Rashomon, who is restricted by competition, who is the trapped company and employees? This article is from the WeChat official account: University of Chaos (ID: hundun-university) , author: Xie Aerospace (Business studies University team Chaos ), Guidance: Li Haoran, original title: “Vice President of Xiaomi was asked to pay 5.25 million, former Tencent employee was sentenced to pay 19.4 million, there are 15 “big pits” behind it, title picture from: Vision China p>
5.25 million yuan, this is a penalty for a job hopping.
Lenovo’s former executive, Chang Cheng, went to court with his old club because he switched to Xiaomi. On October 9th, after labor arbitration, Chang Cheng should pay a penalty of 5,258,800 for the restriction of competition, and continue to perform the restriction of competition.
In recent years, more and more companies require employees to sign “competition agreements.” There have also been many disputes surrounding the agreement.
Workers think that the compensation is too low and it is difficult to make a living; they have signed the competition restriction, and cannot skip jobs, and wages have risen slowly.
Enterprises are also “pouring bitterness”: employees secretly go to work with competitors, and it is too difficult to obtain evidence; the lawsuit has been fought for nearly a year, and there is no way to restrict where employees go to work during this period.
What is the competition restriction? Should a non-competition agreement be signed? What kind of competition restrictions are reasonable? How do workers maintain their freedom of job-hopping? How should companies protect their competitive advantages?
1. Free to change jobs?
As early as more than ten months ago, Chang Cheng had already quit. On the last day of 2019, Changcheng Weibo announced: Leaving Lenovo, who has worked for 19 years.
He listed in detail the projects he participated in each year from 2000 to 2019. And said: “Sentiment, thanks, gratitude”.
Lenovo Group also expressed warmly: Chang Cheng has been struggling for a long time in the fiercely competitive mobile phone line, and proposed to resign based on personal health and the desire for more energy to take care of the family.
Only two days later, the harmony was broken.
On January 2, 2020, the first day of work in the new year, Lei Jun announced on Weibo: Chang Cheng will serve as the vice president of Xiaomi Group, responsible for mobile phone product planning. Chang Cheng forwarded and said: “Official announcement, work hard for your dream on the first day of 2020! Excited and excited.”
On the evening of the same day, Lenovo Group stated to many media that the company and all executives have signed a non-competition clause. If there is a breach of contract, the company will seek a proper solution to the problem within the legal framework. Create a talent flow space that respects the spirit of contract.
In June, Lenovo Group began to file for arbitration.
The case has been heard several times before the Labor and Personnel Dispute Arbitration Commission of Beijing Haidian District. Chang Cheng said that the non-competition agreement was not signed by himself. Moreover, it also stated that none of the relevant documents Lenovo Group used to compare handwriting was signed by the person. The appraisal agency retrieved Chang Cheng’s signature materials from the industrial and commercial department’s archives, and until mid-September, the appraisal result was released: Chang Cheng himself signed it.
On October 9, the Labor and Personnel Dispute Arbitration Commission of Beijing Haidian District issued the arbitration result: It is necessary to return Lenovo’s breach of non-competition obligations of 5,252,821.09 for breach of contract and more than 70,000 yuan for compensation. In addition, the obligation to restrict competition must continue to be fulfilled.
This ruling means: Chang Cheng not only has to pay liquidated damages, but also cannot continue to work at Xiaomi.
However, as soon as the ruling was issued, Chang Cheng appointed a lawyer to file a lawsuit in the court. According to the law, this ruling cannot take effect during the proceedings.
Although the dust has not settled yet, Lenovo Group publicly stated that it welcomes the verdict. Firmly believe in the rule of law and the spirit of contract demonstrated by the ruling. But the new owner did not back down and immediately “supported”: Lei Jun announced a high-profile list of 15 senior management teams, and Chang Cheng was among them.
The smell of gunpowder from the two companies is getting stronger.
A lawsuit triggered by a job hopping involved two companies and one executive. So, what is the competition restriction? Why are financially free executives not free to change jobs?
In 2008, my country’s “Labor Contract Law” was promulgated, which has relatively clear regulations on competition restrictions.
“For workers who know the trade secrets of the unit or other workers who have a significant impact on the operation of the unit, after the termination of the labor contract, within a certain period of time, they shall not produce similar products, operate similar businesses or have other competitive relationships. Employers are not allowed to produce similar products or operate similar businesses that compete with the original company.”
In other words, employees who are aware of trade secrets or have a significant impact on their operations cannot work in a competing unit within a certain period of time after leaving their job, nor can they form a competitive relationship with the original unit through entrepreneurship. If a worker breaches the contract, not only need to pay liquidated damages, but also need to continue to perform the obligation to restrict competition.
However, in order to protect workers, companies also need to comply with relevant restrictions:
First of all, the non-competition agreement is limited to senior management, senior technical staff and other personnel with confidentiality obligations. Usually called: “two highs and one dense”.
Secondly, the non-competition period cannot exceed two years. During the restriction period, the unit needs to pay compensation to the worker.
Thirdly, if the unit unilaterally wants to cancel the agreement during the non-competition period, it needs to pay the worker three additional months of compensation.
The number of non-competition cases has been on the rise in recent years, And Internet technology companies are high-income places.
“Since the era of the industrial revolution, the development of enterprises has relied on capital, machinery, plant, and equipment. Employees are all workers on the assembly line in the factory, which is highly substitutable. However, in the Internet age, people have become the core of the enterprise People are also the carriers of corporate business secrets. In recent years, the new Internet industry is surging and competition is fierce. In order to avoid the disclosure of business secrets and the reduction of competitive advantages due to employee resignation, many companies have begun to use competition restrictions to restrict the flow of talents. , The professional clause of’competition restriction’ has gradually entered the public’s field of vision.” said Zhou Lixia, senior partner of Aurora Law Firm.
According to statistics, from 2014 to 2018, Beijing, Shanghai, Guangzhou, Jiangsu and Zhejiang accounted for 41.88% of the total number of non-competition cases. In addition, the highest density of competition restriction cases is in Haidian District, Beijing. Because here, the “Silicon Valley of China”-Zhongguancun Science Park has gathered a large number of high-tech enterprises represented by Internet companies.
Data source: “Big Data Report on Competition Restriction Disputes among Top 100 Internet Companies” Aurora Law Firm
II. Abuse of competition restriction
In recent years, cases of high compensation caused by competition restrictions have been on the hot search from time to time.
In August 2018, Xu Zhenhua, a former senior R&D talent of Tencent, was sentenced to compensate Tencent with more than 19.4 million yuan, setting the highest compensation record for such cases. During and after Xu Zhenhua’s tenure at Tencent, he established a company to develop a number of games similar to Tencent’s game products, one of which is highly similar to “Honor of Kings”.
In June 2018, Li Chenggang, a former Baidu employee, joined Toutiao and was suspected of revealing Baidu’s business secrets. He was sentenced to return a total of 830,000 yuan in compensation for competition restriction and liquidated damages received from Baidu.