Employment 2025

CHINA Law and Practice Contributed by: Linda Liang, Piao Liu, Chutian Wang and Xiangbo Lv, King & Wood Mallesons

• Restricted competitive behaviours: working for a competing company that produces the same type of products, engaging in the same type of business as their former employer, establishing their own business to produce the same type of products, engaging in the same type of business, or compet - ing with their former employer in any other way. • Scope of employees: employees subject to non- compete clauses shall be senior management, senior technicians or other employees under confi - dentiality obligations. • Scope of regions: the geographical region for non-compete clauses shall be stipulated by the employer and the employee, and is generally limit - ed to the fair and reasonable area that can form an actual competitive relationship with the employer (factors to consider include business coverage and industry characteristics). • Non-compete period: the effective period for non-compete clauses shall be stipulated by the employer and the employee, and shall not exceed two years post-termination. • Non-compete compensation: in order to enforce the non-compete clause, the employer must pay compensation to the employee on a monthly basis throughout the non-compete period. The parties can agree on the compensation amount. According to the national rules, where there is no such agree - ment on the specific amount, the default amount is 30% of the employee’s average monthly salary over the previous 12 months before the termination or expiration of the employment contract for each month. Local rules may have specific requirements on the compensation standard. • Liabilities for breach: under PRC employment laws, if an employee breaches the non-compete obli - gations, the employer can claim for the liabilities for breach of contract as agreed by the parties, including liquidated damages and/or recovery of the non-compete compensation paid by the employer. Meanwhile, the employer can require the employee to continue performing the non-compete obligations for the rest of the non-compete period (if any). 2.2 Non-Solicits PRC employment laws are silent on the topic of non- solicitation; however, non-solicitation clauses are

commonly used by employers in practice to prevent former employees from soliciting clients and employ - ees of the employer. As violating non-solicitation is not a scenario stipu - lated by the law where the employer can claim for liquidated damages as agreed with the employees, employers can generally only claim for recovery of financial losses suffered due to an employee’s breach of a valid non-solicitation obligation. If the employer claims for a breach of non-solicitation by employees, the employer needs to prove the solicitation behav - iours and the financial losses incurred. 3. Data Privacy 3.1 Data Privacy Law and Employment Data Privacy Laws The PRC Civil Code (effective on 1 January 2021) contains a chapter regarding the right to privacy and personal information (PI) protection. The PRC Cyber - security Law (effective on 1 June 2017), the PRC Data Security Law (effective on 1 September 2021) and the PRC Personal Information Protection Law (PIPL, effective on 1 November 2021) collectively constitute the three fundamental and framework laws regulating data security protection in the PRC. Of these laws and regulations, the PIPL provides the most details regarding PI protection, establishing comprehensive and systematic rules on the processing and protection of PI. Employers should also comply with the PIPL when processing employees’ PI; the sections below briefly summarise the key points under the PIPL. PI Processing Principles • Lawful, transparent, accurate and secured: PI shall be processed in accordance with the principles of legality, legitimacy, necessity, good faith, open - ness and transparency. In addition, the quality and security of PI shall be guaranteed during the processing. • Specified purpose: PI shall be processed for a specified and reasonable purpose. The process - ing shall be directly relevant to the processing purpose, and shall be performed in a manner that has the minimum impact on personal rights and interests.

131 CHAMBERS.COM