Non-competition agreement invalidated upon employees being discharged

  The Council of Labor Affairs has finalized the high-profile guidelines for handling non-competition agreement.  According to the guidelines, the non-competition agreement shall take effect only when an ex-employee engaging in competition practice is in apparent breach of good faith.  For example, an ex-employee stealing away his/her former employer's clients and information in bulk is considered a violation of the doctrine of good faith.  If an employee leaves the job due to the employer's fault, such as being fired, the non-competition agreement will be deemed invalid.  And, employers should not force or threat employees into signing a non-competition agreement, or demand them enter into such an agreement by taking advantage of their eagerness to land a job.

   According to the CLA, the purpose for enterprises to ask their employees sign a non-competition agreement is to protect their trade secrets.  The employers can enter into a non-competition agreement only when the employees' posts allow them to access corporate trade secrets or participate in the R&D of the company.  Whereas workers with general skills or hold posts that are denied access to corporate trade secrets, there is no need to sign a non-competition agreement.  A non-competition agreement shall specify the types of business sought to be restricted, the geographic areas of restriction and the duration of restriction.  The duration of a non-competition agreement is two years at most.  The guidelines also specifies that the fields of restriction shall not exceed the company's current field and scope and unfairly obstruct employee's right to work and choose his work.