Is there any restriction on the termination of the non compete clause?

Some employers may enter into a non-compete agreement with the employee, or stipulate a non-compete clause in the employment contract. In general, an agreement is valid if it does not violate the mandatory provisions of the law.

If the effect of the non-compete clause is terminated, both parties are no longer legally bound by the non-compete agreement and are not restricted.

Definition of Non-Compete.

A non-compete clause is a non-compete clause agreed upon by an employer in an employment contract, intellectual property rights ownership agreement or technical confidentiality agreement for an employee who is responsible for keeping the employer's trade secrets, that is, the employee shall not work in an employer that produces similar products, operates the same kind of business or has other competitive relationships within a certain period of time after the termination or dissolution of the labor contract, nor shall he produce similar products or operate similar businesses that are competitive with the original employer. The limitation period shall be agreed upon by the parties in advance, but shall not exceed two years.

A non-compete clause is a deferred entry into force clause in an employment contract, that is, it takes effect after the other provisions of the employment contract are legally binding.

The object of the non-compete.

The non-compete restriction is limited to the senior management personnel, senior technical personnel and other personnel with confidentiality obligations of the employer, and cannot be targeted at all employees of the enterprise.

Scope of the non-compete.

The scope of the non-compete restriction shall be determined through consultation between the enterprise and the employee. However, the non-compete agreement shall not violate the provisions of laws and regulations.

In principle, the territorial negotiation of non-competition should be limited to the region where the actual competitive relationship can be formed with the employer; The scope of non-compete employment is limited to enterprises that compete with the original enterprise, which is clearly defined in the Labor Contract Law, that is, "other employers that have a competitive relationship with the production or operation of similar products or businesses, or the production or operation of similar products or businesses that compete with the employer".

It is important to note that the Employment Contract Law only restricts the "entities" that have a competitive relationship, not the business, product or function, and enterprises can make full use of this legal provision.

Duration of the non-compete restriction The duration of the non-compete restriction cannot exceed two years. In other words, it can only be agreed that a person who knows the trade secrets shall not operate his or her own business or engage in the same or similar work as the trade secrets in other units for two years after leaving the company.

Obligations of the Employer.

If a non-compete restriction is agreed, the enterprise shall provide the employee with monthly economic compensation during the non-compete period. The Labor Contract Law does not specify the amount of severance payment, which can be negotiated between the enterprise and the employee. However, the severance compensation that cannot be booked by the non-compete is included in the employee's existing salary.

Obligations of workers.

If the employee violates the non-compete agreement, he shall pay liquidated damages to the employer in accordance with the agreement. Only by agreeing on liquidated damages can we better ensure that employees comply with the non-compete agreement.

After termination, there is no restriction on the non-compete clause, but the confidentiality obligation still exists.

Circumstances in which the non-compete clause is invalid.

1. The subject of the agreement repents that the book is wrong;

The party to the non-compete agreement should be the owner of the trade secret, that is, the existence of the trade secret must be there, which is a very important prerequisite for the implementation of the non-compete agreement. In addition, the other party to the agreement must be a person who meets the conditions for the application of the non-compete restriction, and if the subject conditions for signing the agreement are not met, the agreement is likely to be invalid.

2. Exceeding the period of non-competition;

Article 24 of the Labor Law stipulates that the prohibition period of a non-compete agreement shall not exceed two years. In other words, if the period agreed by the parties in the agreement exceeds two years, the excess part shall be deemed invalid.

3. Do not compensate those who work hard and liquid;

If an employer asks an employee to sign a non-compete agreement, it must compensate the employee accordingly. If the non-compete agreement does not stipulate the amount of compensation or payment standard, the employer is allowed to negotiate with the employee on this matter, and if the employer does not agree to pay compensation, the agreement shall not be effective for the employee.

Non-compete provisions.

Non-compete refers to the agreement between the employer and the employee who is in possession of the company's trade secrets and confidential matters related to intellectual property rights in the labor contract or confidentiality agreement that within a certain period of time after the termination or termination of the labor contract, the employer shall not be employed by another employer that has a competitive relationship with the employer that produces or operates similar products or engaged in the same kind of business, nor shall it start its own business to produce or operate similar products or engage in similar business.

The non-compete clause involves a conflict between the employee's right to labor and employment and the employer's right to trade secrets, and it is necessary to find a balance between the two. Therefore, the Employment Contract Law further restricts the application of non-compete clauses:

1. When agreeing on a non-compete clause, the employer shall provide the employee with monthly economic compensation during the non-compete period.

2. It stipulates that if an employee violates the non-compete agreement, he shall pay liquidated damages to the employer.

3. The personnel who stipulate the non-compete restriction are limited to the senior management personnel, senior technical personnel and other personnel with confidentiality obligations of the employer.

4. It is stipulated that the period for the implementation of non-compete restrictions shall not exceed two years.