Employer to compensate ex-employee for signing non-competition clause
E021226Y9 Jan. 2003（E41）
Council of Labor Affairs is to promulgate a set of rules recently to prohibit an employer, when signing with his employee a non-competition clause (which forbids the employee from working for a fellow company for a certain period of time after his resignation), from unilaterally imposing punitive damages for breach of such clause, without providing any measures to compensate his ex-employee for the time between jobs. Nor may the employer willfully demand his employee to sign the non-competition clause by taking advantage of his urgency to have a job.
According to the CLA, the non-competition clause should only be signed with employees whose positions allow them to access trade secrets, or to participate in the technical R&D. To those who hold lower positions and possess only common skills, and those who are denied the chances to access an advantageous technology or business advantages that companies desire to protect, the non-competition clause is simply unnecessary.
Further, a non-competition clause should specify the term and area of non-competition, and such restrictions should not go beyond the scope of business conventions. According to the court judgments, the term of non-competition should not be longer than two years, and the damages should not exceed 24 times the employee's monthly salary at the time of resignation.
