The Application Of Penalty Of Appointed Non-competition

As one beforehand remediation, appointed non-competition maintains a freeflow of talent and protection of commercial secrets of the balance.It is to protectbusiness secrets through restraining employees’ freedom of choosing jobs andfreedom of finding jobs. However, clearly stipulated in the Constitution of thePeople’s Republic of China and the Labor law of the People’s Republic of China,these two rights of freedom cannot be deprived. In order to balance the benefitconflict and to erase the equality caused by the conflict, the Labor Law stipulates toprovide some extent of penalty to the employers who has undertaken thenon-competition. But the Labor Law doesn’t stipulate the accurate amount, paymentand other contents of the penalty, so that the weak labors cannot get their deservedpenalties after their freedom rights have been deprived. It not only harms the fairnessand justice of Laws, but also damage the society harmony severely. Therefore, howto balance the penalty of appointed non-competition becomes increasinglyimportant.The applicable principle of non-compete is the principle of good faith in theContract Law and business secret protection principle as the legalbasis.Non-compete compensation as a mean of protect the laborer rights,whichimplements the legislative purpose of China Labor Law,imply the protection oflaborer’s essence justice,and max the balance between employers and workers.Because the Labor Contract Law of P.R.C has not made a specific and detailedstipulation concerning the penalty of appointed non-competition, the provincial andmunicipal court, on the basis of their own stipulated local laws and regulations, todeal with the dispute caused by penalty of appointed non-competition in theirlegislation practice. Fortunately, in February,2013the Supreme People’s Courtpublished a fourth several explanations on dealing with the labor dispute oflegislation application problems (hereafter Explanations IV). The Explanations IVmake a contribution to perfect the application system of penalty of appointed non-competition. Among the article6to9are regulations on conventionalnon-compete compensation, such as the lower limit of compensation amount ofregulation, as well as to the employers and laborers to the provisions of the right tounilaterally terminate.The judicial interpretation of not only has enlarged the judicialprotection of laborer’s rights in the strength and determination, but also for ourcountry application of non-compete compensation to perfect.The thesis is to propose four suggestion for perfecting the penalty system ofappointed non-competition in China. Firstly,clearly stipulate the applicative targetsof appointed non-competition. The author advises to enumerate the applicativetargets in law articles so that the employers are prevented to abuse their powers, tosign agreements of non-competition at their willingness to harm the labors’ freedomof choosing jobs, and to reduce the costs on penalty of employers as well.Secondly,appoint clearly the effectiveness relations between the penalty of non-competitionand agreement of non-competition. The author recommends that in law articles theagreements of non-competition which does not clearly stipulate the penalty areinvalid, and those agreements of non-competition which do not reasonably stipulatethe penalty shall be changeable, revocable so that to protect the labors’ lawful rightsand interests. Thirdly, clearly stipulate the legal standard of penalty. TheExplanations IV has already set a reasonable lower limit of the penalty, however, itdoes not have a clear upper limit. Therefore, the author considers that, in legislation,the upper limit should be set according to the evaluation of business secrets ofvarious industries so that it can meet the different demands in different area.Finally,clearly stipulate the payment of penalty of appointed non-competition. There isexisting various flexible payment in practice, however, the employer maybe exploitthe loophole to damage the labors’ rights and interests. Therefore, the authorsuggests that it should affirm and stipulate those existing payments that are in use onlegislation level.