Can my former employer stop me working for a competitor or make me pay a training bond?

You resign, accept a better offer from a competitor, and then receive a letter from your old employer: you signed a non-compete clause, or you must repay a training bond. What can they actually enforce?

Does a non-compete clause bind me after I leave?

Section 28 of the Contracts Act 1950 says that every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind is, to that extent, void. The section has narrow exceptions, mainly for:

• a person who sells the goodwill of a business, agreeing not to carry on a similar business within specified local limits; and
• partners, in certain situations connected with the partnership.

Malaysia's approach is therefore stricter than countries that test restraints for "reasonableness". A clause that simply stops a former employee from working for a competitor after leaving is often unenforceable to the extent it restrains trade. Each clause and its facts still matter.

What can my employer still protect?

Section 28 does not give a former employee a free hand. Employers may still have remedies for:

• misuse of confidential information or trade secrets, during or after employment;
• breach of duties during employment, such as working for a competitor while still employed, or taking company documents;
• copying or taking client lists, files or data;
• obligations in the contract that do not restrain trade, such as returning property.

Never take documents, data or client lists when you leave. That is where many disputes start.

Is a training bond enforceable?

A training bond is different. It usually says that if the employer pays for your training, you must serve for a period or repay a sum if you leave early. It is a promise to compensate, not a ban on working elsewhere.

When a contract names a sum payable on breach, section 75 of the Contracts Act 1950 allows the innocent party to receive reasonable compensation not exceeding the amount named. In Cubic Electronics v Mars Telecommunications (2019), the Federal Court explained how section 75 applies to agreed sums. See our Cubic Electronics guide.

In practice, questions include:

• what the training actually cost the employer;
• how much of the bond period you served (many bonds reduce pro rata);
• whether the sum is a genuine estimate of loss or excessive.

What should I do if I receive a demand?

1. Do not ignore it. Note any deadline.
2. Read your contract: the restraint clause, the bond terms, confidentiality obligations and notice period.
3. Collect evidence: the training records, costs, your service dates and resignation letter.
4. Check you have returned all company property and data.
5. Reply in writing, or ask a lawyer to reply. See our letter of demand guide.
6. If a court claim or injunction application is served, act quickly; see received a writ of summons.

Have a question about your own situation? Ask on WhatsApp

Example

Priya's employer paid RM12,000 for a certification course under a two-year bond. She resigns after 18 months. The employer demands the full RM12,000 and says a non-compete clause bars her from her new job. The non-compete is likely to face section 28. On the bond, she points to the months served and the actual course fee, and offers a proportionate sum.

Common mistakes

• Assuming a non-compete is always enforceable, or always void.
• Taking files, contacts or data "for reference".
• Soliciting former clients in breach of a confidentiality duty.
• Ignoring a bond demand until it becomes a court claim.

When to speak to a lawyer

Speak to a lawyer if you receive a demand, an injunction application or a writ, or if your new employer asks about your old contract. Employers drafting bonds should also get advice. You can contact us; every case depends on its facts.

Frequently asked questions

Can my old employer stop my new employer from hiring me?

A bare non-compete faces section 28. But claims about confidential information or solicitation can still arise, so get advice.

Is a clause stopping me from poaching clients also void?

It depends on the wording and facts. Courts look at whether it restrains trade or protects legitimate interests such as confidential information.

Do I have to repay the full training bond?

Not necessarily. Under section 75, recovery is limited to reasonable compensation not exceeding the named sum.

Does it matter if I was dismissed rather than resigned?

It can. How the employment ended may affect the bond and any claim. See the unfair dismissal guide.

Can my employer deduct the bond from my final salary?

Deductions from wages are regulated by employment law. Get advice before agreeing to any deduction.

Sources & fact check

Legal points in this article were checked against the primary sources below. The law can change; this is general information, not legal advice.

1. Contracts Act 1950 (Act 136), AGC Laws of Malaysia

Fact-checked on 17 Oct 2026