Viewpoint | Analysis of the Legitimacy of the Secret Period Agreement

With the rapid development of economy and society, the business competition among enterprises is becoming more and more fierce. Under this background, trade secrets have become the key protection object of each enterprise. In order to prevent the leakage of their own trade secrets, more and more enterprises often formulate strict confidentiality mechanism to prevent the leakage of secrets from damaging the interests of the company. Therefore, more and more employers in the labor contract to join the "secret period" clause, or a separate "secret period agreement" signed with employees, in order to achieve the goal of protecting business secrets, then the employer and employees signed the secret period agreement is effective? This article will be analyzed through the judicial practice of typical cases.

The confidentiality period means that the employer can agree that the employee who has business secrets must notify the employer in advance before leaving the company and work for the employer for a certain period of time. After the expiration of the period, the confidential employee can officially leave the company. Within this period, the employer will transfer the confidential employee to a department that does not need confidentiality. Therefore, the secret period essentially belongs to the "advance notice period", which is a way adopted by the employer to protect trade secrets.

According to the above definition of the densification period, it can be seen that the densification period can be understood from the following three levels:

Applicable object:The secret period system only applies to employees who really need to keep corporate secrets. Because the system of the secret period eliminates the rights of employees to a certain extent, it must be necessary to be recognized. In practice, individual enterprises arbitrarily agree on the secret period in order to prevent the loss of employees, which is likely to be invalid by the court because of the lack of necessity.

Dense measures:That is, adjust their jobs and change the relevant contents of the labor contract.

Period Requirements:Not more than 6 months. According to the "Notice on Several Issues Concerning the Mobility of Enterprise Employees" of the former Ministry of Labor and some local regulations, the time limit for the removal of secrets is required to be no more than 6 months.

From the above definition of the demission period, we can find that the departure time stipulated in the demission period is contrary to the departure time stipulated in Article 37 of the the People's Republic of China Labor Contract Law, which stipulates "30 days in advance written notice (3 days in advance notice during the probation period). According to Article 37 of China's Labor Contract Law, "the laborer may terminate the labor contract by notifying the employer in writing 30 days in advance. The laborer may terminate the labor contract by notifying the employer three days in advance during the probation period". Article 37 of the Labor Contract Law is that the law gives workers the right to unilaterally terminate the labor contract. It is the law that gives workers the right to choose employment independently. No unit or individual may interfere, and the confidentiality period agreed between the employer and the worker is often It is longer than 30 days, does this belong to a restriction on the laborer's right to unilaterally terminate the contract? In other words, does the employer and the employee sign a confidentiality agreement for more than 30 days in accordance with the law? There are two different views on this issue in judicial practice, one is that the agreement on the period of confidentiality is valid, and the other is that the agreement on the period of confidentiality is invalid.

Legal basis:Article 37 of the "Labor Contract Law" stipulates: "The laborer may terminate the labor contract by notifying the employer in writing 30 days in advance. The laborer may terminate the labor contract by notifying the employer three days in advance during the probation period".

Case 1:The Chengdu Intermediate People's Court of Sichuan Province held in the civil judgment (2014) Chengmin Zhong Zi No. 537 that "In this case, Fan Hong submitted a written resignation report to Qianfeng Company on November 12, 2012, and on December 27, 2012 According to the requirements of Qianfeng Company, he signed the" Leave/Leave Confidentiality Undertaking "and resigned, thus terminating the labor relationship with Qianfeng Company. Fan Hong terminated the labor relationship with Qianfeng Company in accordance with the law, and the labor relationship between the two parties was terminated on December 27, 2012. ...... The Court held that in this case, Fan Hong's act of terminating the labor relationship was in line with the provisions of China's labor laws and regulations, and whether Fan Hong signed the confidentiality undertaking, whether he was in the confidentiality period and whether he fulfilled the corresponding confidentiality obligations in accordance with the agreement, etc., could not be the cause of hindering the dissolution of the labor relationship between the two parties, and did not affect the dissolution of the labor relationship between the two parties".

Case 2:The Third Intermediate People's Court of Beijing Municipality held in the Civil Judgment (2015) No. 07030 of the Third Intermediate People's Court that "the laborer may terminate the labor contract by notifying the employer in writing 30 days in advance. The employer shall issue a certificate of dissolution or termination of the labor contract at the time of dissolution or termination of the labor contract. In this case, Duan Hongtao proposed to the Analysys Company to terminate the labor relationship on December 23, 2013. Analysys Company approved Duan Hongtao to work until January 24, 2014. Therefore, Analysys Company should issue a certificate of termination of the labor contract to Duan Hongtao in accordance with the law. Analysys appealed that Duan Hongtao did not notify Analysys in writing 6 months in advance of his resignation as agreed in the labor contract. Analysys did not agree to issue a resignation certificate for him, which has no basis and is not supported by this court".

Therefore, the judicial view holds that "the laborer can terminate the labor contract by notifying the employer in writing 30 days in advance" is a mandatory provision of the Labor contract Law on the protection of the laborer's right to resign. The laborer has fulfilled the legal obligation by notifying the employer 30 days in advance, regardless of whether the laborer has signed the confidentiality undertaking, whether it is in the unclassified period and whether it has fulfilled the corresponding confidentiality obligation as agreed, neither can be a cause that hinders the termination of the labor relationship between the two parties, and does not affect the termination of the labor relationship between the two parties, that is, the termination of the labor contract is not based on the completion of the discharge period, and the "discharge period" is invalid due to violation of the provisions of the labor law.

Relevant provisions:Article 2 of the former Ministry of Labor's "Notice on Several Issues Concerning the Mobility of Enterprise Employees" (Labor Ministry Fa [1996] No. 355) stipulates that "When the employer and the employee who has business secrets agree on matters related to keeping business secrets in the labor contract, it may be agreed to adjust his job position before the termination of the labor contract or within a certain period of time (not more than six months) after the employee proposes to terminate the labor contract, change the relevant content of the labor contract". The first paragraph of Article 23 of the "Labor Contract Law": "The employer and the employee may agree in the labor contract to keep the employer's business secrets and confidential matters related to intellectual property rights".

Case 1:The Beijing Second Intermediate People's Court held in (2018) Beijing 02 Minzong No. 357 Civil Judgment (the employer is Ping An Bank Co., Ltd. Beijing Branch) that "Xu Xiaoxi mailed a written resignation report to Ping An Bank Beijing Branch on October 17, 2016, Ping An Bank Beijing Branch received it on October 18, 2016. The ruling No. 466 of Jingxi Lauren Zhong Zi [2017], which has come into effect, finds that Ping An Bank Beijing Branch and Xu Xiaoxi have agreed to a six-month unsealing period in accordance with the law, and the labor relationship between the two parties shall be terminated after the expiration of the unsealing period. The" Letter of Commitment "approved by both parties has stated that the six-month period after I proposed to terminate the labor contract is my confidentiality period. Therefore, the court of first instance determined that the labor relationship between the two parties was terminated on April 19, 2017, and Ping An Bank Beijing The branch should issue a certificate of termination of the labor contract for Xu Xiaoxi, and handle the procedures for the transfer of files and social insurance, which is not improper".

Case 2:The Shanghai Pudong New Area People's Court held in (2016) Shanghai 0115 Minchu No. 1291 Civil Judgment (the employer is China Merchants Bank Co., Ltd. Shanghai Branch) that "the secret period means that the employer can agree that the person who has business secrets must notify the employer in advance before leaving the company and work for the employer for a certain period of time. The employee can formally leave the company only after the expiration of the period. During this period of time, the employer can transfer employees to work in departments that do not require confidentiality to ensure that employees are no longer exposed to new trade secrets. Therefore, the essence of the confidentiality period is the advance notice period. China's current labor contract law stipulates that workers can terminate the labor contract by notifying the employer in writing 30 days in advance. However, the Labor Contract Law does not clearly stipulate that the employer shall not set a period of secrecy. During the performance of the labor contract, the plaintiff and the defendant signed a" secret agreement "with a period of no more than 6 months, which is a consensus reached by both parties after consultation and on the basis of equality and voluntariness. The agreement is the true intention of both parties, and the plaintiff and the defendant should abide by and perform according to the contract".

Case 3:The Higher People's Court of Hebei Province held in (2020) Jimin Shen No. 5887 Civil Ruling (the employer is the Shijiazhuang Branch of Bank of Hebei Co., Ltd.) that "the labor contract and confidentiality agreement signed by both parties are expressions of their true intentions and do not violate laws and regulations. Regarding the validity of the invalidity of the contract, both parties shall perform their respective obligations in strict accordance with the contract. Among them, the agreement between the two parties on the period of secrecy means that the laborer shall notify the employer in advance before leaving the company, and the employer shall transfer the laborer to a department that does not need to be kept confidential for work injury, and the formal resignation shall not be allowed until the period of secrecy expires. The agreement does not violate the compulsory validity provisions of laws and regulations, and is also in line with the current situation of social employment".

Therefore, the judicial view is that Article 37 of the Labor Contract Law does not prohibit enterprises and employees from agreeing on a confidentiality period, and that the 30-day notice period is the lower limit rather than the upper limit of the period. Moreover, the agreement on the secret release period is a consensus reached on the basis of equality and voluntariness of both parties. The agreement is the true intention of both parties. The employee has the right to dispose of his right to release, and both parties should abide by and perform according to the agreement.

From the above cases, it can be seen that the validity of the secret period agreement is controversial in different cases, and both of the above views have their basis for existence.

Among them, it is believed that the validity of the secret period agreement is mainly based on: First, the provisions of the "Notice on Several Issues Concerning the Mobility of Enterprise Employees" issued by the Ministry of Labor on October 31, 1996 are still in force, and the "Beijing Labor Contract Regulations" issued by the Beijing Municipal People's Government on December 24, 2001. Regulations of Shanghai Municipality on Labor Contracts issued by the Standing Committee of the Shanghai Municipal People's Congress on November 15, 2001 and the "Implementation of the Regulations on Labor Contracts issued by the Shanghai Municipal Labor and Social Security Bureau on January 5, 2004<上海市劳动合同条例>Some provinces and cities, such as the regulations on Labor contracts of Jiangsu Province (revised in 2013) issued by the standing Committee of the Jiangsu Provincial people's Congress on January 15, 2013, have also made clear provisions on it, so the agreement on the secret period is in line with the regulations; second, the agreement on the secret period is the result of equal consultation between employees and employers, which is the true intention of both sides, therefore, the point of view of the validity of the densification period agreement is adopted.

Among them, it is considered that the agreement of the secret period is invalid, mainly based on the consideration of legal hierarchy and legal effect. First, from the perspective of legal level, according to the provisions of Article 88 of the Legislative Law, "the effect of law is higher than that of administrative regulations, local regulations and rules". The highest legal level in the relevant provisions on the "advance notice period" for employees to leave should be the Labor Contract Law. Therefore, the provisions of Article 37 of the Labor Contract Law should apply the notice period of 30 days in advance (three days in advance during the probation period). The provisions of Article 37 of the "Labor Contract Law" are legal rights granted to workers, that is, as long as the employer is notified in advance within the time limit stipulated in the "Labor Contract Law", it has the right to terminate the contract. Laws and regulations below the legal level cannot deprive and change the rights granted to workers by the law; second, from the perspective of legal effect, the Labor Contract Law came into effect in 2008, and the Notice on Several Issues Concerning the Mobility of Enterprise Employees came into effect in 1996. The local laws and regulations in Beijing and Shanghai all came into effect before 2008. According to the principle that the new law is superior to the old law and the upper law is superior to the lower law, the Labor Contract Law has the characteristics of both the new law and the upper law, so the provisions of the Labor Contract Law should be applied and the view that the agreement on the secret period is invalid should be adopted.

The author believes that the protection of business secrets is the normal business needs of employers, and the law needs to achieve the maximum balance between the interests of employers and employees. If the secret period system is determined by both employers and employees through negotiation, there is no factor to destroy this balance. The author believes that the secret period system is not illegal, but in the current judicial practice, whether to support the extension of the advance notice period for the voluntary resignation of workers through the secret period agreement is supported, it is difficult to draw a single, definitive conclusion. Although the time limit for the voluntary resignation of workers under the time limit system has not been clearly affirmed in the form of laws and regulations, if the employer and the worker make an agreement through consensus, the agreement is not of course invalid, and factors such as whether the employer does protect the legality and rationality of trade secrets through the time limit for the time limit for the time limit for the time limit for the time limit for the time limit for the time limit for the time limit for the time limit for the time limit for the time limit for the release, and the time limit for the time limit for the time limit for the time limit.

Regarding the question of whether the salary and bonus during the secrecy period can be "salary changes with post", it still needs to be specifically analyzed in combination with the rules and regulations issued by the local human resources department, but so far the rules and regulations in most regions have not clarified this issue, for example, Article 2 of the "Notice on Several Issues Concerning the Mobility of Enterprise Employees" issued by the former Ministry of Labor only stipulates that employers can sign a confidentiality period of no more than six months with employees, but it does not stipulate whether the salary can be changed with the post during the confidentiality period. Article 18 of the "Beijing Labor Contract Regulations" issued by the Beijing Municipal People's Government and Article 15 of the "Shanghai Labor Contract Regulations" issued by the Standing Committee of the Shanghai Municipal People's Congress are the same. There are also some local laws and regulations that stipulate that the wages during the secret period shall be determined through consultation between the employer and the employee. For example, Article 27 of the regulations on Labor contracts of Jiangsu Province stipulates that the employer may, in the labor contract or confidentiality agreement, make an agreement on the advance notice period for the worker to terminate the labor contract, as well as the post adjustment and labor remuneration during the advance notice period. In addition, there are also some local laws and regulations that clearly stipulate that employers shall not reduce the labor remuneration of employees during the secrecy period. For example, Article 19 of the opinions on standardizing labor relations issued by Qingdao Municipal Bureau of human resources and social security (at present, the document has become invalid but has reference significance): when the employer and the employee with the obligation of confidentiality agree in the labor contract to keep trade secrets and confidential matters related to intellectual property rights, they may agree to adjust their work positions and change the relevant labor contract within six months before the termination of the labor contract. Content, but the employer shall not reduce the labor remuneration of the employee.

Therefore, with regard to the question of whether the salary and bonus of employees during the period of confidentiality "changes with the post", first of all, it depends on whether the rules and regulations of the place where the employer is located clearly stipulate this. If this is clearly stipulated, it shall be in accordance with the relevant rules and regulations; secondly, if the rules and regulations of the place where the employer is located do not clearly agree on this, it shall be handled in accordance with the labor contract or confidentiality agreement signed by the employer and the employee. The author suggests that according to the spirit of the document "opinions on standardizing Labor Relations" issued by Qingdao Municipal Bureau of Human Resources and Social Security in 2015, combined with relevant judicial practice, and in accordance with the principle of corresponding rights and obligations, when signing a confidentiality agreement with employees, employers should try their best to keep the original position only adjusting the work content of employees, and the labor remuneration during the confidentiality period should be consistent with the salary before leaving office, minimize disputes between the parties. If it is really impossible to avoid post adjustment and salary adjustment, we should try our best to keep the same level of post adjustment and salary, sign a supplementary labor contract at the same time of signing the secret agreement, including the procedure and reasonable commitment of post adjustment and salary adjustment, and ensure that the employee himself signs and confirms the above documents to clarify the rights and obligations of both parties.