According to the news service of China’s Jiangsu High People’s Court, since March of 2019, a total of 19 employees of the vacuum cleaner department of the KingClean Electric Co., Ltd. (“KingClean”) (known for the Lexy brand in China) have quit KingClean successively within 3 months. Soon after, a competing startup began to sell wireless vacuum cleaners highly similar to KingClean’s products on major Chinese e-commerce platforms. KingClean discovered that although the 19 resigned employees had signed non-disclosure agreements and non-compete agreements, both of which they promised to abide by, they all joined the startup shortly after departure.
The court found that 14 of the 19 employees had violated non-compete agreements. The court considered the statutory compensatory amount provided for by non-compete agreements, the circumstances of the employees’ breach of contracts, the actual losses caused to the employer, the employees’ illegal benefits, etc. and ordered the resigned employees to pay 3.4 million yuan in damages to KingClean and continue to perform the non-compete agreements until they expire. The other 5 employees were not required to perform non-compete agreements for insufficient evidence.