Non-competition Agreement in Labor Law
In a labor relationship, a non-competition agreement refers to a mutual agreement between company and it’s employee which specify that the employee can’t compete with his previous employer after the dissolution or termination of the labor contract. Such as: an employee can’t work with a company which produces or sells similar products, engaged in similar business as his previous employer; or an employee can’t run a business to produce or sell similar products or engaged in similar business as his previous employer within a certain period of time.
1. To whom a non-competition agreement apply?
Though confidential agreement may apply to all employees of a company, non-competition agreement is limited to certain employees, such as senior managers, senior technical personnel and other personnel with confidentiality obligations of a company. Generally speaking, senior managers refer to company managers, deputy managers, head of financial department, the secretaries of the boards of directors of listed companies and other personnel stipulated in the company’s articles of association.
Besides, for companies in manufacturing and technology industry, non-competition agreement also apply to all employees who have easy access to the company’s trade secrets, including senior research developers, technical personnel, skilled workers in key position etc. As a matter of fact, other employees who may be aware of the company’s business secrets, such as marketing staff, accountants, secretaries and so on should also assume non-competition duty. In short, non-competition agreement apply to all staff who master the company’s key and important trade secrets.
2. Term of non-competition agreement
Generally speaking, the term of anon-competition agreement starts upon the dissolution or termination of the labor contract and shall not exceed two years. Even if the company illegally terminate the labor contract, or the employee is forced to terminate the labor contract, the non-competition agreement is still binding on the employee. Of course, the premise is that the company pays compensation to the employee as agreed.
3. Amount for the compensation...
4. Employee can rescind the non-competition agreement when...
5. Penalty for breaching non-competition agreement...