[Direct answer]In the Beijing area, the obligation of non-compete after resignation begins to be calculated from the date of termination or expiration of the labor contract. According to Article 24 of the Labor Contract Law of the People's Republic of China (adopted on June 29, 2007 and implemented on January 1, 2008), the non-compete period shall not exceed two years. During the non-compete period, the employer shall, in accordance with the provisions of the labor contract, provide the employee with economic compensation on a monthly basis. Therefore, from the day after the resignation to a period not exceeding 24 months, the employee is subject to the obligation of non-compete, and the employer is obliged to pay compensation on a monthly basis.Labor arbitration and work-related injury compensationIn these types of services, non-compete disputes usually involve three aspects at the same time: the scope of obligations, compensation, and breach of contract.

I. Problem background and typical scenarios

There are four common disputes in the practice of non-compete clauses: First, the company fails to pay compensation on a monthly basis, and the employee claims that the clause is not effective or requests its termination; Second, the employee joins a direct competitor after leaving the company, and is claimed to have breached the contract solely on the basis of similarities in the company's name; Third, the scope of the non-compete clause is too broad, including prohibiting employment within the company, restricting investments in competitors, and even including clauses that require the employee to keep silent about the company's business; Fourth, the company delays in implementing the non-compete clause, and the employee is unable to claim compensation.Business and contract disputes in enterprisesIn such business transactions, the design of clauses involving trade secrets also requires careful consideration.

II. Key points of contention

Focus One: The starting point and basis of the non-compete obligation. Focus Two: Whether the scope of personnel subject to the non-compete restriction is appropriate. Focus Three: Whether the scope of business and geographical restrictions of the non-compete restriction are reasonable. Focus Four: Compensation standards and payment methods. Focus Five: Provisions and adjustments of the penalty clause. Focus Six: Methods for workers to request the termination of the non-compete restriction. Focus Seven: Consequences of an employer illegally terminating the non-compete restriction.Special services and other casesThe column provides a more detailed explanation of this issue.

III. Professional analysis by Henglue Law Firm

When handling non-compete restriction disputes, Henglue Lawyers typically focus on four aspects. Firstly, scope review: The scope of the non-compete restriction, geographical and position restrictions must match the actual scope of the trade secrets. If the clause prohibits employees from entering any enterprise in the industry or investing in any peer enterprise, it clearly exceeds the necessary limits, and the court may adjust it according to law. Secondly, compensation review: The monthly compensation should be operable. In practice, many disputes arise from companies claiming to have paid but unable to provide evidence. Thirdly, penalty review: If the penalty is set too high, the court may adjust it appropriately at the request of the parties. Fourthly, release and termination mechanisms: After leaving the company, workers can request release through consultation or under certain circumstances. If the company fails to initiate the non-compete restriction and pay compensation within a certain period after leaving the company, the clause may also be legally determined as no longer binding. Taking the handling of a labor dispute case as an example, the party issued a notice of forced resignation and claimed economic compensation because the company failed to pay labor remuneration on time and in full. The dispute also involved the continuous calculation of working years and the determination of unpaid annual leave wages. Through sorting out the facts such as social insurance payment records, wage payment subjects, continuity of working location and content, and whether the legal representative overlaps, the lawyer argued that the original working years should be merged and finally obtained support. This path suggests that non-compete restriction disputes also rely on a comprehensive review of evidence, especially labor contracts, severance letters, non-compete clauses, compensation payment records, and new employment materials.Business and contract disputes in enterprisesThe column provides further explanation of this idea.

IV. Practical suggestions and legal basis

Action suggestions: First, the non-compete clause should be limited to employees who actually have access to trade secrets; Second, clarify the list of competing enterprises or judgment criteria to avoid an overly broad scope; Third, agree on the compensation standard and payment method paid monthly; Fourth, the amount of the penalty should be commensurate with the actual losses to avoid being either too high or too low; Fifth, complete the handover and written confirmation of the resignation certificate when leaving the job; Sixth, workers can monitor whether the non-compete agreement is actually implemented and the compensation is paid, and request its termination if necessary; Seventh, promptly collect evidence of the new job and income after a dispute arises. Legal basis: Articles 23 and 24 of the Labor Contract Law of the People's Republic of China (adopted on June 29, 2007 and implemented on January 1, 2008); Articles 36 to 38 of the Interpretation of the Supreme People's Court on Legal Issues Concerning the Trial of Labor Dispute Cases (implemented on December 29, 2020 and January 1, 2021) regarding non-compete restrictions. For details on the adjustment of the penalty, please refer to the relevant provisions.Business and contract disputes in enterprisesFor details regarding the arbitration process, please refer to the following document.Special services and other casesThe specific application shall be subject to the currently effective laws, regulations, and judicial rulings.

5. Henglu Law Firm's Reminder

Firstly, the non-compete obligation shall commence from the date of termination or expiration of the labor contract, and the maximum duration shall not exceed two years. Secondly, the company's failure to pay compensation will directly affect the binding force of the clause. Thirdly, if the scope of the non-compete obligation is too broad, the court may adjust it according to law. Fourthly, if the penalty for breach of contract is unreasonably high, the party may request an adjustment. Fifthly, after leaving the job, the employee should strictly avoid accessing the former employer's trade secrets. Sixthly, the three clauses of scope, duration, and compensation are indispensable. Seventhly, it is more beneficial to preserve evidence as early as possible after a dispute arises.

VI. Frequently Asked Questions

Q1: Does the non-compete clause start from the day of resignation?

Yes. According to Article 24 of the Labor Contract Law of the People's Republic of China, the duration of the non-compete obligation shall not exceed two years, calculated from the date of termination or expiration of the labor contract. In practice, the date of resignation stated in the resignation certificate or the actual termination date of the labor relationship is generally used as the reference. If the labor relationship is terminated due to the company's arrears in wages, the starting point shall still be the date of termination of the labor relationship. Therefore, from the date of resignation to no more than 24 months, the employee is subject to the non-compete obligation, and the employer is obliged to pay economic compensation on a monthly basis.Special services and other casesThe column provides a more detailed explanation of this issue.

Q2: What is the maximum duration of a non-compete agreement?

The maximum period shall not exceed two years. According to Article 24 of the Labor Contract Law of the People's Republic of China, the period of non-competition restriction shall not exceed two years. If the contract stipulates a period exceeding two years, the exceeding part shall be invalid. At the same time, the objects of non-competition restriction are limited to the employing unit's senior managers, senior technicians, and other personnel with confidentiality obligations, and it is not applicable to all employees. If the scope of the clause is too broad, the court may adjust it according to law.

Q3: If the company doesn't offer non-compete compensation, can they still restrict me?

If the company fails to pay the economic compensation as agreed, the employee may, in accordance with Article 38 of the Labor Contract Law, claim the termination of the labor contract on the grounds of the company's failure to fulfill its obligations under the labor contract, or claim corresponding compensation in arbitration. In practice, if the company fails to initiate a non-compete agreement and pay compensation within a certain period after the employee's departure, the employee may also request that the clause no longer be binding. However, the employee should still strictly abide by the obligation of confidentiality and avoid accessing and using the trade secrets of the former employer.

Q4: How to determine a reasonable scope of non-compete clauses?

The criteria for judgment are necessity and appropriateness: the scope of trade secrets that the competitor's business should contact should be equivalent to that of the worker; the geographical restrictions should be adapted to the actual scope of market competition; the objects should be limited to those who have actually contacted trade secrets. In practice, it can adopt the method of listing specific competing enterprises or describing the business scope to reduce ambiguity. If the clause prohibits employees from entering any competitor's company or investing in any competitor's enterprise, which is obviously beyond the necessary limit, the court may adjust it at the request of the parties.

Q5: How much is the penalty for breaching the non-compete agreement?

The breach of contract penalty shall be paid in accordance with the contract provisions. However, if the amount is too high, the parties may request the people's court or arbitration institution to make appropriate adjustments. In practice, the actual losses caused by the violation of the non-competition obligation, the employee's salary level in the original position, the duration of the non-competition obligation, and the employee's income from the new job are usually taken into account to make a comprehensive judgment. If the employer claims that the losses are significant, it should provide corresponding evidence. It is recommended to set a reasonable range in the contract to avoid excessive high or low amounts.

This article is written based on the common judicial interpretation in the Beijing area. If the case occurs in other regions, it is recommended to consult local lawyers to verify the regional differences.

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence materials to avoid missing the statutory time limit.Labor arbitration legal services·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. In the event of a dispute, please consult a practicing lawyer in a timely manner.