An Empirical Study On The Application Of Non-compete Law In China

Labour Contract Law of the People's Republic of China and Interpretations of Supreme People's Court on Several Issues Relating to Laws Applicable for Trial of Labour Dispute Cases(?)have special provision on competition restriction,which is an important system protecting corporate trade secrets.Since the release of these two laws,scholars have studied the terms of the competition restriction and proposed the inadequacies of legislation.However,most of these studies were discussed from the perspective of academic theory,and seldom focused on the problems faced by judicial practice.This paper starts from the level of judicial practice,summarizes the main controversial focus through analyzing the judgments published by the courts in the past three years,and strives to present the court's judgment standards of competition restriction cases,so as to further propose corresponding measures to solve the problem.In this way,some of the legal applicability problems of non-competition restriction in China could be solved.This paper is structured by 3 proportions:introduction,body and conclusion.The body includes 3 chapters:The first chapter is an analysis of the foundation of non-competition system.Firstly,the term of non-competition is defined and distinguished from loyalty duty.Secondly,the characteristics of the non-competition system are introduced.Finally,the original intention of the non-competition system is illustrated.The second chapter is the empirical study on the court judgements of the non-competition disputes in China.The selected court judgement cases are introduced in the beginning.Then four main legal controversial focuses that mainly existing in the majority of cases are summarized:(?)The qualification of the subject of competition restriction.(?)Whether the employee should bear the liability for breach of contract during the employment period.(?)Whether the defect of economic compensation agreement or payment affect the effectiveness of non-competition.(?)Whether the penalty for the breach of non-competition need to be adjusted.Last,the judgement standards of the court are analyzed regarding to the four focuses of disputes.The third chapter makes recommendations on the court judgments of competition restriction disputes.By scrutinizing the main contentious focus of the sample cases in the Chapter Two and the court's judgement standards,corresponding recommendations are put forward,which can improve the legal applicability of judicial decision-making for non-competition disputes.The recommendations include:(I)Clearly regulating that the employer shall bear the initial burden to prove the qualification of the employees.(II)Clearly regulating that the non-competition penalty is applicable during the employee's working period.(?)Clearly regulating that employees have the right not to fulfill the obligation of non-competition in the case of unclear financial compensation agreement or defective payment.(IV)Identifying and specifying the factors that need to consider regarding the adjustment of non-competition penalty.