An employer who wishes to enter into a post-termination non-compete agreement with its employee is required by Subparagraph 4, Paragraph 1, Article 9 of the Labor Standards Act (the "LSA") to provide reasonable compensation for the employee's loss suffered as a result of not engaging in a competing business; otherwise, such agreement will be void. As for the definition of "reasonable compensation," Paragraph 1, Article 7-3 of the Enforcement Rules of the Labor Standards Act provides the following four criteria in this regard: "the amount of monthly compensation shall not be less than 50% of the average monthly wage of the employee at the time of separation," "sufficient to cover the employee's living expenses during the non-compete period after separation," "comparable to the loss suffered by the employee in complying with the non-compete restrictions regarding the period, area, scope of business activity and employment," and "other matters relevant to determining the reasonableness of the compensation basis.
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