This post explains the type of China employee that can be bound
by a non-compete provision and on the likelihood a China court will
enforce such a non-compete. Or not.
One of the big issues in China employment law is against whom
non-compete provisions will work. China's labor laws explicitly
limit non-compete agreements to senior management, senior
technicians and other personnel who have a confidentiality
obligation. "Senior management" usually means a person in
a senior management position with access to the company's
confidential information. A "senior technician" usually
means someone engaged in technology research and development, and
who has fairly comprehensive access to the company's
It is not so clear, however, which employees come under the
category of "other personnel who have a confidentiality
obligation." and China's courts tend to consider this
issue on a case-by-case basis by looking at a totality of the
circumstances, generally including the following:
The employee's compensation. The higher the compensation,
the more likely the court will enforce the non-compete.
The employee's job title. The better the job title, the
more likely the court will enforce the non-compete.
The employee's responsibilities. The greater the
responsibilities, the more likely the court will enforce the
The likelihood of the employee's gaining access to and
making use of the confidential information. The greater the
likelihood, the more likely the court will enforce the
Whether the employee also signed a confidentiality agreement
with the employer. If there is such an agreement, there is a
greater chance the court will enforce the non-compete.
Whether the employee is suffering a financial hardship in his
or her post-employment period and the extent of that. The
greater the hardship, the more likely the court will not
enforce the non-compete. For more on how "equity" and
"justice" and "harmony" so often infuse China
court decisions, check out
China Courts. You Ain't In Kansas Any More.
Not surprisingly, China's local courts are not
consistent in applying the above factors in determining
whether a certain employee was "other personnel with a
confidentiality obligation." Some courts have
upheld non-compete agreements binding against relatively low
level employees simply because the employer and the employee
signed a written agreement containing non-compete provisions and
therefore the parties should perform their respective obligations
under the agreement. Other courts have invalidated non-competes
against relatively high level employees because the high level
employee (though probably quite wealthy) has been having trouble
finding new employment. In other words, non-competes are like
pretty much everything else related to China employment law issues:
local and not so simple.
Long experience representing many of Australia's leading employers has taught us that in employment litigation the identity of an employee's representative is a major factor in how employee litigation runs.
This WHS decision clarified the interpretation of s 19 of the Work Health and Safety Act 2011 (NSW).
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