1. Which situation constitutes a violation of the non compete agreement?

Whether to violate non compete restrictions depends on the specific situation and is usually related to the following three elements:

√ Non compete agreement and performance

√ Identity weight

√ Performance of duties in the same industry

According to Article 24, Paragraph 2 of the Labor Contract Law:

If both parties to the labor contract have previously signed a non compete agreement, personnel who are responsible for fulfilling the non compete agreement after the termination of the labor contract may violate the non compete restrictions and face corresponding liquidated damages if they go to other employers that produce or operate similar products or engage in similar business with their previous employer, or if they start their own business to produce or operate similar products or engage in similar business.

Who are eligible for non compete restrictions?

According to Article 24, Paragraph 1 of the Labor Contract Law:

Non compete restrictions do not apply to all employees, but mainly apply to executives or high-level personnel.

At present, the scope of application is agreed upon by the employer and the employee, which has a certain degree of generality, with only one small premise: the agreed content must not violate the provisions of laws and regulations.

In current judicial practice, whether the personnel subject to non compete restrictions are matched is mainly judged by their association with trade secrets, intellectual property, core technologies, and job levels.

Is there a time requirement for the competition period in 03?

According to Article 24 of the Labor Contract Law:

The non compete restriction has a clear term, not exceeding 2 years at most.

But for employers who have signed non compete agreements, the non compete period may not always be calculated as 2 years. The specific deadline is generally agreed upon by both parties, ranging from 2 years to several months.

Moreover, if the employer fails to pay non compete compensation for three months after the termination or termination of the labor contract due to their own reasons, individuals can request the termination of the non compete agreement.

How to calculate the compensation for individual non compete performance in 04?

Under normal circumstances, if an individual fulfills non compete obligations after leaving the company, the compensation provided by the employer will be calculated according to the terms previously agreed upon by both parties.

Unclear agreement

According to Article 36 of the Interpretation of the Supreme People's Court on the Application of Law in the Trial of Labor Dispute Cases (I), if the parties have agreed on non compete restrictions in the labor contract or confidentiality agreement, but have not agreed to provide economic compensation to the employee after the termination or rescission of the labor contract, and the employee has fulfilled the obligation of non compete restrictions and requested the employer to pay economic compensation on a monthly basis at 30% of the employee's average salary for the twelve months prior to the termination or rescission of the labor contract, the people's court shall support it. If 30% of the monthly average wage stipulated in the preceding paragraph is lower than the minimum wage standard of the place where the labor contract is performed, it shall be paid according to the minimum wage standard of the place where the labor contract is performed.

How to calculate the compensation for breach of non compete agreement by 05 individuals?

At present, there is no clear provision for breach of contract compensation in the relevant legal provisions of non compete restrictions.

In general, if both parties have previously signed a non compete agreement, after leaving the company, the previous employer will also pay corresponding economic compensation on a monthly basis as agreed during the non compete period. When an individual violates the non compete agreement and goes to work in a competitive unit, the specific penalty for breach of contract shall be subject to the agreement between the two parties.

In existing judicial cases, if an individual violates a non compete agreement, they not only need to return the non compete compensation given by their previous employer, but also need to pay several times the total salary for the 12 months prior to resignation.

06 Suggestions for Enterprises

Enterprises should not use a "one size fits all" approach to apply uniform agreement content to all employees in the scope of non compete restrictions.

For employees who have confidentiality obligations, the scope of non compete restrictions should be "tailored", personalized management should be made based on the business scope of the enterprise, the work content of the employees, and the degree of exposure to trade secrets, and fully explained to the employees at the time of signing.

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