Legal analysis
Liquidated damages refer to the money that one party should pay to the other party for breach of contract according to the agreement of the parties or the direct provisions of the law. The standard of liquidated damages is money, but the parties may also agree that the subject matter of liquidated damages is other property than money. For workers who have confidentiality obligations, the employer may agree with the workers on non-competition clauses; If the employing unit provides special training fees and professional technical training for the laborers, it may agree with the laborers on the service period. If the employee violates the terms of service period and non-competition, the employer may claim liquidated damages from the employee according to the labor contract. Service period and non-competition restriction are cases in which the labor contract law expressly stipulates that the employer can claim liquidated damages. In addition to the above two legal situations, the liquidated damages agreed in other matters are usually invalid. If the company provides special training fees for employees, or provides professional training for employees, the service period may be agreed. The amount of liquidated damages shall not exceed the training expenses provided by the company. The company requires employees to pay liquidated damages not exceeding the training expenses that should be shared for the unfinished part of the service period.
legal ground
People's Republic of China (PRC) labor contract law
Article 22 Where an employing unit provides special training fees and professional technical training for laborers, it may conclude an agreement with the laborers to stipulate the service period. If the laborer violates the service period agreement, he shall pay liquidated damages to the employer in accordance with the agreement. The amount of liquidated damages shall not exceed the training expenses provided by the employer. The liquidated damages that the employer requires the laborer to pay shall not exceed the training expenses that should be shared for the unfinished part of the service period. If the employer and the employee agree on the service period, it will not affect the employee's improvement of labor remuneration in accordance with the normal wage adjustment mechanism during the service period.
Article 23 The employer and the employee may agree in the labor contract to keep the employer's business secrets and confidential matters related to intellectual property rights. For the workers who have the obligation of confidentiality, the employer may stipulate the non-competition clause with the workers in the labor contract or confidentiality agreement, and stipulate that after the labor contract is dissolved or terminated, the economic compensation will be paid to the workers on a monthly basis during the non-competition period. If the laborer violates the non-competition agreement, he shall pay liquidated damages to the employer in accordance with the agreement.