Non-compete obligations 競業避止義務

Restrictions on working for a competitor, which Japanese courts enforce only narrowly after employment ends. Also written kyogyo hishi gimu, non-compete clause, restrictive covenant.

During employment, the duty not to compete is implied: an employee cannot work for or set up a competing business. After employment ends, the position changes. Freedom to choose one's occupation is protected by Article 22 of the Constitution, and there is no statute on post-employment non-competes. Courts enforce them only where there is a clear written agreement, in the work rules or a separate pledge, and only to the extent the restriction is reasonable.

The leading early authority is the Foseco Japan case, decided by the Nara District Court in 1970, which upheld a two-year restriction on employees with access to technical secrets. Since then, courts have weighed a consistent set of factors: whether the employer has a real interest to protect, such as trade secrets or client relationships; the employee's position and access; the length of the restriction; its geographic and business scope; and whether the employee received compensation for accepting it. Restrictions of up to about a year are more often upheld, and the absence of any compensation weighs heavily against enforcement. Clauses that bar a former employee from working in an entire industry are commonly struck down or cut back.

Separately, trade secrets are protected by the Unfair Competition Prevention Act regardless of any non-compete, provided the information was managed as secret.

What it means for a foreign employer

Sources

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General information for employers, not legal advice. Thresholds and dates are checked against the sources listed and dated above; confirm anything you act on with a Japanese employment lawyer or a licensed labour and social security attorney.