A short time ago, a case in which a former employee of Tencent was ordered to pay the huge sum of RMB19.4 million (US$2.79 million) in compensation triggered heated debate in legal and human resources circles.
Senior Partner
Co-effort Law Firm
Xu Zhenhua, a former senior developer with Tencent Technology (Shanghai), established his own company and developed a number of games similar to games developed by Tencent while he was employed by, and after he left, Tencent. Tencent asserted that Xu Zhenhua had breached the provisions of his employment contract, and the non-disclosure and non-compete undertaking agreement entered into by the two parties, and demanded that he bear liability for breach of contract.
In its judgment, the court at first instance ordered Xu Zhenhua to pay liquidated damages in the amount of RMB3.72 million, which was increased to approximately RMB19.4 million in the judgment of the appeal, setting a new record for the measure of damages in such cases, and leading to the case being dubbed the “No. 1 non-compete case”.
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Victor Zhao is a senior partner and Sheen Huang is an associate at Co-effort Law Firm
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victor@co-effort.com
huangxin@co-effort.com
