What types of covenants can be recognized in China?
Noncompetition, nonsolicitation, intellectual property (IP), confidentiality, and nondisclosure clauses can all be recognized. These clauses can be included in the Confidentiality, Inventions Assignment, Noncompetition, and Nonsolicitation Agreement, which we will enter into with your supported employee.
Can these covenants be enforced? How are they enforced?
Intellectual property (IP), confidentiality and nondisclosure clauses can generally be enforced.
Post-termination noncompetition and nonsolicitation clauses can be enforced if they are reasonable. The noncompetition and nonsolicitation clauses in our Confidentiality, Inventions Assignment, Noncompetition, and Nonsolicitation Agreement have been reviewed by external local counsel to increase the likelihood of enforceability.
Does my supported employee need to be compensated in return for restrictive covenants?
The employer must provide reasonable compensation for post-termination restrictive covenants; otherwise, they could be deemed invalid. We generally recommend monthly compensation of at least 30% of the supported employee’s salary prior to termination.