“Sign Here and Shut Up”: The Legal Illusions of the Modern Severance Agreement
Think that NDA in your severance is legal? It might not be. We break down scare clauses, employee rights, and the corporate fear machine behind them.
Let’s begin with a modern workplace fable. You, a diligent employee with years of performance reviews and lunch-and-learns under your belt, are told your role is “no longer required.” The tone is solemn. There’s a severance package, and it's “generous” if you consider money with strings attached to be a gift. But the document you’re handed reads more like a ransom note than a farewell card. You’re expected to sign away your right to speak to government bodies, unions, or mediators. And if you dare, the money vanishes.
This is what (allegedly) happened at Agoda in Singapore. Retrenched staff reportedly received agreements instructing them not to contact MOM, TAFEP, or unions. Such language does more than raise eyebrows. It’s a clause that winks menacingly and says, “We know our rights better than you know yours.”
To the average worker, this looks official. But just because it’s in a contract doesn’t mean it’s lawful. Or moral. Courts don’t rubber-stamp intimidation. But in the boardroom, those are often secondary concerns. The threat is the point. The silence is the product. And the fear? That’s just good business.
Scare Clauses: Because HR Just Loves a Bit of Theatrics
Welcome to the Scare Clause. Not to be confused with its less glamorous cousin, the Legal Clause, the Scare Clause doesn’t care about enforceability. It doesn’t even pretend to. Its job is not to hold up in court, but to hold up an employee’s courage.
These clauses appear with the seriousness of a war treaty. You’ll spot them lurking in severance agreements, worded just vaguely enough to confuse, but just firmly enough to threaten. They include charming phrases like:
You agree not to file any complaints with MOM, TAFEP, or other agencies.
You will not seek mediation or arbitration.
You have not and will not raise any claims or grievances.
They may as well end with, "Now go quietly into that good night."
To the untrained eye, they look like standard boilerplate. HR presents them with an expression best described as “corporately apologetic,” as if this is just how things are done. No big deal, just a clause or two asking you to waive your basic rights.
But that’s the genius of the scare clause. It doesn’t need legal weight when it has psychological weight. Most employees aren’t equipped or resourced to challenge a multinational’s legal team. Few are eager to risk their only lifeline in the form of a “conditional” payout.
So the clause works because it’s intimidating. It says, "You could fight this… but wouldn't it be easier to just sign?"
And that’s the point. Companies win not in court, but in your mind. The scare clause is less a legal strategy than a confidence heist.
Legality? Oh, That Old Chestnut…
Here’s where the whole scare clause game falls apart: the law. Across most developed economies there’s this annoying concept that keeps ruining corporate party tricks: public policy.
Public policy is the part of law that basically says, “Nice try, but no.” You can’t legally give away certain rights, even if you’re desperate, broke, and your HR manager is staring at you like they’ve just handed you a golden parachute. It exists to protect public interest, and yes, it is often the only adult in the room.
In Singapore, clauses that pressure employees not to contact the Ministry of Manpower (MOM) or TADM are skating on thin ice. Courts have already flagged this in cases like Ochroid Trading and Ting Siew May. If you write a clause that restricts someone from accessing statutory remedies or reporting misconduct, you’re just playing chicken with the law.
The UK takes it even further. Under ERA 1996 s.43J, trying to block whistleblowing through a contract is flat-out void. You can’t enforce it, and regulators might thank you for the evidence.
In the US, the SEC doesn’t need much provocation. Rule 21F-17 lets them fine you for simply including language that could chill whistleblower activity. Ask Activision Blizzard how that worked out.
And it’s similar in Australia, New Zealand, Canada, the EU. Reporting to a regulator is protected territory. You can’t gag someone with legal tape, especially if that tape comes with a severance check.
And yet, companies keep doing it. They know it won’t stand up in court. But they also know most employees will never make it to court.
Because Legality Was Never the Point, Darling
These clauses were never drafted to win in court. They were written to win in private meeting rooms, across lopsided power dynamics and 24-hour severance deadlines. Their true power isn’t legal. It’s psychological.
When employees receive agreements stuffed with gag provisions, they don’t immediately think about contract law or legal precedent. They think about consequences. They think about what happens if they push back. Most don’t have the luxury of a legal consultation at short notice. What they have is a mortgage, school fees, and an HR officer nodding politely as they “walk you through the package.”
And so the clause succeeds. Not by being enforceable, but by being believable.
This is where the genius of corporate risk management kicks in. These agreements are polished just enough to look official but are vague enough to deny later. If a regulator notices, it’s written off as a misunderstanding. A template gone rogue. Perhaps even user error.
And while the company issues a regretful statement, the employee is already out the door. They’re unemployed and silenced. Muzzled by the fear of losing the only parachute offered during their free fall.
Compliance teams know they can’t legally forbid someone from contacting the authorities. But that’s not the goal. The goal is to raise just enough doubt that the employee doesn’t try. Make the risk look bigger than the reward. It’s a psychological deterrent dressed as HR paperwork.
This is the real performance. A quiet little manipulation written on corporate stationery. And in most cases, it works beautifully. All without ever needing to step inside a courtroom.
Burn After Reading (And Signing)
Let’s play pretend. Imagine scare clauses were enforceable. Let’s say courts across the globe woke up one morning and decided, “You know what? Sure, let’s let companies financially punish workers for speaking to regulators.” What would the workplace look like then?
Employees could be stripped of severance for simply filing a claim with a tribunal.
Speaking to a union rep could result in clawbacks.
Talking to a lawyer might breach confidentiality.
An entire workforce could be silenced, not with threats of violence, but with legal stationery and a countdown timer on a payout.
Fortunately, reality has some boundaries. Most jurisdictions have said no to this dystopia. Legal systems, for all their flaws, generally agree that workers should not be contractually banned from accessing justice. Courts have rejected these clauses again and again. Whistleblower protections, labor tribunals, and statutory rights are not optional extras. They are foundations.
But what this Agoda episode shows is how far companies are willing to go before anyone notices. Someone greenlit language that allegedly warned employees not to contact Singapore’s MOM or TAFEP. That’s not a typo. That’s not “awkward wording.” That’s a decision. And it was only walked back after the issue became public.
This is how scare clauses thrive. They rely on the idea that no one will push back. And when they are exposed, they’re quickly rebranded as misunderstandings. Out come the statements, the walk-backs, the promises to “review internal processes.”
These clauses do not belong in contracts. They belong in the shredder. But until someone shines a light on them, they’ll keep showing up quietly, hoping no one reads the fine print too closely.
Scare clauses aren’t legal strategy. They’re psychological strategy. No one in the legal department actually expects these clauses to survive a courtroom. What they expect is that they’ll never get tested in one.
The power isn’t in the clause, it’s in the silence it manufactures. Most people don’t react to these documents with, “Let me check statutory precedent on whistleblower protections.” They react with uncertainty, anxiety, urgency. They read it under pressure, sign it to be done with it, and move on. The clause didn’t have to be valid. It just had to be effective.
The legal system, for all its protections, is only useful if people feel safe enough to use it. And companies know that most employees aren’t inclined to fight. So they exploit the quiet gap between what the law allows and what the average person understands.
This is a culture problem. It’s not about one company or one clause. It’s about an ongoing, calculated use of documents to intimidate rather than inform.
If a company includes something blatantly unlawful in your exit agreement, frame it. It’s evidence. Not of legal genius, but of how far workplace culture still has to go.
At StratEx - Indonesia Business Advisory we help employees understand what’s enforceable and what’s just there to scare you. Contact us if you think your severance clause looks off, because you're probably right.