A Study on the Independence of Post-Employment Non-Competition Clause
Date Issued
2014
Date
2014
Author(s)
Tsai, Juei-Lin
Abstract
A Study on the Independence of Post-Employment Non-Competition Clause
Abstract
There have been scarcely ever legal disputes on the post-employment non-competition (PENC) issue since the Supreme Court (SC) reached the consensus that the “principle of contract freedom” should be respected. Nevertheless, to prove the invalidity of the PENC clause, there are still quite a lot of courts below the SC apply Article 72 or 247-1 of the Civil Code or other similar provisions to review the clause and to build various criteria or doctrines to challenge the abovementioned consensus, rejected by the SC over and over again. After reviewing the existing statistics, the author found that actually only half of the courts below the SC reviewed the specific cases proactively to deny the validity of the PENC clause. And the author also concluded that due to the probability of winning the lawsuit over 50%, the employers require their employees to sign the PENC agreement only because filing a lawsuit against the employees is so disturbing and threatening instead of the necessity.
The courts have not yet clarified the legal nature of the PENC clause and that’s why this issue could be considered one of the most complicated legal disputes of civil law without a common point of view between the theories and the practices. The courts below the SC apply Article 72 or 247-1 of the Civil Code but what is the object of the Articles? The universal values or concepts such as “public policy and good morals”, “avoiding obvious inequality”, “releasing or reducing the responsibility of the party who prepared the entries of the contract” and “increasing the responsibility of the other party” could not be judged without identifying the applicable object and the relationship of rights & obligations between the parties in advance.
This study focused on the legal nature of the PENC clause, the most fundamental legal concept, to clarify the following relationship between the clause and the labor contract: 1) is the clause part of the contract? 2) is the clause equal to an independent contract?
The author induced the principles from the essential theories of civil law and then deduced the “ought-to-be logics” from those principles. In other words, the author used and analyzed the logics, judgments, doctrines and wording to ascertain the legal nature of the PENC clause, hiding behind the words in the labor contract. Based on which, he proved that “the PENC clause and the labor contract are not to be and not ought to be the same thing” and found as well that “the clause is an independent contract itself subject to the suspenseful condition of post-employment.” And he discussed its legal nature to prove the validity and explained the usefulness of this study. Even though the criteria of validity are not the main focuses of this study, the author still proved the “doctrine of 5 criteria” right and applicable to this issue, explaining the abovementioned usefulness.
One of the main purposes of this study is to clarify that “the PENC clause is not part of the labor contract” and to prove the clause is the applicable object of Article 72 and 247-1 of the Civil Code. And thus the author could prove that the obligation of non-competition, the alternative compensation, and the penalty are in the consideration relationship and the contract shall be non-gratuitous, or the abovementioned Articles could not be applied logically. The discovery that post-employment is the suspenseful condition of the contract could successfully figure out the lag between signing a contract and its taking effect. Moreover, the author found the doctrine of “the condition deemed not to have been fulfilled” could provide the legal base for those who unemployed by reasons not attributing to themselves not to take the obligation of non-competition. Identifying the legal nature exactly right, the author found out the criteria to verdict the validity of the contract by applying the suitable jurisprudence.
To reduce the abovementioned improper inducement of the employers, the author concluded that it’s necessary to persuade the courts to implement enhanced legal review on the validity of the PENC clause. This purpose could not be achieved without legal bases, not to mention only processing the legal logics. Therefore, this study focused on the legal nature of the PENC clause instead of the requirements of its validity discussed in the most existing studies.
keywords:
”non-competition cause / agreement / contract”,“principle of contract freedom”,
“Article 247-1 of the Civil Code”, ”alternative compensation”,
”non-gratuitous contract”,”bilateral contract”,”legal nature”
Subjects
離職後競業禁止約款
營業秘密
競業禁止有效性判斷標準
五標準說
定型化契約
附隨義務
獨立契約說
Type
thesis
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