Adjustment Of Excessive Non-competition Liquidated Damages And The System Improvement Study

With the gradual improvement of China’s market economy, competition between companies becomes even fiercer and the flow of talents is also more and more frequent, but these situations also exacerbate the leakage and loss risk of employers’ trade secrets and intellectual property information. Therefore, growing numbers of employers use non-competition system to protect their commercial interests and competitive advantage. The system can also help limit the flow of talents and achieve the purpose of retaining talents at the same time. However, usage of non-competition agreement to protect trade secrets may limit the rights of workers such as the free choice of employment. Coupled with the big gap between China’s workers and employers negotiating position and imperfection of the non-competition legislative rules, non-competition systems might become the tool of the original employers to abuse their rights. Especially the frequent appearance of disputes caused by excessive non-competition liquidated damages making the judicial judgment and adjustment of high non-competition liquidated damages urgent problems to be solved. The regulation of non-competition system should continue to be improved. This paper analyzes and discusses the solution of the problems mentioned above from the following aspects.In the first part, by the analysis of a typical case, the author identified the problem of excessive non-competition liquidated damages agreement adjustment and regulation.The second part analyzes the non-competition system from the jurisprudence angle. It also analyzes the value conflicts between workers and employers in the non-competition system and discusses the nature of the non-competition liquidated damages.The third part introduces the interest coordination and adjustment principles of non-competition liquidated damages, which includes the safeguarding of the living right of workers, fairness and good faith principle. Even more this part discusses the function of above principles to coordinate interest conflicts in the non-competition agreement, especially the guiding effect for the reasonable adjustment of non-competition liquidated damages.The fourth part includes identification of excessive amount non-competition liquidated damages and reasonable adjustment rules. Mainly by referencing contract law system and theory, highlighting the special protection of the labor laws for workers and citing the three principles with judgment support, the author offered reasonable rules to judge the amount of non-competition liquidated damages is excessive or not and standards of specific adjustments.The fifth part puts up with thinking for the further improvement of regulation for the non-competition system, which mainly suggests to definite rules and regulations construction from the entire system view rather than just simply cap on non-competition damages to reduce the presence of excessive amount of liquidated damages. All in all, above efforts are all for the consideration to make contribution to the further perfection of reasonable non-competition liquidated damages agreement between both employers and employees and protection of both parties’legal interests.