Non-Compete Restrictive Covenant in Employment Contracts in Korea

Korean courts have invalidated numerous, non-compete agreements, reduced the amount of time of the non-compete period and/or have reduced liquidated damage amounts for violation of non-compete agreements.  Courts typically balance the freedom to work (an ability to work outside the specific field) with the significance of the interest in the employer to enforce the covenant not to compete. For an updated article on this issue from 2023 please see: Non-Compete Clauses in Korean Employment Agreements.

The primary factors courts utilize in determining whether to enforce a non-compete agreement are:

  1. if compensation was paid in exchange for the covenant not to compete;
  2. if the interest being sought protection over includes valuable trade secrets and other valuable intellectual property;
  3. if the position of the employee was such that the employee would be able damage the future of the employer;
  4. if the employee was terminated for justifiable reasons;
  5. if the industry practice is to enforce covenants not to compete; and
  6. if the employee is harmed by the covenant not to compete (i.e. an inability to find alternative employment).

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