When they signed a non-compete agreement upon joining the company, they were met with high compensation claims from the company after leaving, including fresh graduates.
Over the past decade, internet companies that advocate “freedom, equality, and openness” have become the holy land of the workplace in the hearts of young people. However, when the world begins to tighten, the hideousness is revealed again.
Hundreds of thousands, or even millions, of compensation payments have become another shackle that traps these young people, and their life trajectories have changed accordingly.
Former employees who are being pursued
Seven months after leaving Pinduoduo, Lin Zhixin faced a compensation claim of 280,000 yuan.
In October 2023, Lin Zhixin received a call from Shanghai. In the call, the arbitrator told her that Pinduoduo, where she used to work, had filed an arbitration application against her for violating the non-compete agreement, claiming 280,000 yuan. Lin Zhixin’s brain instantly “crashed”, she couldn’t understand the situation at the moment, and hurriedly hung up the phone.
A non-compete agreement is a legal measure taken by the employer against the employee to protect its trade secrets. Through labor contracts and confidentiality agreements, employees who leave the company are prohibited from joining companies that compete with the original company’s business within a certain period after leaving, including enterprises created by employees themselves that have the same business scope as the original company. As consideration, the employer needs to pay compensation to the laborers within the non-compete period. If the laborers violate the non-compete obligations, they should pay liquidated damages to the employer.
Generally speaking, the non-compete agreement restricts senior management personnel, senior technical personnel, and other personnel with confidentiality obligations who master the company’s core business information, referred to as “two highs and one secret”. In recent years, with the increasingly fierce competition in the Internet industry, the scope of application of non-compete agreements has also begun to generalize to grassroots employees. Nowadays, signing non-compete agreements for each employee before joining the company has become a common practice in the industry. However, due to the huge cost of evidence collection, most companies will hardly “take it seriously” for ordinary employees.
Before receiving that call, Lin Zhixin never thought that she would be arbitrated for a non-compete agreement. She was a fresh graduate and only worked in a basic position at Pinduoduo for 8 months, including a 6-month probation period, and she had only been officially employed for 2 months when she left. After leaving, she joined a new company to do foreign trade business, which was different from the “vegetable buying” business she did at Pinduoduo before. She didn’t know how she was related to “leaking the company’s trade secrets”.
That day was Lin Zhixin’s 24th birthday. She once attributed the reason to the fact that she was “in her year of birth and had offended Tai Sui”. Her sister had already bought flowers and a cake, waiting for Lin Zhixin to return to Shanghai from her business trip to celebrate her birthday.
After learning about the incident, her sister immediately took Lin Zhixin to consult a lawyer. The lawyer advised Lin Zhixin to “accept the arbitration” and said: According to common sense, no company will hold on to fresh graduates, and there is no need to worry too much. These words finally relieved Lin Zhixin, who had been uneasy all the way. She thought, “At worst, I’ll take this as a hurdle at 24, and I’ll get over it.”
On November 2023, on the day of the arbitration, Lin Zhixin did not attend and entrusted everything to the lawyer, who had told her, “At most, you will have to pay 30,000 or 50,000 yuan.” Lin Zhixin felt that if she gritted her teeth, she could still accept this result, and she believed that everything would be resolved.
Things did not go as expected. “Xiao Lin, you need to be mentally prepared.” After the arbitration, the lawyer changed his previous certainty and confidence. He told Lin Zhixin that the arbitration committee was likely to make a full compensation ruling.
Through the video brought back by the lawyer, Lin Zhixin realized that she had been followed. A video about 60 seconds long recorded the moment Lin Zhixin walked out of her house and entered the company’s gate. In the video, Lin Zhixin’s face, the building number of her residence, and even the logo of the new company were clearly visible. The lawyer said that at the arbitration site, this video was used by Pinduoduo as evidence to prove that “Lin Zhixin joined the non-compete company”.
She recognized the figure of the follower on the glass wall in a corner of the video. It was a middle-aged man with a crew cut and a big belly. Thinking that she had been followed and secretly photographed by strangers without her knowledge, Lin Zhixin felt cold in her heart, and nausea and fear gripped her at the same time.
Lin Zhixin’s experience is not an isolated case. Many former employees who were accused by Pinduoduo of violating non-compete agreements have been followed by Pinduoduo.
In order to prevent the leakage of privacy, Zhao Chengyu changed his mobile phone and phone number after leaving his job, and he never installed applications under Pinduoduo on his new mobile phone. Even so, he was still claimed 420,000 yuan by Pinduoduo for violating the non-compete agreement. What puzzled him was that he clearly wore a mask to work every day, but the other party could still take evidence by following him. He guessed that Pinduoduo used some “special means”.
Zhao Chengyu considered the two and a half years he worked at Pinduoduo as the most difficult period of his career. Recalling it now, Zhao Chengyu still remembers the oppressive atmosphere he felt on the day he reported for duty. “It’s not even an internet company.” He recalled that he thought that sofas, pillows, and leisure areas were everywhere in internet companies, but there were none here. In an entire office floor that could accommodate about 800 people, there was only a two-meter-wide aisle. There was almost no extra space between the crowded desks and chairs. If someone’s chair moved back a little, it would touch the back of the colleague’s chair. In front of the dense computer screens, everyone was typing on the keyboard expressionlessly.
The office environment in front of him shocked Zhao Chengyu. The supervisor seemed to see his abnormality and embarrassedly asked him: “Is there a big gap with your previous company?” After receiving an affirmative answer, the supervisor comforted him and added: “Get used to it, and stick to it a little longer.”
Colleagues should not communicate with each other privately. Zhao Chengyu said that within the company, many people tacitly agree that they have to “disappear” after leaving their jobs. The lunch break is at 12 o’clock every day, but few people go downstairs to eat together. The food suppliers brought the insulated boxes containing lunch to the center of the aisle on one side of the office and arranged them neatly. The employees lined up in a long queue, silently received the boxed lunches, and returned to their workstations to eat. After eating, they lay on the desk and slept.
While on duty, Zhao Chengyu was cautious and never discussed any topics related to the company on the company’s computer. Even if he switched to mobile phone WeChat, he would try to use pinyin to replace some sensitive words. For example, use “lz” to replace “leaving the job”.
Zhao Chengyu remembers that he was once pulled into a business WeChat group of forty or fifty people when he first joined the company. Although no one sent messages to the group after the project was completed, the HR still found the group, and the group chat was notified to be dissolved immediately. Another time, an employee took a photo of an ambulance under the company building and anonymously posted it on a certain workplace app. That morning, the HR found the employee and fired him.
“You have to know that your computer is monitored at any time, and all chat records may be exposed,” Zhao Chengyu said.
Trap
As a student of a second-tier university, Lin Zhixin has come to where she is today by paying more than others. Since her sophomore year, she has started a “part-time work and part-time study” internship, and she has hardly stopped for three years.
She didn’t expect that hard work could also create a nightmare.
In July 2022, relying on 5 or 6 internship experiences, she got an offer from an internet giant in the campus recruitment, and joined the community group buying department of Pinduoduo as a “Duoduo Grocery” purchasing and sales specialist. The workplace was in Nanning, Guangxi. On the day of the report, the HR brought a stack of thick materials and told her that she should “sign here”, “sign there”, and “don’t sign here”. As for what these documents were and what they represented, the HR did not explain.
Chen Xin, a fresh graduate who also joined “Duoduo Grocery” in 2022 and was subject to a non-compete agreement by Pinduoduo after leaving, recalled that he did not find a non-compete agreement among the several documents he signed at the time. “I thought it was a confidentiality agreement, and the two were put together.” The dense text was piled up on pages of A4 paper, and the font was particularly small, “Both sides of the page are full of words, and it doesn’t look like many pages, but there are so many words.” In a daze, he signed his name. It was not until he left his job that Chen Xin realized the existence of the non-compete agreement.
In early June 2023, he submitted a resignation application to the company, hoping to leave in mid-June. The HR refused his request, saying that according to the regulations, it would take at least a month to complete the handover. But after a while, he said, “We will try our best to let you leave early”; a few days later, he changed his words to “It still takes a month.”
“It’s repeated, like torturing you.” At that time, Chen Xin had already found a “next home” and had set the time to join. He was worried that something would go wrong with the resignation process, and his heart was always hanging.
At the end of June, Chen Xin was notified to return to the company to go through the resignation procedures. He didn’t know whether the resignation application he submitted had gone through the process, and he was always worried. Chen Xin said that on the second day of the forced vacation, Pinduoduo cancelled all his employee permissions, so he could not check the progress of the resignation approval on the office software.
That day, what was in front of him was not the expected resignation certificate, but a “Non-Compete Agreement Notice”. The HR told him: You must sign it, if you don’t sign it, you can’t complete the subsequent procedures, and you can’t approve the resignation. Chen Xin instinctively felt panicked. He “didn’t want to stay in that place for a day”, and just wanted to leave quickly.
Pinduoduo’s default working hours are “11116” (starting work at 11 am, leaving work at 11 pm, working 6 days a week). But the time when many employees actually finish their work is often after midnight. As a member of the company’s “Duoduo Grocery” department, Chen Xin often had to go to bed around 2 or 3 am. Even on the only rest day at home, work would not stop. Therefore, many people would rather “voluntarily” go to work in the company, so that they could get paid for one more day.
During the year he worked at Pinduoduo, Chen Xin felt that his life and freedom were completely deprived, and he often had no rest for a month. Sometimes he couldn’t bear it anymore, so he would let himself rest for a day on Sunday. But the so-called “rest for a day” was just sleeping for an hour more, and he still had to deal with work at home.
He often had nightmares at night, dreaming of his superiors, who would not let him go even at night, and scolded him bloody. Later, the leader was changed, and the situation still did not improve. The new leader did not understand the business and always put pressure on him. Every time he held a morning meeting, Chen Xin had not yet stepped into the door, and the accusations came first: “Why is the vegetable not doing well again.” He was eager to escape from such a life.
Knowing that he might not be able to complete the process and get the resignation certificate if he didn’t sign the non-compete agreement, Chen Xin finally signed his name in fear. “I was afraid that they wouldn’t approve me, and then they would count me as absent from work, and in the end I would have to pay the company.” Later, he learned that according to Article 37 of the “Labor Contract Law”, as long as an employee submits a resignation application in writing, the labor contract can be terminated after one month, and it does not need to be agreed by the employer.
But at that time, he, who had just entered society, did not understand the rules of the workplace, and he knew nothing about the law. Students who have been educated in obedience since childhood also find it difficult to complete the transformation of identity and thinking in time after entering the workplace, and some are just heavy worries about their own destiny. In a certain sense, Pinduoduo is using the passive position of the laborers and the cognitive gap to make employees sign this “unequal treaty”. In law, this is also called the “non-true expression of will” of the laborers, which is not recognized by law itself. But once signed, it is difficult to be recognized in subsequent litigation.
Even if you refuse to sign when you leave your job, it does not mean that you can get rid of the constraints of the non-compete agreement.
In 2020, in the labor contract signed between Zhao Chengyu and Pinduoduo, it was stated that in addition to the basic salary, he would also be given an additional equity incentive of about 250,000 yuan per year. With the rise in stock prices, the value of this remuneration has risen to nearly 500,000 yuan. But the premise of getting this income is that he must work at Pinduoduo for 2 years.
High salary returns are the reason why many people are willing to continue to endure high-pressure work. Some employees could not accept the single-rest system at first, but after several salary adjustments, they began to choose self-persuasion for money, “Single-rest is also good, I don’t know what to do with the extra day, it’s better to earn more overtime pay.”
Pinduoduo’s basic working hours requirement is 300 hours per month. Employees who cannot meet the standard are likely to receive the reprimand “Are you not doing your duty this month” at the end of the month. In Zhao Chengyu’s view, “duty” seems to be an important standard for Pinduoduo to measure employees.
Zhao Chengyu said that there is no public organizational structure within the company, and only nicknames are displayed on the chat software. It was only through the introduction of the old employees that Zhao Chengyu established a basic understanding of the colleagues in charge of the relevant business. But the so-called understanding only stays on everyone’s one-third of an acre of land. Once you want to go beyond the scope of business, you will immediately receive the ridicule “Are you not doing your duty”.
“There is no employee growth, and Pinduoduo does not care about employee growth. It completely treats everyone as dry batteries. You come to work and get paid, and you don’t have to think about anything else.” This is Zhao Chengyu’s most intuitive feeling since joining the company. After working for more than two years, Zhao Chengyu felt that his professional level was not improving but regressing.
For more than two years, Zhao Chengyu has been supporting himself to work every day by the belief of “getting the stock”. Until September 2022, the red physical examination report showed that Zhao Chengyu’s body had two indicators related to tumors soaring. At that time, he had already received more than 400,000 yuan of stock sales, and only 70,000 yuan of after-tax money had not yet been received. Like most employees who eventually left Pinduoduo because “their bodies couldn’t hold up”, Zhao Chengyu decided to end such a life and began to leave his job in October 2022.
Unlike the inexperienced fresh graduates, Zhao Chengyu, who had graduated for many years, had a basic understanding of the non-compete agreement. However, half a month after joining the company, the HR also asked him to sign an additional equity grant agreement. In the closed meeting room, there were several related documents on the table, and a video camera was set up next to the HR sitting on the other side. According to Zhao Chengyu’s recollection, he was about to read the documents in front of him, and the HR immediately interrupted him and urged: “They are all standardized terms, there is no need to read them, everyone is the same.” The agreement was in duplicate, and he signed 3 or 4 names, and the whole process took less than 3 minutes.
Later, after Zhao Chengyu carefully read the text, he found that the signed agreement contained such a sentence: “The equity incentive issued by the affiliated company of the Party, Pinduoduo Inc., to the Party during the term of office shall be used as the consideration for the Party’s commitment to confidentiality and non-competition.”
The payment standard for Pinduoduo’s non-compete compensation is 30% of the average basic salary of the employee in the 12 months before leaving the job. But for employees like Zhao Chengyu who have high salaries and equity incentives, Pinduoduo’s practice is to directly convert the equity incentive into non-compete consideration.
In other words, the equity incentive, which was originally issued as part of the labor remuneration in the labor contract, will be returned to Pinduoduo as non-compete compensation once Zhao Chengyu is subject to non-compete after leaving his job.
Before joining Pinduoduo, Zhao Chengyu had also received an offer from Ali, and the total annual salary was more than 100,000 yuan higher than that of Pinduoduo. Because he did not plan to go to Hangzhou from Shanghai, after careful consideration, he gave up that opportunity. He believed that both the offer and the labor contract stated that “equity incentive is part of the salary system”, and Pinduoduo’s practice of converting it into non-compete consideration was unreasonable.
“For such terms that are extremely unfavorable to laborers, the employer should take the initiative to inform and fully communicate, but they have not mentioned it from beginning to end. If I knew this situation when I joined the company, why wouldn’t I choose Ali?” Zhao Chengyu felt angry that Pinduoduo deliberately concealed it.
Zhao Chengyu refused to sign the “Non-Compete Agreement Notice” on the spot, but the HR told him: In view of the fact that Zhao Chengyu had signed the non-compete agreement when he joined the company, the agreement can still take effect as long as the notification is in place when he leaves his job.
Hard battle
By signing non-compete agreements, the flow of talent to the outside world is restricted, and it also plays a deterrent role to the existing employees within the company.
At the beginning of 2023, when an employee in the same position as Chen Xin left his job, he was not subject to non-compete. But in June, when Chen Xin proposed to leave his job, the HR initiated non-compete against him on the grounds that he “played a very bad leading role”. Chen Xin guessed that it was because too many people left their jobs during that period, and the HR wanted to “kill the chicken to scare the monkeys” to reduce the employee turnover rate.
After leaving his job, the non-compete compensation Chen Xin received each month was 30% of his basic salary before leaving his job, which was 3,700 yuan; and the amount he needed to compensate Pinduoduo for violating the non-compete agreement was “twice the annual pre-tax income”, nearly 430,000 yuan. “When I pay off the money, I will be thirty years old, and I will still have nothing.” This money is jokingly called “redemption fee” by a group of laborers with the same experience.
Due to dissatisfaction with the non-compete terms, Zhao Chengyu decided to take the initiative. In March 2023, he filed a lawsuit against Pinduoduo as the plaintiff, trying to terminate the non-compete agreement through legal channels. According to relevant regulations, if an employee does not receive the non-compete compensation paid by the employer for three consecutive months after leaving the job, the agreement will become invalid. He followed the instructions of his lawyer and, during the “empty period” of the first three months after leaving his job, regularly reported his personal social security information to his former company, Pinduoduo, to prove that he had not joined any company. Three months later, he also sent a notice of “termination of non-compete agreement” to the former company’s mailbox, hoping to make the whole process flawless.
Zhao Chengyu’s lawyer once told him that the offer issued by Pinduoduo clearly stated that the salary structure included equity incentives; and the law stipulates that the non-compete compensation should be the economic compensation outside the labor remuneration of the laborers, and the two are obviously contradictory. Therefore, the possibility of winning the case is “quite high”. But in December 2023, at the first instance court, Zhao Chengyu’s request to “terminate the non-compete agreement” was not supported by the court. “I feel that I have done enough, and it is still not working.”
According to the principle of “freedom of contract”, as long as both parties sign a non-compete agreement, the “agreement is valid”. This standard sometimes easily fails to pay attention to whether the employee signed the agreement on an equal and voluntary basis, whether he is a qualified subject of the non-compete agreement, and whether he has the possibility of leaking the company’s trade secrets, leaving “loopholes” for the employer.
In court, laborers are often asked: “Did you sign it? Why did you sign it?” If the answer is, “I can’t get the resignation agreement if I don’t sign it”, the court will further ask: “Why do you want to leave your job?” Chen Xin couldn’t understand the way of asking questions: “If I don’t leave my job, am I going to work to death?” It’s like signing a contract of sale, and you can’t escape no matter what.
In this way, there seem to be only three ways in front of the laborers: either continue to endure the high-intensity work pressure; or pay a high amount of non-compete compensation to complete the resignation; or they can only leave the Internet industry completely at the cost of their career prospects.
After several hearings, the advice Zhao Chengyu received was: “Settle it, you will definitely lose if you are judged.” Previously, he and his lawyer tried several times to search for judgments related to Pinduoduo’s non-compete agreement on the Internet, but to no avail. After losing the first instance, he was a little discouraged. The lawyer told him that it was a waste of money to appeal to the second instance, and he should not fight again.
Compared with Zhao Chengyu’s relatively superior economic conditions, the litigation of fresh graduates Lin Zhixin and Chen Xin is even more difficult.
The two also grew up in rural families. During the arbitration stage, Chen Xin, who lacked legal knowledge, once did not know how to deal with it and where to find a lawyer. Later, he and a colleague who was also subject to non-compete arbitration were bound together. The two spent a total of 5,000 yuan and found a lawyer on Douyin who claimed to be “very experienced”. The other party claimed that they could “cut” their compensation to 70,000 or 80,000 yuan. The result was a failure.
In early February 2024, after the arbitration result came out, Chen Xin, who could not afford the high compensation, decided to appeal. He didn’t know if he should hire a lawyer this time, and it seemed that whatever he did was useless.
Lin Zhixin also chose to continue to appeal. On December 1, after receiving the ruling, she submitted the prepared litigation materials to the court in Nanning, where she was employed. She vaguely realized that if she wanted to win this battle, she must avoid the other party’s “main battlefield”. At the end of December 2023, the local court in Nanning accepted the case, and Lin Zhixin breathed a sigh of relief, thinking that she could finally have a good year. However, not long after, the lawyer told her: “The case has been transferred to Shanghai.”
Later, Lin Zhixin found out from the date of the statement of claim she received that on November 30, before she got the arbitration result, Pinduoduo had already submitted the complaint materials to the Shanghai Changning Court, and the case was therefore merged. No matter how hard she tried, it was impossible for her to file the case before Pinduoduo. She couldn’t figure out why the company could take the lead and know her arbitration result.
Before the Spring Festival in 2024, Lin Zhixin, Chen Xin, and Zhao Chengyu met Wang Tianming online. After being claimed 4.5 million yuan by Pinduoduo, Wang Tianming embarked on the road of speaking out and defending his rights on the Internet. In January, 11 former Pinduoduo employees, including the four of them, jointly published an article on the Internet entitled “Pinduoduo’s Abuse of Non-Compete Agreements”, and public opinion gradually fermented. At that time, one of the posts surged 10 million views in just one day, and there were 20,000 comments.
Pinduoduo’s public relations personnel found Wang Tianming and his party and expressed their willingness to settle, promising to solve the problem after the Spring Festival as long as they deleted the posts, “Let everyone have a good year”. The Spring Festival soon passed. After the Spring Festival, when they wanted to contact the other party again, the other party became tough again and refused to admit it. “We didn’t send anything during the Spring Festival,” Lin Zhixin said excitedly, “but in fact, they just wanted to drag us.”
Lin Zhixin recalled that when she worked at Pinduoduo in the past, when she encountered disputes with suppliers, the supervisor provided Lin Zhixin with the method – drag it out, and keep dragging it until he doesn’t come to you. Now, looking back, facing this group of former employees, Pinduoduo is also treating them with the same “delaying tactics”.
Her monthly after-tax income was just over 8,000 yuan. At this salary level, if she wanted to pay off the 280,000 yuan debt, she would have to pay for nearly 3 years without eating or drinking. She once lost hope for the future.
In February 2024, Zhao Chengyu received the statement of claim from Pinduoduo. He was already mentally prepared for the hard battle that would follow. He still remembers that on New Year’s Day in 2021, the news of “a Pinduoduo female employee, who was only 21 years old, died suddenly” caused a sensation within the company. At that time, the supervisor said to him meaningfully: “Don’t look at this matter making a lot of noise, it will be gone in a few days.” A few days later, the deceased female employee’s parents posted a circle of friends, expressing their gratitude to Pinduoduo. This incident left a deep impression on Zhao Chengyu.
After being subject to non-compete arbitration, the vast majority of laborers will reach a private settlement with Pinduoduo by negotiating to reduce the compensation, and sign an agreement to “not spread the experience of being subject to non-compete”. Those who dare to fight a “protracted war” have, in a certain sense, a certain stubbornness.
For Zhao Chengyu, whether or not to pay a high amount of compensation is no longer the most important thing. He doesn’t care about winning or losing, he just wants to see how far he can go in this confrontation.
- At the request of the narrator, the information of the characters in the text is blurred
- END –
Discover more from 自由档案馆
Subscribe to get the latest posts sent to your email.