Interpretation of the Supreme People's Court on Several Issues about the Application of Laws for the Trial of Labor Dispute Cases (IV)(“Interpretation”)

Interpretation has been taken into force on Feb. 1, 2013. The biggest highlight of Interpretation is the further explanation on non-competition:

Compensation: where the parties fail to mention the compensation, the employee can request a monthly compensation by the employer based on 30% of the average monthly salary over the 12 months preceding the termination or expiration of labor contract, and the minimum amount equivalent to 30% of the average monthly salary is the minimum wage standard of the place where the labor contract is performed.

Non-competition restriction will not be automatically terminated where the employer fails to pay compensation.

Non-competition restriction will not be automatically terminated where the employee breaches the non-competition agreement.

Conditions on terminating non-competition agreement unilaterally:

The employee can request to terminate when the employer fails to pay compensation for 3 months due to the employer’s reason.

The employee can request to terminate when the employee can request the employer to pay an additional 3 months’ compensation.