SPC strikes balance over employment contracts

The Court issued the Interpretation on Several Issues Concerning the Application of the Law in the Trial of Labour Disputes (4) (最高人民法院关于审理劳动争议案件适用法律若干问题的解释（四）), the fourth Interpretation over employment contracts, on January 31. It became effective on February 1.

“The Interpretation is a step forward – though it is slow, the previous three were mainly procedural, but this one covers more substantial issues like non-compete and verbal changes to contracts,” said May Lu of MWE China Law Offices in Shanghai.

Balancing interests

The SPC routinely issues judicial interpretations after reviewing cases from lower courts and asking for clarification on certain issues. They are designed to provide a framework for these courts to follow once issued.

When the draft version of the Interpretation came out in August last year it caused much controversy as it proposed non-compete compensation of 100% of the average previous 12 months' salary. This meant employers would face unreasonable amounts of compensation and a lot of non-compete cases will come to the courts.