Major internet company male employee switches jobs and is sued for violating non-compete agreement; first instance court orders compensation of 1 million yuan

Tech News, March 25 — Recently, the Shanghai Yangpu Court ruled on a dispute involving non-compete restrictions in the internet industry, sparking widespread discussion in the workplace community.

The involved employee, Deng Yun (pseudonym), was a business analyst at major internet company M, a key position with access to core company data. During employment, he signed a non-compete agreement with the company.

The agreement clearly states that within two years of leaving, he shall not join any competing company. The company will pay monthly non-compete compensation (about 15,640 RMB), and at the time of departure, it also provided him with a list of competing companies, including B Company.

However, Deng Yun ignored the agreement. After leaving M in September 2024, he secretly joined B Company that same month, working in a similar role, and had not reported his employment to M as required.

After collecting evidence through various means—including but not limited to courier deliveries, office surveillance, and parking records—the company verified his breach of contract and legally filed for labor arbitration, appealing to the court.

The court found that Deng Yun’s actions clearly violated the non-compete agreement. In the first instance, he was ordered to return over 93,000 RMB in non-compete compensation and pay 927,000 RMB in damages, totaling over 1.02 million RMB. Deng Yun has appealed, and the case is still under further review.

This case is not isolated. Many major internet companies now impose non-compete restrictions on core technical and business roles to protect trade secrets and maintain industry competitiveness.

For employees, it’s crucial to carefully review the terms before signing a non-compete agreement, strictly adhere to the restrictions after leaving, and avoid taking risks by joining competing firms without approval. Violating the agreement not only requires full repayment of compensation received but also results in hefty penalties, ultimately leading to greater losses.