You have to pay your old company $100,000 after you quit?Because of the violation of this agreement

2022-05-29 0 By

Li Hongyuan was an employee of an education company in Beijing. During her tenure, she mastered the company’s competitive trade secrets and other information.After leaving the company, Li Hong joined a software company in Shanghai in the same industry as the education company during the period of competition restriction.The education company took the case to court.After hearing, Beijing Haidian Court found that Li Hong’s behavior violated the non-competition agreement with the education company and constituted a breach of contract, and ordered Li Hong to pay the education company a penalty of 100,000 yuan.Brief introduction of the case The education Company signed a labor contract with Li Hong from September 25, 2019 to September 24, 2020.Since Li Hong may have access to the intellectual property rights, trade secrets or other information of the education company that has an important impact on the competitive advantage during her tenure, both parties agree in the labor contract that Li Hong shall fulfill the obligation of non-competition after her resignation.In 2020, Li Hong proposed to resign, and the education company issued a notice of competition restriction, which showed that the period of competition restriction was from October 11, 2020 to April 10, 2021. During the period of competition restriction, Li Hong was not allowed to establish labor relations, labor relations and labor dispatch relations with companies or other organizations that had competitive relations with the education company.Li Hong signed the notice for confirmation.After leaving, Li Hong joined a software company within the period of non-competition, which is one of the non-competition companies listed in the notice of non-competition.The education company believes that Li Hong violated the non-competition obligation after leaving the company, which caused huge losses to it, including customer loss, market share loss and corresponding rights protection costs.Accordingly, the education company sued to the court, asking Li Hong to pay liquidated damages of 100,000 yuan.The court heard that Li Hong was actually engaged in software research and development and promotion in an education company, but after leaving the company, she joined a software company as a software engineer. The nature and content of the two jobs are highly similar, so it can be concluded that the education company and the software company have a competitive relationship.After terminating the labor contract with the education company, Li Hong established labor relations with the software company clearly stated in the notice of competition restriction, which violated the agreement of competition restriction of both parties and constituted a breach of contract.The court finally ordered Li Hong to pay the education company 100,000 yuan as penalty for violating the non-compete agreement.The term “non-competition restriction” refers to the stipulation in the labor contract, intellectual property right ownership agreement or technical confidentiality agreement by the employing unit on the workers who have the responsibility to keep the employing unit’s trade secrets or have important influence on the competitive advantage of the enterprise.Within a certain period of time after the termination or rescission of the labor contract, the laborer may not hold a post in the employing unit that produces the same kind of products, operates the same kind of business or has other competitive relations, nor may he or she produce the same kind of products or operate the same kind of business in competition with the original unit.Article 23 of the Labor Contract Law of China provides for the restriction of competition: “The employer and the laborer may agree in the labor contract to keep the employer’s business secrets and confidential matters related to intellectual property rights.The employing unit may, in the labor contract or the confidentiality agreement, agree with the laborer on non-competition clauses, and agree to give the laborer economic compensation on a monthly basis within the period of non-competition after rescind or terminate the labor contract.If the laborer violates the agreement on the restriction of competition, he shall pay liquidated damages to the employer in accordance with the agreement.”It can be seen that the non-competition obligation includes the non-competition obligation of the laborer and the economic compensation obligation of the employer.The employing unit shall, after terminating or rescinding the labor contract, give economic compensation to the laborer, and the laborer shall perform the non-feasance obligation of not entering the job or engaging in business activities that have a competitive relationship with the original unit.In this case, Li Hong, as an employee of an education company, is engaged in software development and promotion. In her work, she is able to remove customer information, software programming and other trade secret information, which should belong to the non-competition personnel.Both parties have agreed the non-competition obligation in the labor contract, and Li Hong has signed the notice of non-competition for confirmation.If Li Hong fails to perform the obligation of non-competition, she shall pay liquidated damages to the employer.Sources: Guangxi High Court, Beijing Haidian Court