fails to stop former exec from working for rival; court says non-compete clause ‘unreasonable’

Source: Straits Times
Article Date: 13 Apr 2024
Author: Selina Lum

The non-compete clause in the employment contract was too wide, said the court.

Personal finance portal MoneySmart has failed in its court bid to stop a former executive from working for a rival firm on the basis of a non-compete clause, as well as a confidentiality clause.

MoneySmart had taken court action seeking injunctions to stop its former employee, Russian national Artem Musienko, from working for a subsidiary of its Nasdaq-listed rival MoneyHero.

In a written judgment on April 2, the High Court said MoneySmart failed to show that the clause protects a legitimate proprietary interest of the company, and failed to show that the clause was reasonable and fair.

Justice Tan Siong Thye said the non-compete clause in Mr Musienko’s employment contract was unreasonable because it was too wide and was not in the interests of the public.

In respect of the confidentiality clause, Justice Tan said MoneySmart failed to specify the alleged confidential information, and there was no evidence that information disclosed to Mr Musienko was clearly classified as confidential.

Both MoneySmart and MoneyHero operate online financial product comparison platforms where consumers can compare and purchase financial products.

In late 2022, MoneySmart launched an in-house insurance brand called Bubblegum. MoneyHero also has its own insurance brand, known as Seedly Travel Insurance.

Mr Musienko worked for MoneySmart from July 2022 to Jan 12, 2024, as the head of technology at its Bubblegum division. He resigned on Nov 23, 2023. It was agreed that his last day of work would be Jan 12, 2024.

On Jan 15, 2024, he started employment with CAG Regional Singapore, a company in the MoneyHero group, as head of engineering for its insurance arm.

MoneySmart sought injunctions against him on Jan 29. He has been placed on one year’s paid garden leave.

His employment contract with MoneySmart contained a non-compete clause that imposed a “restraint period” of three months to a year.

During this period, he is not allowed to engage with any business or organisation in South-east Asia or any other country where MoneySmart operates that provides online financial product comparison services.

His contract also contained a confidentiality clause, which prohibits him from using and disclosing “all information about the company”.

MoneySmart contended that Mr Musienko had breached the non-compete clause, which protects the company’s legitimate proprietary interests. It argued that the clause was reasonable as it was limited in scope of activity, geographical area and time.

Mr Musienko, however, argued that the non-compete clause was unenforceable as it was too wide in scope and did not protect any legitimate proprietary interest of MoneySmart.

In his judgment, Justice Tan noted that restraint of trade clauses, particularly those in the context of employment, are void and unenforceable unless the employer can prove otherwise.

Citing a 2008 Court of Appeal ruling, Justice Tan rejected MoneySmart’s argument that the protection of confidential information was a legitimate proprietary interest. This was because the contract already includes a confidentiality clause.

The judge also rejected MoneySmart’s contention that it has a legitimate interest in maintaining a stable and trained workforce.

MoneySmart has shown neither that its digital insurance business operates in a small and specialised industry, nor that it had invested time and resources to provide Mr Musienko with specialised training, he said.

Justice Tan also found that the non-compete clause was unreasonable in its scope of prohibited activity, geographical area and time.

He said the scope of activity was too wide because Mr Musienko’s work primarily concerned digital insurance-related matters, rather than the provision of online financial product comparison services.

The geographical scope was also too wide because Mr Musienko was not involved in services provided outside of Singapore, he added.

Separately, the Ministry of Manpower and its tripartite partners are finalising guidelines on non-compete clauses, which are targeted to be released in the second half of 2024.