Knowledge · HR & Labor

Non-Compete Agreement · Restriction on Job Change

Non-compete Agreement

📂HR & Labor⏱2 min read📊Advanced🔗Related 7

What is a non-compete agreement?

In one line
An agreement restricting employment with competitors or same-business ventures for a set period after leaving. Because it limits freedom of occupation, its validity is strictly scrutinized.
⚡ Summary in 3 lines
  • A signature alone doesn't make it valid
  • The narrower and more specific the roles, term, and territory, the likelier a court is to uphold it
  • A restriction without compensation is hard to uphold

What a non-compete agreement really changes is not the thickness of the file but the direction of the burden of proof on the company. Getting a signature does not create a right; it creates a structure in which, once a dispute arises, the company must explain what it is protecting and why this particular person must be bound. So HR's job shifts from slipping one more page into the onboarding packet to keeping records of who had access to what information. Access logs, assigned client lists, and research notes should be in place before the agreement, and its strength depends not on the moment of signing but on whether those records exist.

In practice, three things need to be kept apart. A job-change ban that blocks employment at a competitor, a non-compete that stops someone from running a similar business directly, and confidentiality that bars use of information learned on the job differ in nature and in how far courts will enforce them. A period of around one year is the range that is at least arguable; beyond two years, the clause is often struck down entirely, or the court shortens the period and upholds only part of it. Compensation matters too, and "it is already included in the salary" does not satisfy it. To be persuasive, the company needs money documented as compensation for the non-compete restriction, such as a job-change ban allowance, special severance pay, or stock options. A preliminary injunction against changing jobs must be sought right after departure; if months slip by, the urgency that justifies one is the first thing to fall apart.

The most common mistake is invoking the agreement against someone the company pushed out first. If you try to block a move to a competitor after handling the exit through recommended resignation or restructuring, the case usually collapses on how the employment ended, and a single ruling denying the injunction signals to every remaining employee that “that agreement is void”. Setting a penalty at two or three times annual salary may seem like a strong deterrent, but an excessive penalty gets reduced, or becomes grounds to doubt the reasonableness of the whole agreement. Blanket signing is a risk, not protection. Keep in mind, too, that even if the non-compete fails, the confidentiality obligation and liability for trade-secret misappropriation remain separate. Each case is judged on its own facts, so we recommend legal review.

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💡 In plain English
A fence built too wide collapses. Only one built tightly around what you need to protect will hold.
Why it matters in practice
This is usually the document HR reaches for when key staff leave for a competitor. But whether it holds up depends on how it is designed, not on the signature.
Origin and sources

It is well-established case law that a non-compete agreement’s validity is judged as a whole, based on the employer’s protectable interest, the employee’s position, the duration, region, and occupations covered by the restriction, whether compensation was provided, and the circumstances of the departure.

Source · Supreme Court case-law principles on the validity of non-compete agreements
An example

Consider a hypothetical case. Company A makes industrial sensors, with 320 employees and annual revenue of about KRW 90 billion (≈ US$67,335,000). In the past two years, 7 key R&D and sales staff moved to three competitors. A preliminary injunction against one of them to bar re-employment was denied, which unsettled the company. The root of the problem was the agreement it had collected from every employee at hiring: '3 years, nationwide, any business in the same industry.'

  1. The HR director and the IT team cross-checked six months of design-server and customer-DB access logs. Only 41 of the 320 employees had actually touched core materials. The first report: "Collecting these from the other 279 only hurts us in court."
  2. Rewriting the agreement with outside counsel, they narrowed the term from three years to one, and the territory from nationwide to three named competitors and the same product lines. They also listed only two restricted roles: sensor design and key-account sales.
  3. The CFO created a post-employment non-compete allowance: 5% of monthly base pay as a separate line item for the 41 covered employees, plus one year's worth as a lump sum on departure. The average came to KRW 4.8 million (≈ US$3,590) per person, for a total annual cost of about KRW 140 million (≈ US$104,700).
  4. The confidentiality clause was split out of the non-compete document and signed separately with all 320 employees, with data-export logs reviewed once a month. Confidentiality survives even if the non-compete falls, which was the reason for separating them.
  5. Three of the 41 employees asked to re-sign refused. The HR director met with them personally to explain the allowance terms and the one-year period. Two signed, and the third was removed from the covered role.
  6. A year later, key-staff departures had fallen from 7 to 2, and the injunction filed in one of those cases was granted, limited to a one-year term and three named competitors. The covered headcount dropped from 320 to 40, but for the first time the agreement proved enforceable.
Related terms
Employment Contract · Required TermsA contract between employee and employer setting working conditions such as pay and working hours. Items required by law must be stated explicitly and provided to the employee in writing.NDA · Non-Disclosure AgreementA contract in which parties promise not to disclose the other side's confidential information, learned through business or collaboration, to third parties or use it for other purposes. It is the first document signed before serious discussions begin.Exit InterviewA conversation with an employee who has decided to leave, to hear why they are going and what problems the organization has. Well designed, it becomes the most candid source of data on the causes of turnover.IP Strategy · Patent MapA strategy for securing, using, and defending intangible assets such as patents, trademarks, and copyrights in line with business goals, plus a patent analysis map that shows technology trends at a glance.Rules of Employment · Drafting and Unfavorable ChangesInternal rules setting a workplace's working conditions and code of conduct. Workplaces above a certain size must draft and file them, and changing them to employees' disadvantage requires employee consent.Offboarding Process · Handover and Settlement After the Exit InterviewThe full process that runs from the moment a resignation is confirmed through the last working day and beyond: handover, account revocation, issuing documents, and settling pay and severance. If the exit interview is where you hear 'why they are leaving,' offboarding is where you handle 'what to keep and what to cut off.'Moonlighting Ban · Side Job Policy · Limits of Restrictions in Rules of EmploymentRules that restrict employees from working elsewhere outside working hours, and the limits of those rules. Because employees' private lives and freedom of occupation are the starting principle, a blanket ban is hard to enforce; restrictions are justified only for specific reasons such as interference with work, competition, or damage to company credibility.
Training linked to this term
📚Workplace Harassment Prevention and Abuse-of-Power Prevention TrainingNanum Consulting Corporate Training · On-site/OnlineView course →
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Last updated 13 Sep 2026 · Reviewed by John Kim

FAQ

No. Courts weigh the interest being protected, the reasonableness of the restriction, and whether compensation is provided. An overly broad restriction may be held invalid.
It depends on the case, and there is no uniform standard. Generally, though, the longer the restriction and the less compensation is provided, the less likely it is to be upheld.
Not recommended. Restricting even roles with no access to trade secrets greatly raises the risk of the agreement being ruled invalid. Narrowing the scope by job role is more effective.
No. The confidentiality obligation is separate from the non-compete, and protection under trade-secret laws can be reviewed separately as well. Keep the two clauses apart.