📌 목차 (Table of Contents)
Table of Contents

Most foreign companies with Korean employees have a non-compete clause somewhere, usually in a global employment template, an equity award agreement, or a headquarters-drafted separation agreement. Korean courts do enforce non-competes, but only as far as a real employer interest requires. The facts behind the clause matter more than its wording.

The Starting Point: Freedom of Occupation, Not Freedom of Contract

Why Korean Courts Scrutinize These Clauses
Korean courts see a post-employment non-compete as a limit on the constitutional freedom to choose an occupation and on free competition. To the extent a restriction goes further than necessary, it is void as contrary to public policy under the Civil Code.

What That Means for Drafting
The employee’s signature is necessary but nowhere near enough. The court asks whether the restriction is reasonable for this employee on these facts.

The Supreme Court’s Validity Test

The Factors
The Supreme Court’s leading March 2010 decision weighs these factors together:

  • whether the employer has an interest worth protecting;
  • the employee’s position and duties;
  • the period, geographic area, and types of work restricted;
  • whether the employee was compensated for accepting the restriction;
  • how the employment ended;
  • broader public interest.

No Single Factor Is Decisive, but Some Weigh More
Without a protectable interest, the clause usually fails on that alone. A lack of compensation is increasingly treated as a serious weakness.

The Threshold Question: Is There a Protectable Interest at All?

What Counts
The information doesn’t have to be a formal trade secret. Confidential know-how, customer relationships the employer paid to build, and business strategy can all qualify.

What Doesn’t
General skills, industry knowledge, and experience belong to the employee. A clause whose real aim is to keep a trained employee away from competitors won’t be enforced.

Why Position Matters
A senior engineer or a head of sales holding key accounts is a strong candidate for enforcement. A junior employee in a routine role usually isn’t, even if both signed the same template.

Period, Geography, and Scope: What Courts Actually Uphold

Duration
Courts most often accept six months to one year. Two years is possible for a senior employee with a strong protectable interest. Three years or more is often cut down, and courts frequently enforce only the period they find reasonable instead of voiding the whole clause.

Geography and Field
The scope should match where the employer actually competes and name specific competitors or business lines. Worldwide restrictions copied from a global template are a common weak point.

Technology Cycles Cut Both Ways
In fast-moving fields, confidential information loses value quickly, which argues for a shorter restriction.

Compensation: The Factor That Increasingly Decides Cases

Dedicated Consideration
No statute requires payment, but courts give heavy weight to a separate non-compete payment, a clearly allocated allowance, or continued pay during the restricted period.

What Usually Doesn’t Count
Ordinary salary, bonuses, and statutory severance generally don’t count, because the employee would have received them anyway.

How the Employment Ended
Enforcement is much harder against someone the company dismissed or pushed out than against someone who resigned to join a competitor.

Enforcement in Practice: Injunctions, the Clock, and Damages

The Preliminary Injunction Is the Real Remedy
The restriction period generally runs from the employee’s departure date. If it has expired, or nearly expired, by the time the court rules, the injunction will typically be denied or granted only for what remains.

Pre-Agreed Damages Can Be Reduced
Courts can reduce excessive pre-agreed damages. A clause that works as a penalty for leaving can also violate the Labor Standards Act’s ban on fixing penalties in advance in employment contracts.

Directors Are Different During Their Term
Registered directors have a statutory duty not to compete during their term under the Commercial Act. Any restriction after the term ends depends on a contract and faces the same reasonableness test.

Trade Secret Protection Without a Non-Compete at All

The Unfair Competition Act Route
In 2003 the Supreme Court held that, even without a written non-compete, a court can bar a former employee from a role at a competitor where that is necessary to protect trade secrets.

Why This Is Not a Substitute
This route requires proof of an actual trade secret: information that isn’t public, has economic value, and was kept secret through reasonable measures. It works best as a parallel claim.

Practical Sequencing for Drafting and Enforcing a Korean Non-Compete

  1. Limit non-competes to employees who actually hold protectable information.
  2. Adapt the global template for Korea: shorten the period, name specific competitors, and match the geography to where the business competes.
  3. Pay for the restriction explicitly, documented as consideration for the covenant.
  4. Build the trade secret record in advance with confidentiality agreements, access controls, and marking.
  5. Reconfirm the restriction at exit in a separation agreement.
  6. Move immediately when a breach appears, since the clock runs from departure.