Salaried workers trapped in non-compete agreements have been given a hard lesson by large tech giants.
Many "workers" are trapped by non-compete agreements.
"Looking back on the experience of being claimed for compensation under a non-compete clause, it feels like a nightmare," Xiao An, a former employee of a community e-commerce platform, told Radar Finance. He earned less than 100,000 yuan in total at the company, but was claimed for nearly 300,000 yuan in compensation, and the claim was supported by the court.
In comparison, the amount claimed from Xiao An is not large. Yuan Li, who worked at a low-price-focused e-commerce platform for five years, was claimed for more than 1.5 million yuan by her former employer on the grounds of violating the non-compete agreement.
A case exposed not long ago shows that the legal department of a new car-making force filed a labor arbitration against a resigned employee for violating the non-compete obligation. In addition to requiring the employee to continue performing the non-compete obligation, it also demanded the return of the paid non-compete compensation, the proceeds from the sale of restricted stocks, and the payment of liquidated damages, with the claimed amount reaching nearly 10 million yuan.
As a lawyer specializing in non-compete cases, Cui Can, a lawyer at Taiho Law Firm, has represented non-compete dispute cases with the highest amount reaching as high as 12 million yuan.
At present, the number of workplace people trapped in non-compete agreements has reached a considerable scale. Large companies such as Pinduoduo, Tencent, and ByteDance have all been exposed to non-compete agreement disputes.
Up to now, the Anti-Non-Compete Alliance initiated by Cui Can has gathered more than 3,000 workplace people. In his view, non-compete agreements have gradually been alienated into a tool for some large companies to control the resignation rate at low cost.
Due to the inability to pay compensation, many "workers" have been restricted from high consumption, and their lives have fallen into hardship.
"After leaving my former employer, I became a judgment defaulter"
Yuan Li, in her 30s this year, is a former employee of a low-price-focused e-commerce platform. In July 2017, Yuan Li joined the platform through social recruitment. According to Yuan Li, after joining the company, she clocked in for work at 11 a.m. every day and often got off work after 11 p.m.
Due to differences of opinion with her leader and the leader's dissatisfaction with her work ability, Yuan Li was later transferred to a front-line customer service position.
Although the work intensity was very high, Yuan Li confessed that the hard-working spirit of the company at that time infected her a lot, "It's just that my ability is really limited, so I couldn't keep up with their rhythm, and I was transferred to the customer service post to learn."
Later, Yuan Li became pregnant. She said that she still insisted on working during her pregnancy, but she lost the opportunity to get year-end bonus and a pay rise.
After working in the front-line customer service post for more than a year, Yuan Li was transferred to a new department. During this period, the secondary supervisor of Yuan Li's team was replaced for some reasons, and the new leader arranged her to another position.
Yuan Li said that her career planning is far from this new position, and she has no employee options in this company. So Yuan Li refused the arrangement of adjusting her work position, but the company replied that if she did not agree to the job transfer, she would need to resign.
Yuan Li said that she did not have the idea of resigning at that time, so she finally chose to compromise on the job transfer. Because it just coincided with the home office during the epidemic, Yuan Li said that she did not come into contact with the core content after she arrived at the new position.
After working for more than a month, Yuan Li felt that this position was really not suitable for her, so she proposed to resign during the home office period.
Yuan Li said that after she proposed to resign, the leader was very displeased. The leader told her that originally she was going to be dismissed, and it was he who selected her from dozens of candidates and gave her this good position, but Yuan Li still proposed to resign, so the company required Yuan Li to sign a non-compete agreement.
It is understood that the non-compete agreement signed by Yuan Li and the company stipulates that the non-compete period is from May 28, 2022 to February 27, 2023.
In accordance with the provisions of the agreement, Yuan Li shall not establish an employment relationship with an economic entity or other organization that has a competitive relationship with Party A or any of Party A's affiliated enterprises during the non-compete period.
These enterprises with restricted employment include Alibaba, Ant Financial, Tencent, Meituan-Dianping, JD.com, Vipshop, NetEase Yanxuan, ByteDance, Dewu, Xiaohongshu, Amazon, etc.
In January 2023, when the non-compete period was coming to an end, Yuan Li began to prepare to find a new job. After submitting her resume, Yuan Li quickly received an interview invitation from a company, so she went to the new company for an interview at the time agreed by both parties.
During the interview, Yuan Li wandered around the downstairs of the new company, had breakfast and drank coffee. Yuan Li said that her whereabouts were followed and photographed, but she did not notice this situation at that time.
A work certificate sent by Yuan Li shows that she joined a new company in April 2023; another social security payment statement also shows that after April 2023, Yuan Li began to pay social security in other companies.
Prior to that, the last company that paid social security for Yuan Li was Shanghai XX Information Technology Co., Ltd., and the payment period was from May 2021 to May 2022. From June 2022 to March 2023, Yuan Li did not pay social security in other companies.
On February 16, 2023, the e-commerce company filed an arbitration application with the Changning District Labor and Personnel Dispute Arbitration Commission of Shanghai. The Changning District Labor and Personnel Dispute Arbitration Commission of Shanghai successively sent materials such as court notices to multiple addresses, and all the service results were returned.
According to the arbitration application sent by Yuan Li, two addresses were filled in for her as the respondent, one in Tianhe District, Guangzhou, and the other in her residential address in Shanghai.
In response to the fact that she did not receive the relevant materials, Yuan Li recalled carefully that she lives in Shanghai, and she definitely could not receive the express mail from Guangzhou.
As for the materials mailed to her residential address in Shanghai, Yuan Li said that she did receive a missed call from a courier in March 2023. Probably because there was no specific house number on the courier, and the express mails in their community were uniformly placed in one place, she thought it was an online shopping parcel and did not call back. Yuan Li also said that she never received any SMS notification.
Yuan Li believes that another negligence in this process may be that she trusted too much the promise made by the company's HR when she left the job that "if there is anything about non-compete, we will contact you".
Yuan Li further added that from the time she was applied for arbitration to the two public service by the Changning Arbitration Commission, she did not receive any notice from the company's HR or legal department.
In May of the same year, since Yuan Li did not appear in court, the Changning District Labor and Personnel Dispute Arbitration Commission of Shanghai made a default ruling in accordance with relevant legal provisions, requiring Yuan Li to pay 1.4675 million yuan in liquidated damages for violating the non-compete agreement to the e-commerce company, and return 103,600 yuan of non-compete compensation.
The Changning District Labor and Personnel Dispute Arbitration Commission of Shanghai held that the fact that the respondent served in a certain position for about 5 years during her employment and signed a non-compete agreement with the applicant as an employee of the company is clear. After the respondent left the job, the applicant paid the non-compete compensation in accordance with the agreement, and the non-compete agreement has been actually performed. During the effective period of the non-compete agreement, the applicant can carry out necessary management on the respondent in accordance with the agreement. When finding clues of the respondent's breach of contract, the applicant can require the respondent to cooperate in giving a full explanation to prove that the non-compete agreement is actually performed.
The ruling also mentioned that the applicant investigated that the respondent clocked in by scanning the mobile phone code at the place marked with the "XX attendance point" on consecutive working days from January 5, 2023 to January 13, 2023, and entered the office premises of a company located in Yangpu District (part of the information has been processed for privacy protection).
In response to this situation, Yuan Li explained that the aforementioned "XX attendance point" was actually the area for scanning the health code during the epidemic, "There is no such thing as scanning code to clock in in this company", and she was just waiting for the interview downstairs at that time.
In August 2023, Yuan Li received a call from the execution judge, who told her that she needed to pay about 1.5 million yuan in compensation.
After receiving the call, Yuan Li was stunned. Her first reaction was that it was a fraud call, but when the judge accurately stated her personal information and property details, she vaguely felt that it might be true.
So the next day, Yuan Li hurried to the Changning Arbitration Court to retrieve the case files, and only then learned the complete process of the whole incident.
In October 2023, Yuan Li launched the process of execution objection and submitted relevant materials proving that she did not violate the non-compete agreement, but submitting the execution objection did not affect the continuation of the execution.
Yuan Li mentioned in the execution objection that after consulting the arbitration case files, she found that the e-commerce company concealed key evidence that was unfavorable to it and sufficient to affect the fair ruling of the case from the arbitration commission, knowing that the objector could not appear in court and could not defend herself. Accordingly, the objector applied to the Execution Bureau of Changning Court for not enforcing the ruling.
Later, Yuan Li was listed as a judgment defaulter and restricted from high consumption, becoming a "deadbeat".
Since February 2024, Yuan Li's salary has been executed, and only 2,000 yuan of her monthly salary is retained, and the rest is all used to repay the non-compete agreement compensation to the company.
For a while, Yuan Li didn't know how to explain to her family. Even when her child asked her, "Mom, can you buy me an Ultraman?", she didn't know how to answer.
In March 2024, after waiting for several months, Yuan Li finally got the ruling result of the execution objection, but the response was: the objector's reason for applying for non-enforcement of the labor dispute arbitration award is not established, the court does not support it, and finally rejected the objector's objection request.
In Yuan Li's view, regardless of whether the non-compete agreement is violated, the default judgment is really inappropriate, "At least I should be told that I have been arbitrated, and I need to appear in court to cross-examine the evidence. If the evidence is conclusive and sufficient, I can't deny it. And with the HR WeChat of the company, the default judgment also made me lose many opportunities to speak."
"Workers" Trapped in Non-Compete Agreements
In fact, the number of employees like Yuan Li who were claimed for compensation by their former employers on the grounds of violating non-compete agreements has reached a considerable number.
Xiao An used to be an employee of a community e-commerce platform, and the term of the labor contract he signed is from July 13, 2022 to July 12, 2025.
However, Xiao An did not wait until the contract expired, and resigned on March 8, 2023, and the labor contract between the two parties was terminated.
Before leaving the job, Xiao An's monthly basic salary was 8,160 yuan, and his total income during his employment was 86,745.29 yuan.
According to the investigation of the Changning District Labor and Personnel Dispute Arbitration Commission of Shanghai, on July 13, 2022, the two parties signed the "Confidentiality, Non-Competition and Intellectual Property Ownership Agreement", which agreed on the scope, duration, and breach of contract liability of non-compete.
On March 8, 2023, the two parties signed the "Non-Compete Notice", which stipulated that Xiao An's non-compete period is from March 9, 2023 to December 8, 2023.
No matter what reason Xiao An leaves the community e-commerce platform, during the non-compete period, Xiao An shall not establish an employment relationship (including but not limited to labor relationship, service relationship, labor dispatch relationship, etc.) with an economic entity or other organization that has a competitive relationship with the community e-commerce platform or any of its affiliated enterprises.
The enterprises whose business is similar to or has constituted competition with the community e-commerce platform or any of its affiliated enterprises include, but are not limited to, organizations or economic entities operating in the name of the following brands: ... Alibaba Group and companies in which it holds more than 20% of the shares...
During the non-compete period, the community e-commerce platform pays Xiao An non-compete compensation on a monthly basis, and the payment standard is: the total of Xiao An's pre-tax monthly basic salary in the last 12 months before the termination or end of the labor relationship between the two parties / 12 months * 30%.
Xiao An promises that within the non-compete period, before the 10th of each month, he shall take the initiative to fill in the complete reporting information through the non-compete reporting link, and strictly follow the requirements to actively send and reply to the non-compete reporting email...
If Xiao An violates the non-compete agreement, he shall refund the non-compete compensation already paid to the community e-commerce platform and pay liquidated damages to Party A. The standard of liquidated damages is twice the total annual pre-tax income of Xiao An in the 12 months before leaving the job. If Xiao An has been employed for less than 12 months, it shall be calculated according to the standard of (the total of all pre-tax income during Xiao An's employment / the number of months of Xiao An's employment) * 24.
Later, the community e-commerce platform paid Xiao An 14,056.26 yuan of non-compete compensation from March 9, 2023 to August 31, 2023 at the standard of 30% of 8,160 yuan/month.
The community e-commerce platform believes that Xiao An is responsible for investment promotion, market research, sales analysis and other work in the company, and has mastered confidential data such as the company's merchant information, investment promotion plans, and core market data, and belongs to the category of other persons with confidentiality obligations.
After leaving the job, Xiao An provided labor services to Alibaba and did not report to the community e-commerce platform, and Alibaba is a competing enterprise of the applicant. Xiao An's behavior has seriously violated the non-compete agreement between the two parties.
In response, Xiao An said that he joined Alibaba at the end of March 2023, and his working department is the Global Digital Commerce Group - AliExpress Department, which is mainly responsible for the operation of toy products. The department, industry category model, and targeted consumer groups are all