A court in Shanghai has ordered a property management company to pay a former employee 690,000 yuan (around Rs 95 lakh) after ruling that her dismissal over her husband’s alleged links to a rival company was illegal. The employee, identified by her surname Liu, had worked with the company since 2006 before being terminated in late 2023, South China Morning Post reported. According to court documents, the company claimed Liu’s marriage to a man working as a general manager at a competing firm created a conflict of interest and could potentially harm the business.
At the end of 2023, Liu received a notice informing her that her labour contract was being terminated. The company said it was because her spouse worked for a rival firm, causing “adverse effects” on its operations.
In February 2024, Liu filed a labour arbitration complaint seeking 680,000 yuan in salary compensation, a 60,000 yuan bonus for 2023, and another 10,000 yuan for unused annual leave.
Two months later, the labour arbitration committee ruled largely in her favour, ordering the company to pay 680,000 yuan in compensation along with 10,000 yuan for untaken leave. The company challenged the decision in court.
During proceedings, the employer argued that Liu, who worked as an operations manager, had access to sensitive company data and confidential information. It further alleged that her husband, surnamed Li, had established a competing business under his mother’s name and publicly appeared as its general manager during industry events.
Liu denied the allegations, saying she only played a supporting role in the company and had no access to critical trade secrets. She also argued that her husband did not formally work for the rival company and had only presented himself as an employee during industry events for convenience.
The Xuhui District People’s Court found no evidence that Liu had leaked confidential information, engaged in misconduct, or helped sabotage her employer’s interests.
The court also noted that it is common for spouses to work in companies within the same industry and said such circumstances alone cannot justify termination under China’s Labour Contract Law.
According to the court, non-compete clauses apply only to senior executives, senior technical staff, or employees with formal confidentiality obligations, and such agreements must be signed in writing beforehand.
Since Liu was neither a senior executive nor bound by a non-compete agreement, the court ruled that her dismissal was “illegal and unreasonable.” It upheld the arbitration committee’s earlier decision and ordered the company to compensate her for lost wages and damages.
