Thursday 15 November 2007

The new labour contract law and non-competition agreements

According to an article in China International Business by China Law Blog's Steven Dickinson, China's new labour contract law means big changes in the kind of demands that companies can make on their employees -

The LCL imposes significant restrictions on the use of these agreements. The most important restriction is that non-compete agreements cannot be imposed on all employees. Only senior management and other employees with access to critical trade secrets can be required to enter into a non-competition agreement. The agreement must be limited in duration to two years, must be limited in geographic scope to a reasonable area and the employer must pay compensation to the employee during the period that the non-competition restriction is in effect.

Of course the best way of preventing such a contract restricting your future employment prospects is simply not to sign such an agreement, but - as the FOARP can attest to - this can be easier said than done. At least things will hopefully get a little easier for anyone who has signed such a contract.

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