A post-employment non-compete in Mainland China is not effective merely because an employee signed a broad template. Labor Contract Law Articles 23 and 24 limit the eligible population, require post-employment compensation and cap the restricted period at two years. Since September 2025, the Supreme People’s Court has expressly tied effectiveness to whether the employee knew or accessed trade secrets or intellectual-property-related confidential information, and tied scope, territory and duration to that information.
Employers should therefore restrict selectively, document access, tailor the competitive field and territory, budget monthly compensation and decide at exit whether to enforce, narrow or release the obligation. Confidentiality and trade-secret protection are related but separate tools. Employees should examine effectiveness, payment, proportionality and actual competing activity before assuming either that the clause is absolute or that it can be ignored.
Direct answer
Build the restriction from the information risk, not the job title. Identify the secret or IP-related confidential matter, prove the employee’s knowledge or access, define the competing activity that threatens it, set a proportionate territory and duration, and operate compensation after exit. Review the file again before enforcement.
Record 3139 remains the detailed guide to the 2025 SPC Interpretation II and governance redesign. Record 3268 remains focused on non-compete compensation. This page owns the general lifecycle from drafting through release or enforcement.
Eligible personnel
Labor Contract Law Article 24 limits post-employment non-competes to senior management, senior technical personnel and other personnel with confidentiality obligations. A senior-sounding title alone does not establish the necessary connection.
SPC Interpretation II Article 13 states that where the employee did not know or access the employer’s trade secrets or confidential matters related to intellectual property, a court should support a request to confirm that the clause did not take effect. Maintain a role-and-access record showing systems, projects, pricing, customers, code, formulas, plans or other protected material actually encountered.
Blanket restrictions across the workforce are difficult to reconcile with this framework and create avoidable compensation cost.
Protected information
Define the legitimate information interest with precision. The 2025 Anti-Unfair Competition Law describes trade secrets as technical, operational or other commercial information that is not known to the public, has commercial value and is subject to corresponding confidentiality measures.
Not every internal fact is a trade secret, and not every confidentiality obligation justifies stopping future employment. Classify information, restrict access, mark sensitive material, use appropriate controls, train personnel and preserve access evidence. A non-compete cannot substitute for reasonable secrecy measures.
Proportionate scope
Interpretation II Article 13 also allows the employee to challenge the excessive portion where the restricted scope, territory or duration is not suited to the secrets or IP-related confidential matters known or accessed.
Define competition by the relevant product, service, technology, customer market or business line. A group’s entire registered business scope is often a poor proxy. Geography should follow where the employer competes and where the information can be exploited. Duration should follow the information’s useful competitive life and may not exceed two years.
Use the narrowest restriction that protects the documented risk. A worldwide two-year ban may be defensible for some global technical roles but not for an employee with local, short-lived information.
Post-employment compensation
Article 23 requires the employer to pay economic compensation monthly during the post-employment restricted period. State the amount, due date, account, term, tax handling and failed-payment process. Compensation should begin when employment ends, not when the employer later learns of a competitor.
Under the consolidated SPC Labor Dispute Interpretation I, where the agreement omits the compensation amount and the employee performs, the employee may claim 30 percent of the average monthly wage during the 12 months before exit, paid monthly, subject to a floor at the local minimum wage. Local rules and a valid express agreement can affect the analysis.
If nonpayment caused by the employer continues for three months, the employee may request termination of the non-compete. Record 3268 addresses compensation operations in more detail.
Maximum duration
The post-employment period cannot exceed two years. The maximum is not the default. Match duration to how quickly the protected information becomes stale and review whether a shorter period is adequate.
State a clear start and end date. Avoid automatic extensions triggered by an allegation or dispute unless current law clearly permits the mechanism.
In-service restrictions
Interpretation II Article 14 addresses in-service non-competes for senior management, senior technical personnel and other employees with confidentiality duties. An employee cannot invalidate such a clause merely because it operates during employment or because no separate economic compensation was paid for the in-service period.
Draft in-service duties separately from post-employment restrictions. Address outside employment, competing businesses, investments, consulting, conflicts, use of company resources and disclosure duties. Ordinary loyalty and conflict rules still require proportionate, lawful application.
Exit decision
Before the last working day, decide whether to enforce, narrow or release the restriction. Review current access, sensitivity, likely destination, cost, term, scope and evidence. Notify payroll and preserve payment instructions if enforcement continues.
If the employer releases the employee during the restricted period, consolidated SPC rules permit employer termination of the agreement but can allow the employee to request three additional months of non-compete compensation. Draft the release date and final payment carefully.
Do not leave the employee uncertain while payments stop informally.
Evidence of compliance or breach
For compliance, preserve the agreement, eligibility memo, access map, scope analysis, exit notice and every compensation payment. For suspected breach, collect lawful evidence of the new employer or business, role, competitive activity and dates.
A new employer in the same broad industry does not automatically prove breach. Compare the actual role and business to the valid restricted scope. Avoid unsupported accusations to the employee’s new employer or customers.
Interpretation II Article 15 supports return of compensation already paid and agreed liquidated damages where an employee violates an effective restriction. The amount and enforcement can still be disputed. Preserve causation and proportionality evidence.
Confidentiality and trade secrets
Confidentiality can operate during and after employment without imposing the same ban on working for a competitor. A trade-secret claim targets improper acquisition, disclosure or use of qualifying information. A non-compete temporarily limits competitive activity for eligible personnel in exchange for compensation.
Use these tools for their distinct purposes. A weak secrecy program should be fixed through information governance, not covered by a wider employment ban. The revised Anti-Unfair Competition Law, effective since 15 October 2025, governs trade-secret conduct and evidentiary consequences independently of the labor clause.
Non-solicitation and related terms
Customer and employee non-solicitation terms are not automatically outside non-compete scrutiny merely because they use a different label. Their practical effect, scope and connection to protected interests require current local analysis.
Garden leave, notice duties, invention assignment, data return and confidentiality can supplement a lawful program. They do not eliminate statutory post-employment compensation where the term functions as a non-compete.
Cross-border and group issues
International templates should not be translated without localization. Identify the correct Chinese employer, governing law, forum, payment currency, restricted business and protected entity. An affiliate cannot assume it owns another entity’s employment covenant or secrets.
For employees serving several affiliates, align labor contracts, confidentiality, intellectual-property ownership, data access and compensation. Cross-border evidence collection must comply with applicable data rules.
Disputes and interim action
Non-compete disputes ordinarily proceed through labor arbitration before court proceedings. Act promptly to preserve evidence and assess available interim or property-preservation measures with counsel. The general labor-arbitration limitation framework and local procedural rules apply.
Employees should keep the agreement, termination papers, compensation history, job descriptions and evidence showing the real activities of the new role. Employers should test effectiveness and proportionality before filing rather than relying on deterrent language.
Employer checklist
- Limit eligibility to employees with documented protected access.
- Identify the specific trade secrets or IP-related confidential matters.
- Tailor business scope, territory and duration.
- Set monthly compensation and a payment workflow.
- Review the restriction after material role changes.
- Decide to enforce, narrow or release at exit.
- Preserve access, exit and payment evidence.
- Investigate suspected breach lawfully.
- Keep confidentiality and trade-secret controls independent.
- Audit the restricted population and cost annually.
Common mistakes
- Requiring every employee to sign the same restriction.
- Treating a title as proof of secret access.
- Defining every group business worldwide as competition.
- Using the two-year maximum automatically.
- Failing to pay compensation monthly.
- Waiting for competitive employment before starting payment.
- Assuming liquidated damages replace compensation.
- Confusing confidentiality with a ban on employment.
- Importing a foreign template without localizing employer and scope.
Sources
- Labor Contract Law of the People’s Republic of China, especially Articles 23–25.
- SPC Interpretation II on Labor Disputes, especially Articles 13–15, effective 1 September 2025.
- SPC Interpretation I on Labor Disputes, especially Articles 35–40.
- Anti-Unfair Competition Law of the People’s Republic of China, revised in 2025 and effective 15 October 2025.
- Labor Dispute Mediation and Arbitration Law.
General legal information only; not legal advice for a particular restriction, employee or dispute.
