Is this school asking too much. Can't go to any competition for a year after I leave

[Hero Doug]

I'm going to sign with a school on a sort part-time sort of full-time basis. I'm not concerned about this as of right now, but I haven't closed the option of going to this school full time.

This thing is that they put this clause in their contract. I haven't taught at a private school in a long time so I'm wondering if it's too much.

After termination of this agreement, the Employee will not operate a business in direct competition with the Employer within a year of the contract termination. Additionally, due to the competitive market and in regards of unfair competition practices, the Employee agrees to not accept employment with the Employer’s direct competitor(s) who shares the similar model to our teaching style in the same city within a year of the termination date.

So their trying to tell me where I can and can't work. Like I said I haven't worked at a private school since I first got to China, but *if* next year I was to go to this school, would I be asking to much for them to remove the last paragraph, or are they asking too much by asking that I accept it.

[badr]

That's the first time I've ever seen or read such a clause in a teaching contract. The school is asking for waaaayyy too much in this case.

I guess it's their right to put what they want on the contract but it's also your right not to accept it.

[roddy]

Haven't seen that before, and I'd be doubtful about how enforceable it would be - if they'd just left it at 'teaching English' they might have a chance, but how do you decide on what is a 'direct competitor' or a 'similar teaching style'?

If you have no plans to stay there (Nanjing?) long term, I wouldn't worry about it. If you do . . . well, I probably wouldn't worry about it anyway. Could maybe quiz them about who they regard as 'direct competitors' and so on, but I'd wager they haven't really thought about it.

[tianma]

I'd love to sign such a contract. According to the law, they have to compensate you after you leave the company for not being able to work for a competitor. The compensation is normally being paid every month and is 1/3 of your former salary.

[kudra]

obviously they have some super-duper top secret teaching method, that they don't want you to steal. I can't believe it would be possible or worth their time to enforce it.

On the other hand, when I was in Taiwan in the early 80's we did get training on how to teach a group using hand cues and various materials they had developed. I suppose if I had worked there and picked up their tricks, then set up a big competing school with a with backing from a bunch of rich ivestors, the original school would feel some effect on their cash flow and want to take action. But barring that kind thing, I can't see that it would be worth their trouble to enforce such a non-compete clause.

Of course I'm not a lawyer, and I'm not there, so what do I know? answer: not much.

[imron]

I would get them to remove this clause if you want to work at this school. If they don't, then as they mention in the contract, it's a competitive market, and so you won't have a shortage of other places to choose from.

[Jockster]

I would not sign a contract with such a clause in it. I've seen non-competition clauses like this before. What I think is fundamentally wrong is that when someone is educated for a certain job then that is his bread and butter and therefore it is unreasonable to demand this from him/her.

If they have some teaching methods that they have developed themselves, then fine, those should be protected. But that should be done with a non-disclosure agreement, not with a non-competition clause.

[imron]

I'd love to sign such a contract. According to the law, they have to compensate you after you leave the company for not being able to work for a competitor. The compensation is normally being paid every month and is 1/3 of your former salary.

Tianma, do you happen to know of an online reference which specifies which law mentions this? I imagine it'd be quite useful to have a copy of it

[tianma]

I can't find the law right now but this should help as well ... If anyone finds the right passage in the legal text it would be great if you posted the source here, thanks.

It is therefore a relatively recent development to see post-termination non-competition provisions in domestic enterprise employment contracts. In some cases that we have seen, such provisions have been simply copied from U.S. companies' employment contracts. This can be less than effective in China, since such a provision is only enforceable if they provide for non-competition compensation in addition to the statutory severance payments.

The new labor law seems to protect employees even further:

http://www.sandpconsulting.com/news_detail.php?news_id=38

Here is a sample contract:

http://contracts.onecle.com/asiainfo/zhang.confid.2005.12.08.shtml

A court decision (please note that it is not binding - no precedence):

http://www.ccpit-patent.com.cn/News/2005081502.htm

[zhwj]

It's my guess that this is designed to address two fears:

(1) After working at this school for a bit, you go off and start your own competing school that uses the same innovative methods. Not very likely, but I've seen something like this happen in the past.

(2) More likely, after working at this school for a bit, you get hired away by one of the co-founders who splits off from the school to found his own place, taking many of the teachers with him. In this case, the presence of the clause on teachers' contracts acts as a disincentive to the current partners to break off, since they won't be able to take teachers with them.

It's not common, but I guess it's an understandable reaction for a place that may have been burned in the past by teachers who've jumped ship, perhaps after getting some exposure in an ad campaign or something. I'd take the opposite view to roddy's, and say that the "direct competition" would give you more options if you walked - if the schools are targeted at different student groups, or if they offer different certificates or something, they're probably not in direct competition and you'd be OK.

If you can't get them to take it out, maybe you could try having something written in that voids the non-compete in the event that you leave because they have broken some other parts of the contract - if they fail to pay you for six months, for example, or some other unacceptable behavior.

[wushijiao]

I agree with Kudra- I just can't imagine that they would ever enforce that clause. Would they really sue you if you worked for another school? How would you define "direct competitor(s)" anyway?

Has anyone ever heard of this type of clause being put into effect?

[Hero Doug]

but how do you decide on what is a 'direct competitor' or a 'similar teaching style'?

The U.S. patent office show's that's it's all in the wording. All teaching styles are the same, one teacher, one to many students, the teacher teaches, the students learn, it's quite a broad description.

I'd love to sign such a contract. According to the law, they have to compensate you after you leave the company for not being able to work for a competitor. The compensation is normally being paid every month and is 1/3 of your former salary.

Thanks for the links, I'll be sure to read them, nice to have a bit of an ace up my sleeve when negotiating. I read article 4 of the sample contract you posted and it's perfect. It's helped me reach a solution which I'll post when finished responding.

obviously they have some super-duper top secret teaching method, that they don't want you to steal. I can't believe it would be possible or worth their time to enforce it.

lol, if by super-duper you mean nothing special, then you're 100% right. And I'm not sure they'd be able to enforce it either, once I leave I leave, that's all there is to it.

The thing is though I know all the major schools in the area send their workers to each other's schools to keep tab's on prices and what-not, so it's likely that they may casually bump into me when doing this. It happened to my girlfriend actually, from people from a couple of schools she worked at.

I've seen non-competition clauses like this before. What I think is fundamentally wrong is that when someone is educated for a certain job then that is his bread and butter and therefore it is unreasonable to demand this from him/her.

Well said, I like the wording as well. It would legally force me to go to another city if I left that job, and the legal system is getting to a point where it just might be enforceable.

More likely, after working at this school for a bit, you get hired away by one of the co-founders who splits off from the school to found his own place, taking many of the teachers with him. In this case, the presence of the clause on teachers' contracts acts as a disincentive to the current partners to break off, since they won't be able to take teachers with them.

Actually quite a funny story here. The school I'm considering (a) stole everything from another school ©, as did another school (B). The funny thing is that the school © the other two schools stole everything from (a+B) stole everything from another school themselves.

To the solution

I think I'll decide to leave it in the contract. I'll let them have their sense of security, but it should come at a price.

I'll take a (well many) clause from the article tianma posted.

4. Payment of compensation fee

4.1 Within, but not exceeding one month after Party B’s Separation from Party A, Party A shall decide whether it requests Party B to undertake the Non-competition Obligation as well as the period of non-competition. If Party A decides to require Party B to undertake the Non-competition Obligation, it shall pay the non-competition compensation fee according to Article 4.2 of this agreement.

4.2 The non-competition compensation fee shall be 50% of Party B’s annual salary (if the local government stipulates a minimum more than this amount, such minimum shall prevail). The non-competition period to which such compensation fee is applicable shall be 12 months, commencing on the date of Party B’s Separation from Party A.

4.3 The non-competition compensation fee shall be paid up in full in one lump sum within, but not exceeding one month after the formal Separation of Party B, and shall be collected by Party B at Party A’s corporate address (or paid by Party A to Party B via bank or post office). If Party B refuses to receive the payment, Party A may submit the payment of the compensation fee to the relevant authority for deposit according to law. The time when such submission is completed shall be deemed to be the date of payment of the compensation fee.

4.5 If Party A fails to pay the non-competition compensation fee to Party B within one month after Party B’s Separation, Party A shall be deemed to have released Party B from the Non-competition Obligation (which means that Party B may not be subject to the obligations set forth in and only in Articles 3.3 and 3.4). Upon such time, Party B shall not claim against Party A for payment of the non-competition compensation fee in any manner (including but not limited to arbitration or litigation).

That should cover their worries and mine. In a way I hope they would enact it, because I'd just hop on over to a university with 6 months pay and start another job.

I'll send my request to them and post back with their response.

[imron]

For those interested, a draft copy of the law can be found online here. The relevant part is article 16.

[tianma]

looks good :-)

I would change article 4.2 slightly though:

4.2 The non-competition compensation fee shall be 50% of Party B’s annual salary (if the local government stipulates a minimum more than this amount, such minimum shall prevail). The non-competition period to which such compensation fee is applicable shall be 12 months, commencing on the date of Party B’s Separation from Party A.

When the new labor law is being established, the minimum is likely to be a full annual salary. Therefore I'd change "if the local government stipulates ..." to "if the local or state government stipulates ..." and you should be fine ;)

[tianma]

thanks imron ...

If I understood those articles correctly, it means that the non-competition clause is limited to a certain region and can be valid for a maximum of 2 years. And the compensation is a normal annual salary - the last one the employee received at his/her former firm.

It would be nice to see the current legislation since this is just the draft.

[imron]

I've found what appears to be copies of the relevant current legislation here (劳动法) and here (合同法). They're dated 1994/7/5 and 1999/3/15 respectively, and came into effect on 1995/1/1 and 1999/10/1. I've only skimmed them briefly, but they don't seem to mention non-compete agreements (竞业限制约定) unless they're using a different term from what's used in the current draft.

Also, with the current draft, the other thing to bear in mind, is that if you break the non-compete, then you can up fined up to 3 times the amount paid to you in non-compete compensation, so if you're worried about this clause if/when you do go and work somewhere else, you might want to get it in writing that your new workplace isn't in direct competition etc.

Also of interest is that the wording of the new law seems to limit it to people who have knowledge of the business' trade-secrets, so perhaps it's unlikely to apply in a case where there are no trade secrets?

[Hero Doug]

Getting a written statement is also a good idea, a university should be safe since it's in no way in direct or indirect competition with a private school, but always best to cover your bases.

[mr.stinky]

zhwj: "the same innovative methods"

oh, c'mon, this is china fer chrissakes!! innovative??? bwahahahahah!!!!

they prolly just needed a contract, pulled something off the internet, and replaced

something like engineering with teaching.

[zhwj]

zhwj: "the same innovative methods"

oh' date=' c'mon, this is china fer chrissakes!! innovative??? bwahahahahah!!!![/quote']Naturally, "innovative" is relative, but the English training industry is driven in large part by trends - teachers get trained in this year's popular methods, costing the school a pretty penny, but allowing them to advertise that their teachers are cutting-edge (to a degree, of course). If they then jump ship it's all wasted investment for the first school, and an unearned windfall for the second.

And that's not even getting into the foreigners who land on these shores, get disgusted with the pedagogical conditions, and launch their own programs in concert with some local entrepreneur. I've known several of these folks, each of whom believes he is the savior of English education in China, and who jealously guards his teaching methods. Naturally, people try to poach from them if they're in any way successful.

Of course, you might be right about where the contract came from....

[Hero Doug]

I like your theory about where the contract came from mr.stinky, highly possible.

Also, the long awaited results. Their taking the clause out, guess that's a better option then adding the appendix I proposed above.

And I agree about innovation, everyone copies everything from everyone else here. I'll never buy an Ineovo (I think that's the spelling) because of their blatant rip-off's of the Motorola Razor. It's just disgusting.