On November 30, 2016, the Supreme Court released the Minutes of the Eighth National Court Civil and Commercial Judicial Work Conference (Civil Law Part) (hereinafter referred to as the “Minutes”). In the Minutes, there are 6 paragraphs about labor disputes (along with social insurances), including the relationship between social insurances and tort liability, the acceptance of labor cases and time limits on labor arbitration, the process for handling excessive liquidated damages for breach of a non-competition obligation, and termination under an employer’s inferior elimination mechanism. Specifically, the Minutes stipulate that if the agreed amount of liquidated damages in the non-competition agreement between an employer and an employee is excessively higher or lower than the actual losses incurred, and the employee or employer requests an adjustment of said damages, the People’s Court may refer to Article 29 of Interpretation of the Supreme Court on Certain Issues Concerning the Application of the PRC Contract Law (II). In addition, the Minutes expressly provide that an employer’s unilateral termination, based on the inferior elimination mechanism or competition, constitutes wrongful termination.
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