The statutory rule: section 28 Contracts Act 1950

Section 28 states: "Every agreement by which any oneis restrained from exercising a lawful profession, trade or business of any kind, is to that extent void." The wording is absolute. Unlike the English common-law position (Nordenfelt), Malaysia does not allow a court to uphold an otherwise-void restraint on grounds of "reasonableness."

The three statutory exceptions

Section 28 contains only three exceptions, all narrowly drawn:

  1. Sale of goodwill. A seller of the goodwill of a business may agree not to carry on a similar business within specified local limits, provided those limits are reasonable to the court, and so long as the buyer (or a successor) carries on a like business in those limits.
  2. Partners on dissolution. Partners may agree, on or in anticipation of dissolution of the partnership, that none of them will carry on a similar business within specified local limits.
  3. Partners during continuance. During the continuance of the partnership, the partners may agree that some or all of them will not carry on any business other than that of the partnership.

Employment is not one of the exceptions. Post-employment restraints on a former employee's ability to work in the same industry are caught by the prohibition.

What the leading cases say

  • Wrigglesworth v Wilson Anthony [1964] 1 MLJ 269: partnership context; Exception 2 requires the partnership to subsist before the non-compete is signed.
  • Polygram Records Sdn Bhd v Hillary Ang (The Search) [1994] 3 CLJ 806: section 28 voids post-contract restraints, but during-contract exclusivity is not caught.
  • Worldwide Rota Dies Sdn Bhd v Ronald Ong Cheow Joon [2010] 8 MLJ 297: restraint is permissible only to the extent it protects identifiable trade secrets or business connection, and even then through a confidentiality / IP route rather than as a direct non-compete.
  • Dynacast (Melaka) Sdn Bhd v Vision Cast Sdn Bhd [2016] 4 CLJ 1 (Federal Court), affirmed that post-employment non-compete is void; confidentiality claims fail unless the confidential information is pleaded with particularity.

What can still be enforced

  • Confidentiality of genuine trade secrets and identifiable confidential information. Subject to the Federal Court's pleading standard, the information must be specifically identified, not just labelled.
  • During-employment exclusivity / garden leave. Restraints that operate while the employment relationship subsists are not caught by section 28 (Polygram).
  • Non-solicit clauses tied to identifiable confidential customer or employee information may survive, but they are not categorically exempt from section 28, a blanket prohibition on dealing with former customers can still be struck down. Drafting matters.
  • IP assignment clauses. Pre-existing IP assignments and ownership of work-product remain enforceable.

What cannot be enforced

  • "Employee shall not work in the [industry] for [period] within [territory] after termination", void under section 28, regardless of how reasonable the period or territory looks.
  • Non-compete clauses against former directors of a company (outside the sale-of-goodwill exception).
  • Non-solicit clauses framed so broadly that they amount to general restraint of trade.

Drafting realistically for Malaysia

  • Do not import English-style non-compete templates without local review.
  • Focus on confidentiality, IP assignment, and post-employment non-solicit of specific named customers, these are more likely to survive than a blanket non-compete.
  • Where the protection is genuinely needed, consider whether the situation falls within the sale-of-goodwill exception (most commonly in an M&A context where the founder is also selling the goodwill of the business).
  • Plan for the practical reality that even unenforceable clauses can have deterrent effect, but do not bet a business on an unenforceable contract.

If your employment contracts still rely on post-employment non-competes, or you want to redesign the confidentiality and IP-assignment layers that actually hold up in court, please contact us.

法定规则：《1950 年合同法令》第 28 条

第 28 条规定：「每一项使任何人不得从事任何合法之专业、贸易或业务的协议，于该范围内无效。」措辞绝对。与英国普通法立场（Nordenfelt）不同，马来西亚不允许法院基于「合理性」维持本应无效之竞业限制条款。

三项法定例外

第 28 条仅设三项例外，且范围狭窄：

  1. 商誉出售。业务商誉之出售方可同意，在指定地域范围内不得经营同类业务，只要该地域范围在法院看来合理，且买方（或其继受方）在该地域内继续经营同类业务。
  2. 合伙解散时。合伙人可在合伙解散时或预期解散时，约定彼此均不在指定地域范围内经营同类业务。
  3. 合伙存续期间。合伙存续期间，合伙人可约定其中部分或全体不得从事合伙业务以外之其他业务。

雇佣并非例外之一。离职后限制前员工在同一行业工作的条款，落入禁令范围。

主要判例的态度

  • Wrigglesworth v Wilson Anthony [1964] 1 MLJ 269: —合伙背景；例外二要求合伙关系在签订竞业限制之前已存在。
  • Polygram Records Sdn Bhd v Hillary Ang (The Search) [1994] 3 CLJ 806: —第 28 条令「事后」竞业限制无效，但「事中」独家性条款不受该条约束。
  • Worldwide Rota Dies Sdn Bhd v Ronald Ong Cheow Joon [2010] 8 MLJ 297: —竞业限制仅在保护可识别之商业秘密或业务关联之范围内可被支持，且须以保密／知识产权路径而非直接竞业限制方式呈现。
  • Dynacast (Melaka) Sdn Bhd v Vision Cast Sdn Bhd [2016] 4 CLJ 1（联邦法院），确认离职后竞业限制无效；保密索赔须以具体方式陈述所主张之机密资料，否则不获支持。

仍可执行的安排

  • 真正之商业秘密与可识别机密信息之保密义务。须满足联邦法院之诉状要求，机密资料须被具体识别，而非笼统标签化。
  • 雇佣存续期间之独家性／带薪园艺假。仍在雇佣关系存续期间的限制不受第 28 条约束（Polygram）。
  • 非招揽条款: —若挂钩至可识别之机密客户或员工信息，可能存活；但并非绝对豁免于第 28 条之外，若措辞宽泛至构成一般竞业限制，仍可被撤销。起草至关重要。
  • 知识产权转让条款。事前之 IP 转让与工作成果之归属，仍可执行。

不可执行的安排

  • 「员工于离职后 [期间] 内、于 [地域] 内不得从事 [行业]」，依第 28 条无效，无论该期间与地域看似多么合理。
  • 对前董事之竞业限制（不在商誉出售例外内者）。
  • 措辞过宽、构成一般竞业限制之非招揽条款。

面向马来西亚的实务起草

  • 切勿不经本地审查，照搬英式竞业限制模板；
  • 聚焦保密、IP 转让、以及离职后对特定具名客户之非招揽，这些远比笼统竞业限制更可能存活；
  • 若保护确属必要，考虑情形是否落入商誉出售例外（最常见于 M&A 情境下，创办人同时出售业务商誉）；
  • 务实地规划：即便不可执行之条款仍可能起到威慑作用，但切勿将业务命脉押注于不可执行之合同。

若贵公司的雇佣合同仍以离职后竞业限制为主要保护手段，或您希望重新设计真正能在法庭上站得住脚的保密与知识产权归属条款，请与本所联系。