Competition restriction is a legal system in which an enterprise prohibits its employees from engaging in business that competes with the enterprise or working in other enterprises that have competition with the enterprise or other interests within a certain period of time after leaving the enterprise in order to keep trade secrets or maintain competitive advantages. Non-competition clauses refer to specific agreements or texts, including special non-competition contracts and non-competition clauses agreed in labor contracts. Non-competition clauses are one of the important means for enterprises to keep trade secrets and maintain competitive advantages.

First, which personnel have the statutory duty of non-competition

The law makes special provisions on competition restrictions for directors, senior managers, partners, investors and other such personnel. These personnel have non-competition obligations to work or investment entities without going through specific procedures during their employment.

Article 147 of the Company Law stipulates that the directors, supervisors and senior managers shall abide by laws, administrative regulations and the articles of association of the Company, and bear the duty of loyalty and diligence to the company. Article 148: A director or senior manager shall not engage in any of the following acts: (5) Without the approval of the shareholders' meeting or the shareholders' meeting, take advantage of his position to seek business opportunities belonging to the company for himself or others, or operate the same business as the company for himself or for others. Article 32 of the Partnership Enterprise Law stipulates that a partner may not operate or cooperate with others in any business that competes with the partnership. Except as otherwise provided in the partnership agreement or with the consent of all the partners, no partner may transact with the partnership. A partner may not engage in any activity detrimental to the interests of the partnership. Article 20 of the Sole Proprietorship Enterprise Law stipulates: "The personnel entrusted or hired by the investor to manage the affairs of the sole proprietorship enterprise shall not engage in any of the following acts: (6) engage in any business that competes with the enterprise without the consent of the investor; (7) entering into contracts or transactions with the Enterprise without the consent of the investor.

2. Which personnel may agree on non-competition obligations

Confidentiality agreements can cover the content of non-competition agreements, but the scope of application of confidentiality agreements is more extensive, confidentiality agreements can be targeted at the majority of employees of the enterprise, while the applicable object of non-competition agreements is mainly the enterprise executives and research and development personnel who have access to important trade secrets in their work.

Article 23 of the Labor Contract Law stipulates that if a worker violates the competition restriction agreement, he shall pay liquidated damages to the employer in accordance with the agreement. Article 24 The persons subject to competition restriction shall be limited to the senior managers, senior technical personnel and other personnel under the confidentiality obligation of the employing unit. After rescission or termination of the labor contract, the period of competition restriction for the personnel mentioned in the preceding paragraph shall not exceed two years when they enter into competition with other employing units that produce or engage in the same kind of products or engage in the same kind of business with the same unit, or when they set up their own operations to produce or engage in the same kind of products or engage in the same kind of business.

3. Whether ordinary employees have the obligation of competition restriction during their employment

Some people believe that employees have a duty of loyalty to the company, according to the principle of good faith, during the term of office, employees certainly have a non-competition obligation to the company. In fact, based on the special legislative purpose of labor law - "to protect the legitimate rights and interests of workers", the act of increasing the obligations of workers should be strictly restricted, and the obligation of workers should not be increased at will in the case that the law does not clearly stipulate that workers should perform legal obligations. For the competition restriction, even the competition restriction obligation after the termination or termination of the labor contract is based on the agreement between the two parties, and the scope of personnel is strictly limited to senior managers, senior technical personnel and other personnel with confidentiality obligations. Therefore, for ordinary employees during the term of office can not be arbitrarily required competition restrictions.

Companies may worry that if employees are self-employed or work for competitors, it may harm the interests of the employer, which can be prevented by other institutional designs. For example, a person who has a duty of confidentiality has the obligation to keep a trade secret, regardless of whether he or she is in office and whether or not he or she has paid confidentiality fees. If there is competition and infringement of trade secrets, the employer may require it to bear tort liability. Of course, the premise is that the relevant technology and information of the employer must meet the corresponding requirements, and the corresponding measures have been taken, and the use of these technologies and information has become a trade secret protected by law through a series of system designs. For another example, workers may work in other units in the form of part-time work, for this situation can be clearly stipulated in the rules and regulations, employees engaged in competitive activities with the unit, the unit has the right to terminate the labor contract for serious violations of rules and regulations in accordance with Article 39 of the Labor Contract Law.

Iv. Whether the enterprise has the right to terminate the non-competition agreement before rescinding or terminating the labor contract

Rescission of a contract means that one or both parties to a contract terminate the validity of the contract according to law or as agreed by the parties. The termination of a contract is either based on the agreement of the parties to the contract or on the provisions of the law. In order to protect the order and security of the transaction, the termination of the contract is generally more strict, and the unilateral termination of the contract is more strict. According to the above contract law theory, both parties have signed a non-compete agreement, and it should be more difficult for the employer to unilaterally terminate the non-compete agreement.

However, from the perspective of the source of rights, the employer has the right to rescind the competition restriction, especially before the rescission or termination of the labor contract, the employer has the unconditional right to rescind. Because, the purpose of labor law design competition restriction system is to protect the special interests of employers by restricting the right of certain workers to choose their own jobs. In other words, the owner of the right of the competition restriction system and the initiator of the rules are employers, and it is the right of employers to require specific workers to carry out competition restriction. Rights can be exercised or waived. The employer and the worker sign the non-competition agreement to exercise the right, and the termination of the non-competition agreement is to give up the right, which is the freedom of the employer. Moreover, after the employer gives up the right, the worker can regain the right to choose the job independently, which does not damage the rights and interests of the worker. Competition restriction has not officially started before the termination or termination of the labor contract. When the employer terminates the competition restriction agreement, it will not have any impact on the worker, and the worker's rights will not be restricted in any way, and the worker can freely choose another job. Therefore, before rescinding or terminating the labor contract, the employer has the right to rescind the non-competition agreement.

5. Whether the enterprise has the right to terminate the competition restriction agreement during the competition restriction period

Through the above analysis, the employer has the right to rescind the non-competition agreement, but after the rescission or termination of the labor contract, the employee's employment right has been restricted during the period of non-competition. If the employer suddenly rescinds the competition restriction during the period of non-competition, the employee needs some time to choose another job. Labor remuneration is the main source of survival of workers. In order to reduce the loss of workers and protect the basic survival rights of workers, workers should be given corresponding compensation. To this end, Article 9 of the Supreme People's Court's Interpretation of Several Issues concerning the Application of Law in the Trial of Labor Dispute Cases (IV) stipulates that "within the period of competition restriction, when the employer requests to terminate the competition restriction agreement, the people's Court shall support it." When terminating the non-competition agreement, the worker requests the employer to pay the worker an additional three months of economic compensation for non-competition, the people's court shall support."

Vi. Whether the competition restriction agreement signed with employees who do not meet the competition restriction object is valid

Competition restriction is to protect the business secrets, competitive advantages and other core interests of the employer from being infringed, and to better develop the employer in the market. In essence, it protects the development right of the employer. For workers, competition restriction means that workers can not engage in the same or similar work with the original unit in a certain period of time, and there are certain restrictions on the rights of employment and survival of workers. When the employee's right to employment and survival conflicts with the employer's right to development, it is necessary to make a choice in legislation and judicial practice. For this reason, the object of competition restriction is clearly stipulated in law. Article 24 of the Labor Contract Law stipulates that the persons subject to competition restriction are limited to senior managers, senior technical personnel and other personnel under confidentiality obligation of the employing unit. The scope, territory and term of competition restriction shall be agreed upon between the employer and the worker. The agreement on competition restriction shall not violate the provisions of laws and regulations. If ordinary employees are also subject to the competition restriction, it violates the original intention of establishing the competition restriction system and hinders the workers' right to employment and survival. Even if both parties sign a competition restriction agreement, the workers who do not conform to the object of competition restriction can claim that the agreement violates the mandatory provisions of the law.

In addition, if a person who does not meet the object of competition restriction has signed a competition restriction agreement with the employer and has actually fulfilled it, the employer cannot claim that the agreement is invalid and does not pay economic compensation. Competition restriction hinders workers' right to employment and right to subsistence, and economic compensation is the protection of workers' right to employment and right to subsistence. Although it does not conform to the object of competition restriction, the employer, as the beneficiary of competition restriction, should pay corresponding consideration for this. If the workers actually perform the competition restriction obligation, the employer does not pay economic compensation, it is extremely unfair to the workers. Therefore, in the case that the worker actually performs the competition restriction, even if the object of the competition restriction is not met, the employer cannot claim that the contract is invalid, and the employer still has to pay the economic compensation for the competition restriction.

To sum up, when signing a non-compete agreement, enterprises should pay attention to: First, since enterprises need to pay non-compete compensation to the signatories of the non-compete agreement, it is not appropriate to expand the signatories and increase the costs of enterprises. Generally speaking, the contract object of the non-competition agreement should be controlled to the key technical personnel or management personnel who have mastered the important trade secrets of the enterprise or have an important impact on the competitive advantage of the enterprise. Second, because the wage level and consumption index are not comparable, the payment standard of compensation can not be uniformly stipulated. Enterprises should generally determine a minimum and reasonable range of compensation according to the average social wage level in the provincial administrative region and consider the actual annual income of employees, so as to ensure that the interests of employees are not harmed. Also try not to increase the unreasonable expenditure of enterprises; Third, the area and period of competition restriction are important factors to determine whether the freedom of employees is unreasonably restricted. Employees at different levels have different areas of competition restriction. The less they have access to company secrets and the lower their level, the smaller the competition restriction area. The period of competition restriction includes the period of employment and the period after resignation. The law stipulates that the latter shall not exceed two years, but the development cycle of different industries is different, and the technical information of high-tech enterprises may have no value to the enterprises within a few months. If the competition restriction is still implemented within two years, the enterprises may unreasonably restrict the re-employment freedom of employees. It also increases the cost of unnecessary compensation.