China Non-Compete Agreements

  • Uncategorized

China`s labor laws generally allow non-compete agreements that prevent a worker from competing with their former employer for up to two years after the end of the employment relationship. But there are all sorts of restrictions on these agreements, as explained below. If a court orders a worker to pay damages for breaching a non-competition clause, the agreement can remain in effect if the employer so wishes. In other words, the payment of damages, whether paid by the former employee or by his new employer, does not serve as a substitute for the payment of the non-competition clause. To bind Chinese employees to a non-compete clause, you must pay them for the entire non-compete period after the employment relationship. A signing bonus does not count and payments must be made by monthly bank transfer. In practice, the undertaking may determine the duration of the non-competition clause according to the nature and technical characteristics of the confidential information in question. For some companies that have rapidly updated information and technology, the lifespan can be reduced appropriately to avoid unnecessary competition bans (see below). It is important to remember that what is signed and agreed by both parties in matters of non-competition is not necessarily applied. Legal rules and uncertainties require companies to think deeply about whether signing a non-compete clause is worth it. .

. .