Issued by:    Ministry of Human Resources and Social Security of the People's Republic of China
Issue No.:    Renshetinfa [2025] No. 40
Release Date:    September 12, 2025
Effective date:    September 12, 2025
Links:    https://www.mohrss.gov.cn/xxgk2020/fdzdgknr/ldgx_4234/ldyg/202509/t20250912_558711.html
To balance the protection of trade secrets with the legitimate rights of employees, promote fair competition among enterprises, and facilitate the orderly and efficient allocation of human resources, the Ministry of Human Resources and Social Security has issued the Guidelines on non-compete compliance. It’s necessary to note that the Guidelines are not departmental regulations or normative documents and are therefore non-mandatory and for reference only. Key points are as follows:
Prerequisites: The non-compete clause may only be enforced if the enterprise possesses commercial information that is “not known to the public, has commercial value, and has been subject to reasonable confidentiality measures.” 
Covered personnel: Non-compete obligations shall be restricted to senior management, senior technical personnel, and other personnel with confidentiality duties who are privy to trade secrets. Agreements with other obligated personnel require a clear explanation of the rationale and the specific secrets involved. 
Scope of restrictions:
a) Restricted employment should be limited to other enterprises that are in competition with the enterprise. 
b) Geographic restrictions should correspond to the scope of the enterprise's business scope; absent sufficient justification, they generally shall not extend to the entire nation or worldwide; 
c) The term of non-compete agreement should be reasonable and must not exceed two years at the longest.
Economic compensation: The monthly compensation shall be no less than 30% of the employee’s average monthly salary over the last 12 months prior to termination, and shall not be lower than the local minimum wage. If the non-compete period exceeds one year, the compensation should generally be no less than 50% of that average salary.
Liquidated damages: The employer and employee may agree on liquidated damages should the employee violate the non-compete obligation. The amount of such liquidated damages should generally not exceed five times the total amount of the agreed-upon financial compensation for the non-compete period.   
Early termination:
a) The employer may terminate the non-compete agreement early by paying the employee additional compensation.
b) If the enterprise fails to pay the financial compensation in full and on time for a period exceeding the stipulated timeframe, while the employee has been complying with the obligations, the employee shall be relieved from fulfilling the non-compete obligations.