Employees with a monthly salary of 45,000 yuan leave

The financial compensation for non-competition restrictions was only 2590 yuan per month.

And once you default,

We will have to compensate the company 1 million yuan in a one-time manner

Is such a non-competition agreement reasonable?

Recently, the Second Intermediate People's Court of Shanghai City issued a case. After trial, the court finally ruled that the company should pay financial compensation based on 30% of monthly salary.
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Su Moumou entered a technology company on December 10, 2019. The two parties signed a "Labor Contract" with a term from December 10, 2019 to December 9, 2022, stipulating that Su Moumou would engage in technical work and his salary was 45,000 yuan per month.

双方另签订一份《保密合同》，其中约定：Within a period of 24 months from the date of termination of the labor contract with the technology company, Su Moumou shall not operate on his own account or operate business for others that does not compete with the company. **科技公司按照上海市最低工资标准（即2590元/月）向苏某某支付竞业限制经济补偿费。苏某某如违反本合同， 应当一次性向科技公司支付100万元违约金。 **

On July 8, 2021, Su Moumou resigned from the technology company. From July 9, 2021 to June 15, 2022, the technology company paid Su Moumou 12 months of non-competition financial compensation at the standard of 2590 yuan. After the technology company failed to pay compensation as scheduled for several months, Su Moumou applied to the Arbitration Commission for arbitration, requiring the technology company to pay the difference in non-competition economic compensation based on 30% of its normal salary standard before leaving office, cancel the non-competition agreement, and Pay months of non-competition economic compensation, etc.

仲裁委裁决确认，科技公司与苏某某之间的竞业限制协议于2022年10月10日解除；科技公司应支付苏某某2021年8月至2022年6月竞业限制经济补偿差额12万余元；对苏某某的其他请求不予支持。 Both the technology company and Su Moumou refused to accept the arbitration award and appealed to the court.

The court of first instance held that the Arbitration Commission ruled that the non-competition agreement between the technology company and Su Moumou was terminated on October 10, 2022, and neither party sued the arbitration award to the court, which was deemed to have recognized the result of the award and confirmed it.

综合《保密合同》的签订时间、竞业限制期时长、苏某某的正常工资和违约金数额等因素，The court of first instance accepted Su Moumou's payment of 30% of his average monthly salary ，即1.35万元每月的标准作为其竞业限制补偿标准这一主张，故科技公司还应支付苏某某2021年8月至2022年6月期间竞业限制经济补偿差额12万余元。

At the same time, the court of first instance pointed out that the reason for the termination of the non-competition agreement between the two parties was that the technology company had not paid Su Moumou's non-competition economic compensation for more than three months after June 15, 2022. However, until the non-competition agreement was terminated on October 10, 2022, Su Moumou had been fulfilling its non-competition obligations in accordance with the agreement. Therefore, the technology company should also pay Su Moumou another 41,000 yuan in non-competition economic compensation during this period.

After the first-instance judgment, a technology company refused to accept it and filed an appeal with the Second Intermediate People's Court of Shanghai.

Shanghai Second Intermediate People's Court held that based on the ascertained facts, the non-competition clause agreed in the "Confidentiality Contract" between the technology company and Su Moumou belongs to a standard clause. If standard terms are used to conclude a contract, the party providing the standard terms shall follow the principle of fairness in determining the rights and obligations between the parties; if the party providing the standard terms unreasonably exempts or reduces its responsibilities, increases the other party's responsibilities, or limits the other party's main rights, the standard terms are invalid.

The economic compensation fee for competition restrictions stipulated in the "Confidentiality Contract" is significantly lower than Su Moumou's normal salary level, which is because a technology company uses the standard clause to unreasonably reduce its own responsibilities; The "Confidentiality Contract" stipulates that the compensation standard for non-competition is the minimum wage standard in Shanghai City, the non-competition period is 24 months, and the liquidated damages for Su Moumou's violation of non-competition obligations are 1 million yuan, which will lead to the rights and obligations of both parties being in an unbalanced state and violates the principle of fairness that should be followed in concluding a labor contract.

In summary, the Second Intermediate People's Court of Shanghai determined that the agreement on the non-competition compensation standard in the Confidentiality Contract between the technology company and Su Moumou was invalid. In this case, the technology company should pay Su Moumou economic compensation for non-competition in accordance with the legal standards.

In 2020, Article 36 of the "Interpretation of the Supreme People's Court on the Applicable Legal Issues in the Trial of Labor Dispute Cases (1)" stipulates that workers have fulfilled their non-competition obligations and required employers to pay monthly economic compensation based on the labor contract before the termination or termination of the labor contract. The people's court shall support the payment of 30% of the average monthly salary.

According to this regulation, Su Moumou advocated using 30% of his average monthly salary, or 13,500 yuan, as the compensation standard for non-competition. It is well-founded in the law and supported by the court of first instance. It is not inappropriate.

科技公司在2022年6月15日之后虽未继续定期向苏某某支付竞业限制经济补偿，但也并未向苏某某明确提出解除竞业限制协议，苏某某无从判断竞业限制协议是否解除，在此情况下，苏某某按照双方之间《保密合同》的约定继续履行竞业限制义务，并主张科技公司继续支付相应对价，亦具有合理性。 The arbitration ruling confirmed that the non-competition agreement between the two parties was terminated on October 10, 2022. The technology company's failure to sue for the content of the ruling should also be regarded as an acceptance of the ruling.

In summary, the Shanghai Second Intermediate People's Court ruled that the appeal was rejected and the original judgment was upheld.

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