The standard of compensation for non competition, the standard of compensation for non competition

Non-competition is a means to protect the trade secrets of an enterprise by restricting the right of employees to choose their jobs freely to a certain extent, including both incumbent and former employees. For in-service employees, non-compete is an implied legal obligation, and for departing employees, it must be set up in the non-compete agreement, and the signing of the non-compete agreement is generally at the cost of the employer paying a certain amount of economic compensation. At present, the laws of China stipulate that an employer may stipulate a non-compete clause with an employee in an employment contract or confidentiality agreement, and stipulate that after the termination or termination of the employment contract, the employee will be compensated monthly during the non-compete period.

The law does not clearly stipulate the scope of such economic compensation between the employer and the employee. However, if the employer and the employee have not agreed on the standard of severance to be paid to the employee after the termination or termination of the labor contract, then the employee may request the employer to pay the employee 30% of the employee's average salary for the 12 months prior to the termination of the labor contract in accordance with the provisions of the Interpretation (IV) of the Supreme People's Court on Several Issues Concerning the Application of Labor Dispute Cases. In addition, if 30% of the average monthly wage of the employee is lower than the minimum wage standard of the place where the labor contract is performed, it shall also be paid according to the minimum wage standard of the place where the labor contract is performed.

Where the parties have agreed on a non-compete restriction in the labor contract or confidentiality agreement, but have not agreed to give the employee economic compensation after the termination or termination of the labor contract, and the employee has fulfilled the non-compete obligation and requires the employer to pay the employee 30% of the employee's average salary for the 12 months prior to the termination of the labor contract, the people's court shall support it.

Legal analysis: The standard of non-compete compensation is determined by the employee and the employer through negotiation, and laws and regulations do not stipulate the minimum amount of non-compete compensation; If the two parties have not agreed on compensation, and the employee has fulfilled the non-compete restriction, the employee may request monthly economic compensation at the rate of 30% of the average salary for the 12 months prior to the termination or termination.

Legal basis: Article 23 of the Labor Contract Law The employer and the employee may agree in the labor contract to keep the employer's trade secrets and confidential matters related to the hidden property rights of intellectual lead.

For employees who are obliged to maintain confidentiality, the employer may stipulate a non-compete clause with the employee in the employment contract or confidentiality agreement, and stipulate that after the termination or termination of the labor contract, the employee will be given monthly economic compensation during the non-compete period. If the employee violates the non-compete agreement, he shall pay liquidated damages to the employer in accordance with the agreement.

Compensation provisions: 1. If the parties have agreed on a non-compete restriction in the labor contract or confidentiality agreement, but have not agreed to give the employee economic compensation after the dissolution or termination of the labor contract, and the employee has fulfilled the non-compete obligation, the employer may require the employer to pay severance on a monthly basis at 30% of the employee's average salary in the 12 months prior to the termination or termination of the labor contract, and if 30% of the average monthly wage 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; 2. If the parties have agreed on non-compete and economic compensation in the labor contract or confidentiality agreement, and the parties terminate the labor contract, unless otherwise agreed, the employer shall pay the employee economic compensation after the employee has fulfilled the non-compete obligation; 3. If the parties have agreed on non-compete and economic compensation in the labor contract or confidentiality agreement, and after the labor contract is dissolved or terminated, if the economic compensation is not paid for three months due to the reasons of the employer, the employee may apply to the court to terminate the non-compete agreement; 4. During the period of non-competition, when the employer requests to terminate the non-compete agreement, the people's court shall support it. When the non-compete agreement is terminated, the employee may request the employer to pay the employee an additional three months' non-compete economic compensation. 5. If the employee violates the non-compete agreement and pays liquidated damages to the employer, the employer may require the employee to continue to perform the non-compete obligation in accordance with the agreement.

Legal basis

Article 6 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (IV) Where the parties have agreed on a non-compete restriction in the labor contract or confidentiality agreement, but have not agreed to give the employee economic compensation after the termination or termination of the labor contract, and the employee has fulfilled the non-compete obligation and requires the employer to pay the employee 30% of the employee's average salary for the 12 months prior to the termination of the labor contract, the people's court shall support it. Where 30% of the average monthly wage provided for in the preceding paragraph is lower than the minimum wage standard of the place where the labor contract is performed, it shall be paid in accordance with the minimum wage standard of the place where the labor contract is performed.

Legal analysis: The standard of non-compete compensation is first agreed by both parties, and as long as the employee fulfills the non-compete obligation, the two parties can negotiate to determine the amount of compensation. If no agreement can be reached or no agreement can be reached through negotiation, severance may be paid at the rate of 30% of the average salary in the 12 months prior to the termination of the labor contract.

Legal basis: Article 6 of the Labor Contract Law of the People's Republic of China Where the parties have agreed on a non-compete restriction in the labor contract or confidentiality agreement, but have not agreed to give the employee economic compensation after the dissolution or termination of the labor contract, and the employee has fulfilled the non-compete obligation and requires the employer to pay the economic compensation on a monthly basis at the rate of 30% of the employee's average salary in the 12 months prior to the termination or termination of the labor contract, the people's court shall support it. If 30% of the average monthly wage is lower than the minimum wage standard of the place where the labor contract is performed, it shall be paid in accordance with the minimum wage standard of the place where the labor contract is performed.