420,000, this is the liquidated damages claimed by Xu Yang by his former owner after he changed jobs during the probation period, and he may even breach the contract even when he goes to deliver takeaways.
Last year, when he joined a "large factory" as a procurement, he signed a non-compete agreement (hereinafter referred to as the "non-compete agreement"). Typically, such agreements are only addressed to a small number of people who may be in possession of the company's commercial and technical secrets, such as senior executives, senior technical personnel, and "other persons under a duty of confidentiality." After an employee leaves the company, the agreement will restrict him or her from engaging in work or activities that compete with the original company's business.
However, in recent years, it is not uncommon for non-compete agreements to be asymmetrical, expanded or even abused. Some scholars have combed through the judgments of 454 non-compete dispute cases and found that 79% of the subjects of non-compete obligations are "other personnel with confidentiality obligations", of which 77% are employees in grass-roots positions, such as product sales, front-line workers, security guards, etc.
In the above-mentioned judgments, 87% of the judgments confirmed or tacitly acquiesced in the validity of the non-compete agreement, and most employees received less than half of the basic salary of the non-compete compensation every month, but had to bear high liquidated damages. Lawyer Wu Shigang has seen liquidated damages of 100 million, "There is no cap." ”
Previously, the Supreme People's Court (SPC) had issued relevant guiding cases that clearly pointed out that the court should conduct a comprehensive review in light of the actual business content, service targets or product audiences between enterprises. Wu Shigang said that some courts stick to the business scope of enterprise registration when making judgments, but "having technology does not mean that there are technical secrets".
For this reason, the reporter interviewed a number of employees and their lawyers who were subject to non-compete claims, and we wanted to know whether it was possible for ordinary people to get out of this unequal battle.
"The company lets you sign, who dares not to sign"
32-year-old Xu Yang considers himself a "duty" person.
In his hometown of Ma'anshan, Anhui Province, his mother worked as a farmer, and his father worked in a steel mill during the day and a security guard in the factory at night in order to provide him with education. When most of his peers had dropped out of school to work, he was admitted to "211" and Baoyan all the way, and then joined a leading grain and oil enterprise as a purchaser, working for 6 years, from a small staff member to a director, "Reading can change your destiny", he said.
In March 2023, he jumped to a "big factory" mainly engaged in e-commerce business, and his salary has increased by half and he is close to home, but he is tired. In the Wuhu branch, he was responsible for the procurement of more than 10 categories such as grains and oils, vegetables and fruits, with a probationary period of half a year. "The contract says that he is a purchasing and marketing supervisor, but he is a technical position, and there is no assistant. ”
Xu Yang introduced, the work is "11-11-6", a single rest every week, 11 o'clock in the morning to 11 o'clock in the evening, repeating the price comparison, looking for suppliers, and arranging promotional items for the next day; the office is a little depressed, colleagues including warehouse sorters use nicknames, everyone does not communicate much, busy with each other; to the early morning, the lights of the unit are basically on, "about 14 hours a day, 14×6, 84 hours a week, at least 300 hours a month." ”
After four months of work, he stayed up so much that his "spirit was in a trance", his resistance was much worse, and he had colds and rashes from time to time, and the doctor advised him to stay up less late, but he thought, "Slowly endure and boil." ”
On July 24 of the same year, his mother was in a car accident, and he and his supervisor took leave to go to the hospital to care for his mother, who had fallen into a coma. He recalled that in the afternoon of the same day, the supervisor was still in the group @ him, "saying how my sales have declined", and the next day, he directly submitted his resignation. The company wanted to keep him, but he refused, and then HR said that it would start a non-compete agreement with him.
In July last year, Xu Yang's mother was hospitalized in a car accident, and the photos in this article are all courtesy of the interviewee
The Labor Contract Law stipulates that the employer may agree on a non-compete clause with senior executives, senior technical personnel and other personnel who are obliged to maintain confidentiality, and provide monthly economic compensation during the non-compete period after the termination or termination of the employment contract. If the employee breaches the contract, he or she shall pay liquidated damages to the employer in accordance with the agreement.
According to the non-compete agreement signed by Xu Yang, he is not allowed to engage in work or activities that compete with the original company's business for six months after leaving the company. He said that the competitors in the annex to the agreement cover most of the major Internet companies.
He recalled that when he signed the contract, at least five materials were in triplicate, including a non-compete agreement. ”
On August 4 last year, he went to ask for a resignation certificate, but because his work authority had been lifted, he could not enter the office and could only wait in the parking lot. HR took the confirmation of the initiation of the non-compete agreement and said that he would only give the certificate by signing, so angry that he drove away.
By mid-August, after Xu Yang was discharged from the hospital to take care of his mother, he went to an e-commerce platform to make purchases. He once lent a friend a sum of money and didn't want it back, and he had to repay the mortgage of 4,000 yuan a month, including the 1,200 yuan for renting, and he was always a little short of money.
At that time, the new owner was in a hurry to recruit people, and asked him to make up the resignation certificate later, but he didn't ask too much. He also didn't care about the non-compete agreement of the former employer, "Even if you have trade secrets, you can't talk to a probationary person." ”
But the indictment came unexpectedly. In March 2024, he received a labor arbitration application from his former employer, requiring him to return 15,000 yuan in non-compete compensation (about 30% of the total basic salary for half a year) and pay liquidated damages of 420,000 yuan (about two years of pre-tax income).
For violating the non-compete agreement, Xu Yang was claimed by the former owner for liquidated damages of 423675 yuan.
On March 21, he rushed to the Changning District Labor and Personnel Arbitration Court in Shanghai to attend the arbitration hearing, and the case was not pronounced in court. He said that during the trial, the former owner provided 7 videos of him entering and leaving the new company as evidence, and the camera was mostly facing his face, and he secretly filmed him before and after for nearly half a month, but he was unaware of it, "I was creepy after watching the video."
Zhang Jinfang, a lawyer at Beijing Yinghe Law Firm, said that in addition to Xu Yang's case, she and her colleague Zhou Can have recently represented a number of similar labor dispute cases, including a number of fresh graduates or recent graduates, who also faced high liquidated damages and involuntarily signed non-compete agreements. ”
Lawyer Wu Shigang also mentioned in an interview that most workers have no legal awareness and sign when they want to, and even if they find out about this problem, they have no ability to negotiate. Lawyer Yang Lei suggested that employees should be cautious in signing the non-compete agreement, if they have to sign it, refine the non-compete agreement, make preparations for the non-compete when they leave the job, and act in accordance with the non-compete agreement after leaving the company.
Zhang Jinfang said that in fact, the person sued for breach of contract had consulted many lawyers in Shanghai before approaching her, and most of the replies were "difficult to win", and her judgment was not much different from that of her peers. She explained that in related cases, it is common to presume that the employee is a qualified subject of a non-compete agreement based on the agreement. As for their assertion that they did not sign the contract voluntarily, in practice, it is often difficult to obtain support from the court because of the difficulty in adducing evidence. "To put it simply, this is a game that is not destined to be exactly equal. ”
"Technology does not mean that there are technical secrets"
Yu Shuhong, a professor at Wuhan University's Law School, and Jia Weiyu, a master's student, published a paper last year entitled "Reflection and Reconstruction: Rules for the Review of the Validity of Non-compete Agreements" (hereinafter referred to as the "Non-compete Rules"), in which they pointed out that although these non-compete agreements are legal and valid in form, they are essentially subject to problems such as the generalization of applicable subjects, the unreasonable scope of restrictions, and the asymmetry of rights and responsibilities, and there are disputes over their performance.
34-year-old Xie Ruiming was also sued by his old employer, who had only been in the company for three months. In June 2019, he joined the IT industry as a software developer and signed a non-compete agreement. At the end of September, he successively changed jobs and was dispatched to work in a number of companies to do the bank's work, and then was sued by his old employer in court, demanding compensation of 140,000 yuan in liquidated damages.
According to the first-instance judgment of the Shanghai Xuhui District People's Court, Xie Ruiming argued that the former owner did not issue a list of non-compete companies and did not pay non-compete compensation, so it should not pay liquidated damages.
The court held that Xie Ruiming's claim had no legal basis and ordered him to pay liquidated damages as agreed, and Xie Ruiming appealed, and in February 2022, he reached a civil mediation with the former company and paid liquidated damages of 80,000 yuan.
Yang Lei, Xie Ruiming's entrusted agent ad litem and a lawyer at Shanghai Xiaozhan Law Firm, said that usually, if an employer fails to pay non-compete compensation for more than three months, the employee can unilaterally terminate the agreement and claim compensation.
He added that according to the Interpretation (IV) of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Labor Dispute Cases, the non-compete agreement is still valid until the employee exercises the right to terminate and cannot be exempted from the corresponding obligations.
However, many people have a misunderstanding about this, thinking that if they do not receive compensation, they do not need to perform the contract.
The reason why Xie Ruiming was able to reduce the compensation after mediation, Yang Lei believes that the main reason may be that the original company is suspected of "fishing". Xie Ruiming once mentioned to him that he was arranged by the former company leader to go to the next company, because the other party is a customer company, and the project will be assigned to them only after passing the ability assessment of the employees of the former company. However, Xie Ruiming failed to provide relevant evidence for this.
However, Yang Lei said that in the IT industry, there is no shortage of such "job hopping" and labor dispatch in order to take over the project, because the outsourced employees mainly follow the project, and the business scope of the IT company overlaps, and some are even in the old employer's non-compete list, and the employees passively bear the legal risk.
Once a non-compete agreement is initiated, it is often equivalent to being "banned".
Wu Shigang, a lawyer at Shanghai Shenpu Law Firm, once represented a case in which an employee who originally made new energy motor controller products, jumped to a fuel auto parts factory to make exhaust exhaust pipes, and was also sued for breach of non-compete agreement, and the lawsuit went all the way to the second instance, and the court ruled that the employee should pay 150,000 yuan in compensation on the grounds that the business licenses of the two companies have technology development and belong to the auto parts industry.
Wu Shigang said that the employee was "banned" by the auto parts industry. Behind this is also a problem, "having technology does not mean having technical secrets", but many judgments are more based on the overlap of the business scope on the business license of the enterprise.
In his view, the non-compete agreements of some companies are more about "controlling the turnover of employees". He once represented an employee in Shanghai, who was originally engaged in the development of autonomous driving technology for sweeping robots, and switched to a truck company, also doing autonomous driving, and was sued by the former owner for breach of contract, claiming more than 700,000 yuan.
"The gap between the two products is too big, and there is no substitution," Wu said, and in the end, the court found that the two companies were in competition on the grounds that both were core autonomous driving technologies, and ruled that the agreement was valid. At the time of execution, the employee chose to compromise and return to his former employer, and also signed a confidentiality agreement not to disclose information about the case and give interviews to the media.
The Labor Law stipulates that the non-compete period shall not exceed two years, and some enterprises set it at two years, far exceeding the speed of change in the general technology and information markets; some enterprises even set the liquidated damages at 100 million yuan, "with no upper limit."
In contrast, he said, there is a lot of room for non-compete compensation. Not less than 30% of the basic salary or the minimum wage level of the place where the contract is performed, "the employee (salary) is 50,000 yuan a month, and if the company is not kind, it can be set at 3,000 yuan." ”
According to the 454 judgments in non-compete dispute cases combed by the Non-compete Rules, 72% of the non-compete agreements were for 2 years or more, and 71% of the non-compete compensation was not higher than 30% of the average monthly salary in the 12 months prior to resignation.
From this point of view, there is a suspicion of imbalance in the relationship between labor rights and obligations in the non-compete agreement. According to the analysis of the Non-compete Rules, for employers, excessively low economic costs of performance form a reverse incentive, which stimulates them to impose unreasonable non-compete obligations on employees in consideration for low economic compensation.
"We should not be confined to the scope of business registered by the company"
In fact, the Supreme People's Court also has clear instructions on the fairness of entering into non-compete agreements.
According to the Interpretation (II) on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases (Draft for Comments) issued by the Supreme People's Court in December last year, the scope, geography and duration of non-compete restrictions should not only be compatible with the trade secrets known and accessed by employees, but also with confidential matters related to intellectual property rights, their commercial value and the competitive advantages they have formed.
Chen Zhibin fought a lawsuit with his former employer for more than a year, and in the end, the court also made a judgment based on whether all aspects were "suitable".
After working in the technical management position of Mingheng Hybrid Technology Co., Ltd. for more than a year at a car company in Wuxi, in October 2021, he was suddenly required by HR to sign a non-compete agreement with a non-compete period of 2 years, including but not limited to companies engaged in the development and technology of automotive electronic products, and the business scope includes the development of motors and their controllers.
He recalled that at that time, he was surprised by the wide scope of competition, and did not want to sign, and "saw" back and forth with HR for several days, and finally he signed.
Half a year later, in order to have better development opportunities, Chen Zhibin jumped to a new energy vehicle company in Wuxi as a system engineer, and informed the former owner of the new unit and position. The other party did not say whether it was in breach of contract, but when the compensation was paid, he clarified that the monthly compensation was adjusted to 8,626 yuan, which was 1,000 yuan more than before.
When he received the news from his former employer again, it was already a court summons sent by courier. According to the non-compete agreement he signed, the more compensation, the higher the liquidated damages, and the former owner claimed 1.81 million yuan from him. He wanted to negotiate with the former leader privately and make an appointment with HR to meet, but the other party only replied, "Follow the procedure." ”
In October last year, the Huishan District People's Court in Wuxi City, Jiangsu Province, made a judgment on this labor dispute case. According to the judgment, the court held that the scope of Chen Zhibin's non-compete restriction exceeded the scope of his actual production and operation at the time of his resignation, and infringed on his right to freedom of labor;
In the end, the court rejected Mingheng's claim.
In Guiding Case No. 190 of the Supreme People's Court, the Supreme People's Court also pointed out that it is in line with the legislative intent of the non-compete system to prevent the improper expansion of the scope of non-compete and restrict the reasonable flow of talents by regulating the content of the review of non-compete disputes.
This case was represented by Wu Shigang, and it was a lawsuit for more than a year. He recalled that in July 2020, Wang Shan, who was doing intelligent data analysis, planned to consult him before he moved to Shanghai Bilibili Technology Co., Ltd. (hereinafter referred to as "Bilibili") from Shanghai Wind Information Technology Co., Ltd. (hereinafter referred to as "Wind Information") to see if this violated the non-compete agreement.
At that time, Wu Shigang believed that the former's specific products were mainly financial information software, which provided financial institutions and customers with securities information, which was obviously different from the latter's products and customer base, and obviously did not constitute a competitive relationship.
As a result, after Wang Shan changed jobs, Wind Information applied for labor arbitration, and the arbitration commission required him to compensate 2 million yuan in accordance with the non-compete agreement on the grounds that the business licenses of the two companies had software technology development.
Wang Shan was dissatisfied with the arbitral award and sued the court. On June 29, 2021, the Shanghai Pudong New Area People's Court ruled that Wang Shan should perform the non-compete obligation and lowered the liquidated damages to RMB 240,000, and on January 26, 2022, the Shanghai No. 1 Intermediate People's Court ruled that Wang Shan had not violated the non-compete agreement and was not required to pay liquidated damages.
According to Guiding Case No. 190, the SPC holds that when a people's court examines whether a competitive relationship has been formed between a worker's self-employed or employed unit and the original employer, it should not be confined to the registered business scope of the enterprise, but should also conduct a comprehensive review in light of the actual business content, service targets or product audiences, and whether the corresponding markets overlap.
Xu Yang, who was claimed 420,000 yuan by the former owner, is still waiting for the first-instance judgment. After being sued, his 60-year-old father panicked and began to call relatives to borrow money; he chose to leave his new employer because of a labor dispute behind his back.
He said that the former owner had proposed mediation to reduce the liquidated damages to 100,000 yuan, but he refused. This time, he didn't want to admit it so "duty".
(Xu Yang and Chen Zhibin are pseudonyms in the article)