Non-Compete Compensation in China

Pay monthly non-compete compensation after exit, or expect the restriction to fail.

Compensation is the price of the non-compete, not an optional bonus. It is typically paid monthly after termination for the length of the restriction (up to two years). If the contract states a figure, pay that figure unless it is unlawfully low. If it is silent, many cities and SPC Interpretation-related practice look to 30% of the average wage in the 12 months before exit, and not below local minimum wage. Stopping pay usually lets the employee stop complying. Liquidated damages for the employee’s breach sit beside, not instead of, the employer’s payment duty.

The classification screen

4 questions before you choose the route.

This page identifies the right question and evidence. It does not determine the legal outcome on a reader’s facts.

Did you agree a monthly amount in writing?

Use that amount unless it undercuts a local floor.

Amount

When does payment start?

After the last day, monthly, not ‘we will see if they compete’.

Start

Have you actually paid every month?

Bank proof beats a clause.

Proof

Do you still want the restriction?

You may waive and stop pay; do it in writing.

Waiver

Working rule: Compensation is the price of the non-compete, not an optional bonus. It is typically paid monthly after termination for the length of the restriction (up to two years).

What changes the answer

The signal ledger.

These facts move the question beyond a label and into a product, money-flow and control analysis.

Signal

Ask the operating question

Why it changes the route

Zero pay

Has any month of the restriction gone unpaid?

Non-payment is the standard defence to enforcement.

Token amount

Is the clause RMB 1 per month or far below one-third?

Tribunals often lift the figure or the restriction.

Pay only if they compete

Did you withhold until a competitor appeared?

That structure is backwards and usually fails.

Prepare before you escalate

Bring a compact evidence docket—not a pitch deck.

Give a compliance team or counsel the operating facts that reveal the perimeter.

01ClauseCompensation amount, term and payment dates.

02Average wage12-month payable wage used for the one-third test.

03Payment proofsMonthly transfers after the last day.

04Waiver or demand lettersIf you stopped or the employee demanded pay.

Common confusions

Questions people ask before they build.

Short answers for orientation. The right result can change with the service model and current rules.

Can we set compensation at zero if we pay a huge signing bonus?

No. Post-termination monthly compensation is its own duty. A past bonus does not usually buy a free two-year ban.

What if the employee refuses to take the money?

Tender it in a provable way (bank transfer to the known wage account). Do not treat a refused transfer as a reason to skip the duty without advice.

Primary authorities

Reviewed sources support orientation, not a fact-specific assessment.

National laws database (NPC)

PRC Labor Contract Law (gov.cn)

Ministry of Human Resources and Social Security

Supreme People’s Court