Newsletter
MODEL NON-COMPETITION CLAUSES SOON TO BE FINAL-IZED
To protect confidential business information, many employers enter into post-employment non-competition agreements with employees. Such agreement is made in the employer interest, and may substantially restrict a worker right to work and right to choice of employment. To reduce the number of disputes between em-ployees and employers, in September 2002 the CLA invited scholars and experts to draw up model agreement clauses for the guidance of enterprises, based on the legislation in force in Germany, Japan and the USA and on actual cases encountered in practice. The CLA has also so-licited the support of the judiciary, in the hope that the model clauses can be promoted throughout Taiwan by the end of 2002.
The CLA states that because of the very different natures of different industrial and commercial sectors, it is not easy to arrive at a single form of agreement that is universally applicable. Therefore the aim at present is to provide guid-ance as to the proper content of a model agree-ment. This includes that it should be in writing, that it should clearly state the restricted occupa-tions or clientele, and that the period for which restrictions apply should not exceed one or two years.
If a former employee breaches such an agree-ment, any damages should be reduced according to the time that has elapsed since the person left the company's employment. For example, a former employee who takes up new employment after two-thirds of the agreed time period has elapsed should only be liable to pay one-third of the agreed damages. Employers should also provide financial compensation to assist workers in finding other employment.