Non-Compete Agreements in China — Enforcement & Limits

Non-compete agreements in China are enforceable but subject to strict statutory limits — including a maximum 2-year term and mandatory compensation of at least 30% of prior average monthly salary.

Legal Framework

Non-compete clauses are governed by the Labor Contract Law (Article 23–24). They apply only to senior management, senior技术人员, and employees with access to trade secrets. Non-compete cannot be applied to ordinary employees.

Key Requirements

• Maximum term: 2 years after termination
• Mandatory compensation: At least 30% of average monthly salary for the 12 months prior to termination (per SPC司法解释)
• Geographic scope: Must be reasonable and specified
• Business scope: Limited to the employer's actual business

Enforcement and Remedies

Employers can seek injunctions to enforce valid non-compete clauses and claim liquidated damages for breach. Courts may reduce excessive liquidated damages. If the employer fails to pay compensation for 3 months, the employee can terminate the non-compete obligation.