The illusion and reality of non-compete agreements: car companies and technology companies "block" each other, and millions of liquidated damages trap talents

Author | Zhang Cuicui

Edit | Autun

After spending more than eight months of "flower names", Lin Yuemeng received an express mail in December last year, and he was told by his old owner that he would no longer pay compensation.

"This indicates that the company voluntarily terminated the non-compete agreement, but will not specify the reason." He explained that the other party's cessation of payment does not completely mean that the agreement is invalid, and he is still obliged to keep the confidentiality of the previous company's confidential content less than a year.

Lin Yuemeng worked in an Internet company as an algorithm and joined the current company for a full year in March this year. When he left office in January 2021, he was launched with two one-year non-compete agreements, one for general restrictions and one for options.

"These documents are not all in duplicate, some documents are signed, but they are not allowed to take pictures, and they are taken by pressing the fingerprints." Lin Yuemeng, who is now the director of algorithm technology at another company, still clearly remembers the list of restricted companies listed by the previous company, "there is about a page and a half of A4 paper, and some cannot see the competition relationship."

In order to avoid trouble, Lin Yuemeng did not dare to use his real name in the new company. During the non-compete period, Lin Yuemeng received a routine spot check call from the old owner's HR, and often had headhunting contacts, in fact, she was also asked whether she had joined the current company. He habitually denies it all, "There is no impermeable wall, and I can't do anything to acknowledge or answer any questions on WeChat or voice."

After changing back to his real name, Lin Yuemeng occasionally pays attention to recruitment information, and his next job hopping plan is already in the making.

Behind Lin Yuemeng's seemingly troublesome but constant attempts to open the next job-hopping plan is the attractive "money scene" of the automotive industry joining the talent competition for the industry talent he represents after the war. Headhunter Xu Jing told Tencent Auto that companies are recruiting at a very outrageously high premium, algorithms, software and autonomous driving talent salaries are very demanding, no budget is a budget, and some people have changed 6 companies in two weeks.

Car companies and technology companies "block" each other

The boundaries of the automotive, technology and Internet industries are blurring, which is bringing more talent into the non-compete.

Li Xiang and Lin Yuemeng in the marketing public relations post belong to the same company, and their daily work does not seem to involve core technologies, but they are unfortunately involved in the competition war. When he left his post in December last year, Li Xiang signed a six-month non-compete agreement, and there are auto circles and technology circles in the non-compete list, which he believes is "already the industry practice.".

"Prus communication in the new force enterprise is no longer a service department, but a role to undertake corporate strategy. In fact, PR understands a lot of corporate strategic planning and business model operations. Emerging companies are using content to tell brand stories, so communication and marketing personnel are also being constrained by non-competes. ”

Li Xiang recalled that the three new car-making companies of "Wei Xiaoli" have successively let the company's core personnel sign a non-compete agreement that clearly restricts Internet and technology companies since March and April last year, "During that period, the wave of cross-border car-making such as Xiaomi and Baidu was very strong."

It was then that the tense atmosphere of the "robbery war" began to pervade. In May last year, He Xiaopeng publicly stated that R&D students would expand to more than 500 people; in July of the same year, Lei Jun released a recruitment advertisement for the autonomous driving department on Weibo, the first batch of 500 technicians were recruited, and some people got the Xiaomi car offer in a week; Huawei recruited people at a "sky-high price" commission in order to sell cars to car companies.

The new force car manufacturers signed non-compete agreements with employees overnight, and the latecomers who were pulled into the "blacklist" began to "fight back" from 2022.

In January this year, a Huawei employee posted on the social platform, "Has been lastday resignation process has not been approved, HR and direct supervisors communicate every day, let sign the non-compete agreement, and signed immediately started, the non-compete agreement listed is not limited to Weilai, ideal, millet, Momenta, Geely, Didi and other more than 20 intelligent driving car companies, related enterprises and subsidiaries, signed can only go to the nursing home." ”

In mid-March, Huawei insiders confirmed the news to Tencent Auto. Huawei's automotive business updated the content of the technical personnel non-compete agreement at the end of February, "counting all the car suppliers that can be imagined, and the non-compete period ranges from 3 to 24 months." In the past, it was the core technical personnel who were involved in signing the non-compete agreement, and now the ordinary technical employees also have to sign it."

At about the same time as Huawei, Xiaomi, which announced that it had been building cars for less than a year, also began to update the scope and content of the non-compete agreement. 36Kr has reported that Xiaomi began to implement a non-compete agreement from mid-February, mainly for core talents above the 19th level, and the non-compete companies also include new car manufacturers such as "Wei Xiaoli".

Similar news has become a hot topic on workplace social software such as Pulse. On February 25, a person with an ID display who served on Xiaomi's technical committee posted that the department was required to sign a non-compete agreement with all employees, and that "many car companies were added, and about 40 companies were listed in the non-compete list."

Li Xiang, who has worked in the automotive industry for more than ten years, believes that this is very reasonable, "the car has become a new track, has truly become a digital intelligent terminal, so now it will not be a competition between car companies and car companies, it will be a competition and competition between automobiles, Internet and technology companies."

Zhao Yue, who used to be the vice president of marketing at a traditional car company, told Tencent Automobile that experience in the field of sales and marketing is very important, but the scope of non-compete restrictions will not be very wide, selling cars is not dependent on individuals, even the highest level of people will be competed for up to two years, most of which are one year.

"In the past, the senior management of traditional car companies will soon join the next one after leaving, and it will be very high-profile, but now it is different, and the marketing executives I am familiar with will be very low-key when they are hired by the new car companies after being competed for business." Zhao Yue said that in the algorithm, software and other core technology positions non-competition is even more cruel, "the scope of non-competition restrictions is wide-ranging, a list of enterprises, a person engaged in technology non-competition for a year, the personal harm to the industry is very large."

Whether it is a traditional car company or an Internet car company, on the one hand, it is said that layoffs are not available, and on the other hand, it cannot recruit people, and most companies only want to find ready-made talents to directly create value.

"Some time ago, everyone was transferring the president of the Geely Research Institute to be poached by the internet car manufacturing company with high salaries, and at the beginning he himself debunked the rumors, but then joined Shunwei Capital, which is 'curve to save the country', he can't not go to build cars." Zhao Yue said that people who understand understand it.

After the talent treasure was pried open, traditional car companies no longer "Buddhist" response. In August last year, a Great Wall Motor non-compete agreement with a list of more than 130 non-compete companies was exposed, and the liquidated damages amounted to 800,000 yuan. "The technology center was signed by all employees, and the latest regulations on manpower said that 100% would be started after leaving." On the pulse, Great Wall employees revealed that some of the non-compete period is even as long as 2 years.

Jiang Lin, a current employee of the Great Wall, told Tencent Automobile that the upgrade non-compete agreement was not signed when he joined the company, "it was uniformly signed by employees in August last year."

BYD, which has complex business segments, is moving faster. As early as March and April last year, BYD launched an upgraded non-compete agreement with the first batch of enterprises such as "Wei Xiaoli". However, the new agreement is only for new employees, and a BYD insider told Tencent Automobile that existing employees still use the non-compete agreement for the auto industry in the past.

Compared with the rapid response of independent brand car companies, foreign and joint venture car companies are a bit "slow to respond".

A R&D engineer for Ford China told Tencent Automobile that it had never heard of a non-compete agreement, "it is estimated that it will be signed by a senior executive"; a battery expert from BMW Brilliance said that "there is no non-competition agreement signed, which has no impact on job hopping"; another person in charge of SAIC-GM's car networking related business revealed that "the agreement was signed, but this is not common within the company, and objectively it does increase the cost of talent flow."

30% compensation and liquidated damages without a "cap"

For initiators, non-compete agreements are a means of building invisible barriers, the visible price is a small compensation payment to former employees, and the invisible thing is that companies will use professional teams such as HR, private detectives or lawyers to defend their own interests.

For the individuals who signed the agreement, all the contradictions will focus on one word: money.

The salary paid by the former company and the current company to Lin Yuemeng is not much, but when it comes to "money", he still feels "flesh pain". According to his description, Internet companies will generally set a non-compete period of half a year to a year, and the compensation conscientious enterprise will give 50% of the average monthly salary of the previous year, and each month will be paid to the departing employees of the non-compete period like a salary, while most people can only get 30%.

"At that time, the liquidated damages for the cash portion stipulated in the agreement were 3 times the annual salary, and there was also compensation for the option portion." When she first joined the company, Lin Yuemeng showed the legal counsel the non-compete agreement and desensitization information of the previous company, and the other party said that if the worst result occurred, "such as causing a lawsuit, the company is willing to pay compensation for the cash part, but the option stock part must be paid by itself."

There is a quantitative standard for compensation agreed in the non-compete agreement, but there is no "upper limit" on liquidated damages, so the two amounts seem to be very different.

The Interpretation of the Supreme People's Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (I) (hereinafter referred to as the "Interpretation"), which comes into effect in 2021, stipulates that if an employee fulfills the obligation of non-compete, the employer is required to pay economic compensation on a monthly basis in accordance with 30% of the average wage for the 12 months before the termination or termination of the labor contract.

Regarding liquidated damages, the Interpretation stipulates that when an employee violates the non-compete agreement, he shall pay liquidated damages to the employer in accordance with the agreement. The agreed amount of liquidated damages should be within the scope of fairness and reasonableness, otherwise the amount of liquidated damages beyond this category may be difficult to obtain the support of the people's court.

However, Lin Yuemeng recalled to Tencent Automobile: "In the actual implementation process, the amount of this 'agreed' liquidated damages has not been discussed, and if there are objections, employees can not sign, but few people do not sign, do not want to make too stiff." ”

R&D engineer Wang Xun's former company was an upstream raw material supplier, and the company only informed the launch of a non-compete agreement on the last day before leaving. "The compensation provided for in the agreement is a double gain obtained during the non-compete period, including the salary gain of the next company plus the compensation already given by the previous company."

No "upper limit" of liquidated damages has become a magic weapon for enterprises to retain talents, in order to warn more employees, power battery giant Ningde era even "speculated" the liquidated damages to 1 million yuan.

According to the judgment document network, from 2019 to 2020, CATL sued 9 predecessors in court due to non-compete disputes. The reason was that they joined Wuxi Tianhong and Baoding Yixin respectively after leaving their jobs, and these two companies were judged to be hive energy affiliates, and the court sentenced employees to pay 1 million yuan in non-compete damages of NINGDE Times. The employee appealed, and the original judgment was still upheld in the second instance.

The monthly salary of the employees involved in the Ningde era ranged from 8,000 yuan to 20,000 yuan, and the liquidated damages were uniformly 1 million yuan, and for employees with a monthly salary of only 8,000 yuan, the compensation was equivalent to 10 times the annual salary.

The "huge" compensation has aroused heated discussion in the industry and the media. "It's not a small amount of money for individuals, but compared to the size of the business, the compensation money is not enough to spend the energy of legal counsel and HR staring at you." Enterprises written in the non-compete agreement are more severe, mainly to play a warning role. An industry insider told Tencent Auto.

However, the court's judgment refuted the allegation that the compensation was unreasonable, "The purpose of the Employment Contract Law is to prevent the possibility of trade secrets being leaked, and does not presuppose that the employer suffers actual losses".

With the rapid development of the new energy automobile industry, core technical talents such as power batteries have become the focus of competition.

Employees who have left the NINGDE era told Tencent Automobile that the position of internal manager of the NINGDE era or above must sign a non-compete agreement, and the non-compete time is generally 2 years; according to an employee of the upstream electrolyte supplier of the battery, "the non-compete agreement is very common, and the upstream and downstream will be restricted, and we will also be signed a non-compete agreement when we jump to the battery company." At the same time, he said, "The liquidated damages are randomly opened, which is not standardized."

As long as you don't go to court, the non-compete agreement and the amount of money involved are more like weapons hidden in the shadows.

A lawyer who has taken over litigation related to non-compete agreements told Tencent Automobile that before the contradictions are pointed out, many people will not pay attention to liquidated damages, and for those who do not default, there is no concept.

Song Zhen, who worked in a traditional car company, signed a non-compete agreement when he joined in 2017, and the company launched an agreement with him when he left in 2021. Song Zhen recalled to Tencent Automobile that the "blank" agreement signed that year added a specific list of enterprises when it was signed and started, but because the track was changed after leaving, the leader did not implement the non-compete restriction.

There was a gap from the departure of the previous company to the joining of the new company, and Song Zhen did not receive the 30% compensation payment issued by the previous company, nor did he pay attention to the details of the liquidated damages in the agreement. But when it comes to the "1 million liquidated damages in the Ningde era", he said in an affirmative tone, "the non-compete agreement has been abused."

"Enterprises are locked in knowledge, and hope to lock all the valuable work during your entry, and leading enterprises prohibit the flow of people in this way." Song Zhen believes that this is the case of imperfect domestic intellectual property protection, by targeting individual employees to put pressure on potential competitors, in fact, the core is to solve unfair competition.

Unreal and real under the anti-non-compete routine

Non-compete agreements have gradually become a common phenomenon, but in practice, there are still a small number of employees who actually initiate non-compete agreements when they leave their jobs. "Signing back doesn't necessarily start." Lin Yuemeng said that the agreement is more of a warning, so that employees have some concerns when they jump ship.

Even if it does, the means of "circumventing" non-compete agreements have become industry practice. A headhunter told Tencent Automobile that when employees leave their jobs, they should keep a low profile, use flower names when they enter the company, sign third-party contracts first, and then sign formal contracts after the non-compete period.

"After the introduction of senior talents, the company will sign the outsourcing position, and once the court proves, the outsourcing company is not in your non-compete list, so as to circumvent it." The above-mentioned headhunter said that under normal circumstances, the corresponding person cannot be searched in the internal software of the enterprise, "nameless and headless".

According to her description, domestic new power enterprises have stricter non-compete restrictions on the executive level of intelligent driving-related positions, and the strategy-related executives will play "emotional card" tactics.

"For example, if a VP-level senior executive leaves, he will generally become a senior consultant of the company, and the period will range from half a year to a year." Xu Jing explained that in fact, this is a disguised non-compete, senior consultants will also have corresponding restrictions, but compared to the actual sense of the non-compete agreement will be much broader, "liquidated damages are symbolic, options and stocks will also be fully unbanned to employees."

Luo Jun, who has served as a technical executive in a car company, believes that in fact, the company is reluctant to take this policy to strictly prevent employees at the executive level, but when the intelligent driving track has not yet entered the decisive battle, everyone will do whatever it takes to prevent the leakage of core technology.

"If some sensitive IP is brought to competitors by technical experts at the execution level, it will greatly shorten the research and development cycle, and it is even possible to achieve commercialization, which will cause greater harm to enterprises." Luo Jun said that many people want to make smart cars, but there is a shortage of people who are really experienced.

However, from the perspective of commercialization, the intelligent driving track is far quieter than the battery field. Duan Hui, a senior executive of the new power enterprise, said to Tencent Automobile that from the perspective of competitive barriers, it is not difficult to understand the practice of the Ningde era, but from the perspective of the development prospects of the industry, other enterprises in the industrial chain also need talents, and ordinary engineers can bring hope.

"Car design and battery manufacturing are different, the former can explore technical avoidance, the latter is more like a pharmaceutical, battery material exploration is likely to be a 'go-to-no-return' thing, especially once the battery formula is leaked, it will bring a fatal blow to the enterprise." But key technologies such as recipes have tight encryption measures, and not everyone can master them. Duan Hui thought so.

A middle-level leader of a battery company once helplessly said in private that the non-compete restriction should also consider the development and survival of individual employees. "It is impossible to recruit a few R&D personnel to change our R&D direction and strategy."

Whether it is a battery or a smart electric vehicle track, non-outlet industry insiders seem to be too outrageous today's talent war, but from the perspective of the times and the market, it seems reasonable. Party A and Party B seem to be "unanimously" pushing things in the extreme direction.

Headhunter Xu Jing recalled to Tencent Auto that companies are recruiting at a very outrageously high premium, and the salaries of algorithms, software and autonomous driving talents are very demanding, and no budget is a budget. "Someone changed 6 companies in two weeks and used the offer of the previous company to raise the offer price of the next company. Later, the headhunting circle and these 6 car companies blocked this person. ”

In the imbalanced environment of "buyers and sellers", smart driving track practitioners have higher bargaining space, but in turn, companies will try their best to clamp down on people who pay a high price, and the list of non-compete companies will "grow barbarically".

"When you started, you wrote 20 companies, and when you left, it was probably 2,000 companies a hundred times, and now some new forces have listed 1,000 companies." Luo Jun believes that the game between the two sides is bringing the talent ecology into a vicious circle, but compared with the Internet industry, the smart car track is far from the hot war stage of "robbing people openly and harming people secretly".

A person familiar with the matter told Tencent Automobile that a large factory will give a batch of bidders to the company's internal line, and then someone will contact the "undercover" in a single line to provide photos, voices and other evidence, "this kind of thing is the same as the judgment of legal couples and de facto couples, and they will be recognized in legal proceedings."

Because of the existence of a mature set of "routines" between non-compete and anti-non-compete, disputes between employees and enterprises and competing companies will inevitably arise, and the legal litigation caused by "non-compete disputes" shows an upward trend year by year. According to the judgment document network, the relevant litigation has increased significantly since 2014, reaching 324 related litigation in 2018, 420 in 2019, 585 in 2020, and 388 in 2021.

Hailin, who served as vice president of autonomous driving at a new car manufacturer, believes that the current industry belongs to the stage of vicious competition, and for a long time in the past, "high-paying digging", and now it has derived a non-compete agreement that has been abused, and this model cannot last too long.

Luo Jun believes that it is difficult to avoid talent wars when any industry is hot, and smart cars are repeating what happened before the real estate and Internet industries, and the existence is reasonable, and now it has just seen the beginning. "In the competition of Internet companies, some companies win on key people, and the smart car track is an asset- and talent-intensive industry, and when the real battle comes, the company is willing to pay liquidated damages and pay money to seize strategic figures."

Non-compete agreements were born to maintain order in the industry, but in a sense, it seems that it cannot control the power it emits, but instead becomes a force that destroys the order.

Gu Guohong, vice president of the Qingdao Automotive Research Institute of Jilin University, who has served as an executive at two lithium battery companies, believes that "it is necessary for us to think carefully and deeply about the rationality of the scope of the non-compete restriction." Finding a balance between non-compete restrictions, scientific and technological innovation, and workers' rights and interests is the greatest common denominator in today's society."