Q:
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What is non-compete agreement in China?
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A:
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Non-compete agreement means that an employer may agree with the employee in a labour contract or confidentiality agreement on non-compete provisions, which place restrictions on the employee to work for any other employer producing or trade in products of the same category or engaging in business of the same category, or establish his/her own business to produce or trade in products of the same category or engage in business of the same category after the termination or expiration of the labour contract.
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Q:
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Who can legally be subject to non-compete obligations?
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A:
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According to Article 24 of the Labour Contract Law of the PRC, employees who can legally be subject to non-compete restrictions are limited to the senior management, senior technicians and other personnel with a confidentiality obligation.
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Q:
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What kind of competitive actions can be prohibited?
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A:
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According to Article 24 of the Labour Contract Law of the PRC, the competitive actions that can be prohibited include: working for any other employer producing or trading in products of the same category or engaging in business of the same category, or establishing his/her own business to produce or trade in products of the same category or engage in business of the same category.
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Q:
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What is the maximum non-compete period in China?
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A:
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According to Article 24 of the Labour Contract Law of the PRC, the non-compete period shall not exceed 2 years upon termination or expiration of a labour contract.
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Q:
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Could non-compete compensation be included in the paid salaries?
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A:
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It is not allowed. Article 23 of the Labour Contract Law of the PRC has clearly provided that the non-compete compensation shall be paid to the employee on a monthly basis during the non-compete period after termination or expiration of the labour contract.
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