The system of noncompetition is regulated in China Labor Contract Law, “If a Employee has a confidentiality obligation, the Employer may agree with the Employee on competition restriction provisions in the employment contract or confidentiality agreement, and stipulate that the Employer shall pay financial compensation to the Employee on a monthly basis during the term of the competition restriction after the termination or ending of the employment contract.” By the article, a financial compensation is demanded for the conclusion of non-competition agreement, while no legal regulation on the effect of such articles when no compensation is paid. Therefore, on the issue, the adjudication or decision made by local courts or labor arbitration committee in China varies much, and today’s post is our analysis on it.
Recently, Bridge IP Law Commentary is consulted by some clients about whether it is necessary for an enterprise to pay its employees, who is subject to confidentiality obligation, the confidentiality fee. Today, we will answer such questions combining with the current laws and regulations as well as the practices. (the image above is the cover of the Guidelines of Trade Secret to Companies by DeBund Law Offices)
I. There only regulates the payment for the competition restriction but no fees for confidentiality
—Introduction to the Security Measures by the Courts in China
Recently, a judge from the Shanghai No.2 Intermediate People’s Court has published an article (in Chinese) Trial Experiences in Trade secret Infringement Cases (the article), and the Bridge IP Law Commentary has already introduce how to apply for evidence preservation in trade secret infringement cases in China. Today we would like to continuously introduce another part of the Article relating the security measures taken by the people’s courts in preventing the parties concerned in the proceeding from discourse of trade secrets.