I’m a junior employee working in finance. I pledged to the 競業避止および秘密保持契約書 when I joined the company and there is a clause that says I cannot take up employment with “any business that competes with my employer” for 2 years without my employer’s consent.
Now, I’m leaving the company with my last date within one month. HR recently emailed me saying that I cannot switch jobs to companies that are competitors.
1. Is this Non-Compete and Confidentiality Agreement enforceable, to start with?
From my [research online](https://www.meti.go.jp/policy/economy/chizai/chiteki/pdf/handbook/reference5.pdf), the clause has to satisfy all of these requirements. But the clause above does not mention ② and ③ at least. So is the whole clause void?
①守るべき企業の利益があるか
②従業員の地位
③地域的な限定があるか
④競業避止義務の存続期間
⑤禁止される競業行為の範囲について必要な制限があるか
⑥代償措置が講じられているか
2. Do I have to reply to the email from HR of my employer? If so, how?
3. Can I still apply for direct competitors, and will I need to ask for consent from my employer as stated in the agreement?
4. Will other financial companies check with me if I have signed this agreement with my current employer?
Apologies that this is my first job in finance so I am not very familiar with how to deal with this… I want to be let off the hook from this, but I also don’t want to create too much noise as I still want my last month of salary here.
I can DM the specific financial sector that I’m working in, the clause and the HR email excerpt if needed. I still want to pursue a career in this sector so 2 years of being out of the industry is too restrictive for me. Thank you.
by Straight_Shopping_81
9 comments
Unless you’re the CFO I don’t think it matters what you do next.
Basically, the risk is that they might try to sue you. Typically, the worst judgement that would get imposed is around a month’s salary and a portion of any severance.
From the information you’ve given us, that non compete clause as written is bullshit. 2 years applied to what amounts to an entire industry is too far of a reach of scope, any judge would throw it out if they tried to sue you over it. My previous employer tried to do something like that, and our own legal department shot it down. 6 months is generally considered reasonable, the longer you go over that, the less enforceable it is.
Also, there needs to be some form of significant compensation for the period where you are unable to seek work in the industry – did you receive a “confidentiality allowance” as part of your pay? Is there a confidentiality payment on retirement? Without one of these, non-competes are basically meaningless.
Also – do you have special knowledge that might deeply impact them? Are you an R&D coder in a fintech firm, for example? If you don’t have specialised knowledge, a non-compete becomes weaker as well.
> 2. Do I have to reply to the email from HR of my employer? If so, how?
What are they going to do, fire you? Personally I’d ignore it – they’re fishing for an agreement from you. There is no upside for you in replying.
> 3. Can I still apply for direct competitors, and will I need to ask for consent from my employer as stated in the agreement?
You can apply, and you don’t have to ask.
> 4. Will other financial companies check with me if I have signed this agreement with my current employer?
Probably not. And if they do, they’ll get a good laugh out of the one that your current employer is trying to get you to agree to.
Unless they offered you some kind of huge bonus payout for not joining a competitor, I’d say 99.99% chance there is nothing they can do.
Send HR a picture of your middle finger.
Freedom of employment is guaranteed in the Japanese Constitution. If you were the daihyo and they had proof of you taking proprietary methods and intellectual property from your current company to a direct competitor, the situation would be different. That is obviously not the case here.
I worked in a company that did a lot of HR, you do not have to disclose where you are going to next, so just don’t. A lot of people did in fact change to competitors, and they can inly ask you if you want to tell them. You can also say you are still searching too. Keep in mind that the company strategies and such do fall under confidential info and just don’t talk about specifics of clients from your old job
It’s not clear from your post, have you already got an offer from a new company? Usually they ask for work references in which case you will need to provide a coworker’s or your manager’s contact. If they are assholes it will leak to HR. But as others said, it might not be enforceable.
One issue you might have is that whether it is legally enforceable or not, your current company might put pressure on your next company; or if your next company is in the same industry they might have a tacit agreement with your current company.
It’s a long time ago now but a company I worked with about ten years ago did exactly that – pressured another company in the same industry to enforce a probably legally unenforceable non-compete; and the other company bent over to preserve good relations between the two companies and promptly fired their new hire. There was a bit of a fuss about it in industry blogs etc.
It is likely not enforceable due to laws in Japan.
BUT, depending on your previous employer (and the people working in that company), you can actually get blacklisted from the industry.